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vi 14111 MINERAL LEASING REVENUEk

GOVERNMENT

Storage

HEARING

BEFORE THE

SUBCOMMITTEE ON PUBLIC LANDS

OF THR

COMMITTEE ON

INTERIOR AND INSULAR AFFAIRS

-mcr UNITED STATES SENATE

nj

m EIGHTY-SEVENTH CONGRESS

r•- SECOND SESSION

0 ON

_r] ,--R S.898

A BILL TO AMEND SECTION 35 OF THE MINERAL LEASING ACT

OF 1920 WITH RESPECT TO THE DISPOSITION OF THE PROCEEDS OF SALES, BONUSES, ROYALTIES AND RENTALS UNDER

SUCH ACT

MAY 15, 1962

Printed for the use of the

Committee on Interior and Insular Affairs

U.S. GOVERNMENT PRINTING OFFICE

85790 WASHINGTON : 1962

UNIVE

ook

SEP 10 19 62

4rTm4
COMMITTEE ON INTERIOR AND INSULAR AFFAIRS

CLINTON P. ANDERSON, New Mexico, Chairman

HENRY M. JACKSON, Washington HENRY DWORSHAK, Idaho

ALAN BIBLE, Nevada

JOHN A. CARROLL, Colorado

FRANK CHURCH, Idaho

ERNEST GRUENING, Alaska

FRANK E. MOSS, Utah

OREN E. LONG, Hawaii

QUENTIN N. BURDICK, North Dakota

LEE METCALF, Montana

J. J. HICKEY, Wyoming

THOMAS H. KUCHEL, California

GORDON ALLOTT, Colorado

JACK R. MILLER, Iowa

MAURICE J. MURPHY, JR., New Hampshi

JAMES B. PEARSON, Kansas

JERRY T. VERNIER, Chief Clerk

STEWART FRENCH, Chief COIL/18e1

RICHARD L. CALLAGHAN, Professional Staff Member

SUBCOMMITTEE ON PUBLIC LANDS

ALAN BIBLE, Nevada, Chairman

CLINTON P. ANDERSON, New Mexico

ERNEST GRUENING, Alaska

FRANK E. MOSS, Utah

OREN E. LONG, Hawaii

LEE METCALF, Montana

HENRY DWORSHAK, Idaho

GORDON ALLOTT, Colorado

JAMES B. PEARSON, Kansas
CONTENTS

Page

S. 898 1

Agency reports on S. 898:

Budget 3

Interior 2

STATEMENTS

Buchanan, J. A., director, Wyoming Natural Resources Board 6

Hickey, Hon. J. J., a U.S. Senator from the State of Wyoming 28

Humphrey, Dr. G. D., president of the University of Wyoming 21

Landstrom, Karl S., Director, Bureau of Reclamation; accompanied by

Max Caplan, Chief, Division of Minerals; Mark Welt, Chief, Division of

Budget and Finance, Bureau of Land Management; and Bruce Davis,

Chief, Program and Finance, Bureau of Reclamation 24

McGee, Hon. Gale W., a U.S. Senator from the State of Wyoming 4

Roberts, A. W., executive vice president, Wyoming Oil Industry Committee 13

Wyoming Council for Economic Development 3a

Wyoming Taxpayers Association, Duane W. Riggert, executive director 18

Wyoming Wool Growers Association 20

COMMUNICATIONS

Rocky Mountain Oil dr Gas Association, Robert B. Laughlin, executive

vice president: Telegram, dated May 14, 1962, to Senator Hickey 24

Wyoming Education Association, Chester H. Bowen, executive secretary:

Letter, dated May 10, 1962, to Senator Hickey 32

Wyoming Mining Association, R. W. Beamer, executive secretary: Telegram, dated May 12, 1962, to Senator Hickey 24

Wyoming School Boards Association, Mrs. Dorothy F. Bush, president:

Letter, dated May 10, 1962, to Senator Hickey 33

MINERAL LEASING REVENUES

TUESDAY, MAY 15, 1962

U.S. SENATE,

SUBCOMMITTEE ON PUBLIC LANDS OF THE

COMMITTEE ON INTERIOR AND INSULAR AFFAIRS,

Washington, D.C.

The subcommittee met, pursuant to call, at 10 a.m., in room 3110,

New Senate Office Building, Senator Alan Bible (chairman of the

subcommittee) presiding.

Present: Senators Alan Bible, of Nevada; Clinton P. Anderson, of

New Mexico; Frank E. Moss, of Utah; Oren E. Long of Hawaii;

Lee Mecalf, of Montana; and Gordon Allott, of Colorado.

Also present: Senators Quentin N. Burdick, of North Dakota; J. J.

Hickey, of Wyoming; and Gale W. McGee, of Wyoming.

Staff members present: Stewart French, chief counsel, and Jerry

Verkler, clerk.

Senator BIBLE. The subcommittee will come to order.

The bill before us is S. 898, introduced by Senators Hickey and

McGee, of Wyoming, to grant 90 percent of mineral leasing revenues

from Federal lands to the State within which the lands lie. Specifically, Senator Hickey's bill would amend section 35 of the Mineral

Leasing Act which now provides that 57% percent of such revenues

shall go to the reclamation fund, 32% to the State for public purposes,

and 10 percent shall be retained by the Federal Government for administrative costs.

We will make a part of the record at this point S. 898 and the report

of the Department of the Interior dated May 10, 1962, as signed by

Assistant Secretary John Kelly, and likewise the report of the Bureau

of Budget, dated May 8, 1962. These executive agencies oppose enactment.

(The bill and reports referred to follow:)

[S. 898, 87th Cong., 1st Bess.]

A BILL To amend section 35 of the Mineral Leasing Act of 1920 with respect to the disposition of the

proceeds of sales, bonuses, royalties, and rentals under such Act

Be it enacted by the Senate and House of Representatives of the United States of

America in Congress assembled, That section 35 of the Act entitled "An Act to

promote the mining of coal, phosphate, oil, oil shale, gas and sodium on the public

domain", approved February 25, 1920, as amended (30 U.S.C. 191), is amended

to read as follows:

"SEc. 35. All money received from sales, bonuses, royalties, and rentals of

public lands under the provisions of this Act shall be paid into the Treasury of

the United States, and 90 per centum thereof shall be paid by the Secretary of

the Treasury as soon as practicable after December 31 and June 30 of each year

to the State within the boundaries of which the leased lands or deposits are or

were located. All moneys received under the provisions of this Act not otherwise

disposed of by this section shall be credited to miscellaneous receipts."

1
MINERAL LEASING REVENUES

SEC. 2. The amendment made by this Act shall be effective with respect to all

moneys received on and after the first day of the first month following the date of

enactment of this Act from sales, bonuses, royalties, and rentals under such Act

of February 25, 1920.

Hon. CLINTON P. ANDERSON,

Chairman, Committee on Interior and Insular Affairs,

U.S. Senate, Washington, D.C.

DEAR SENATOR ANDERSON: YOUT committee has requested a report on S. 898,

a bill to amend section 35 of the Mineral Leasing Act of 1920 with respect to the

disposition of the proceeds of sales, bonuses, royalties, and rentals under such

act.

We recommend that the bill not be enacted.

The bill would provide that 90 percent of the moneys received from leasing

the mineral rights in the public lands, including naval petroleum reserves, be

paid to the State within whose boundaries the leased lands are situated.

Section 35 of the Mineral Leasing Act of February 25, 1920, as amended (30

U.S.C. 191), provides for the disposition of all money received from royalties

and rentals from leases issued under that act. Under that section receipts are

divided three ways: 3734 percent being paid to the State within the boundaries

of which the leased lands or deposits are located, 524 percent to the reclamation

fund, and 10 percent to the Treasury of the United States as miscellaneous receipts. Each State is required to use its 37% percent of the receipts for the construction and maintenance of public roads or for the support of schools or other

public educational institutions. Receipts from leases in the State of Alaska are

treated similarly except that, instead of 5234 percent being assigned to the reclamation fund, 52% percent is paid to the State for disposition by its legislature as it

deems advisable. This 523 is in addition to the 37% noted above and thus the

State of Alaska receives 90 percent of the receipts from mineral leasing within its

borders. All receipts derived from mineral leasing within naval petroleum

reserves are deposited in the Treasury as miscellaneous receipts.

The Reclamation Act of June 17, 1902 (32 Stat. 388; 43 U.S.C. 371 et seq.),

which established reclamation of the arid and semiarid lands of the West as a

Federal activity, included, among its other provisions, one that financing of the

Federal undertaking should be accomplished through a special fund to be established within the Treasury of the United States, this fund to be known as the

reclamation fund. The fund was duly established and supported in the beginning

by proceeds from sales of public lands of the United States, pursuant to 43 U.S.C.

391. It was later augmented by a percentage of the income from oil and other

mineral leases on public lands of the United States and collections from the

projects.

Until 1910, the sale of public lands was the principal support of the reclamation

fund. Some $65 million of revenue from this source was received in the 10-year

period from 1901 to 1910, inclusive. Beginning in 1910, collections from the

completed reclamation projects became sufficiently large to provide an additional

source of income. Income from the leasing of public lands for oil began in 1921

and has been a prime source of revenue to the reclamation fund ever since, a total

of some $502,500,000 having been realized by June 30, 1961, including a single

transfer of $29,778,300 from naval petroleum revenue receipts in September 1938

pursuant to the act of May 9, 1938 (52 Stat. 291, 322). Potassium receipts were

small until the impact of World War II was felt, when the revenues increased,

exceeding a total of $23,300,000 by June 30, 1961.

The accretion to the reclamation fund for the fiscal year ending June 30, 1961,

derived from mineral leasing amounted to some $45,195,000. Mineral leasing

receipts under section 35 of the Mineral Leasing Act, supra, have been the source

of over 29 percent of the money ever put into the reclamation fund. These

receipts stem from oil and gas and potassium leasing. The transfer of proceeds

from mineral leasing on naval petroleum reserves accounts for an additional 1.74

percent of the total accretions to the reclamation fund.

Appropriations from the reclamation fund have increased in recent years,

reflecting the increase in accretions and collections. It has been the practice of

the Congress to appropriate from the reclamation fund each year sufficient funds

to meet the costs of the approved programs for general investigations, operation

U.S. DEPARTMENT OF THE INTERIOR,

OFFICE OF THE SECRETARY,

Washington, D.C., May 10, 1962.
MINERAL LEASING REVENUES 3

and maintenance, general administrative expenses, and the emergency fund

except for certain items allocated to the Colorado River Dam fund or to the

general fund. After providing for these appropriations, the approximate balance

in the reclamation fund on June 30, prior to the fiscal year of appropriation, is

applied to the "Construction and rehabilitation" appropriation. The difference

between the amount available in the reclamation fund and total appropriated

for construction and rehabilitation is derived from the general fund. The

Colorado River storage project receives a separate appropriation for advance

planning and construction derived entirely from the general fund of the Treasury.

We are unaware of any sound justification for the contemplated donation of

Federal funds to the States. The Federal Government owns the mineral estate

and essentially is in the same position as any other landowner. The proceeds,

with which the bill is concered, are now being earmarked and utilized for a vital

conservation program—reclamation activities. In the unlikely event that the

Congress should decide that there is no longer any need for reclamation activities,

there are other conservation programs, e.g., parks, wildlife refuges, which should

be considered before any such donation is made to the States. Any grant of funds

to the States should be on the basis of some program—the funds in issue are now

being devoted to an excellent conservation program.

The reclamation States have derived widespread pecuniary benefits from

reclamation activities. It is noteworthy that reclamation activities have had a

highly favorable impact particularly on the reclamation West and thus have

broadened the tax base of the reclamation States. Seven million acres are irrigated

with water from reclamation reservoir and canals. About 200 municipalities or

other nonfarm entities also use project water to the extent of 290 billion gallons

annually. Some 129,000 irrigators have established adequately watered farms,

providing a livelihood for not only their own families but also for a great number

of farm wage earners. From this type of economic base has sprung the prosperous

community development which characterizes the entire reclamation West. Now

1% million persons make their homes on lands irrigated from reclamation systems.

More than 8 million persons live and work in the cities and towns which draw

on reclamation projects for water supplies. Human existence would be virtually

precluded and industry could not operate without an assured source of water.

The large reclamation reservoirs provide water recreation on a huge scale.

In 1959, the usage of these facilities amounted to nearly 23 million visitor-days.

The impoundment of water supplies has created hundreds of miles of new shoreline

and more than 1% million acres of water area. Business enterprises which cater to

the needs of persons seeking recreation in such areas reap a rich harvest. Thus

the overall beneficial economic impact of water resource developments in the

West considerably enchances the tax base of the States concerned.

We believ that the diminu on of mineral receipts going into the reclamation

fund would seriously impair, i not jeopardize, the reclamation program of this

Department. Although fun s from the General Treasury have been made

available for reclamation activ ties, nonetheless mineral leasing accretions provide

a substantial base of financing and no reason is apparent to us why the large

measure of support now founded upon these funds should be imposed on the

general funds of theeTreasury.

For the foregoing reasons, we strongly urge that S. 898 be not enacted.

The Bureau of the Budget has advised that there is no objection to the presentation of this report from the standpoint of the administration's program.

Sincerly yours,

JOHN M. KELLY,

Assistant Secretary of the Interior.

Hon. CLINTON P. ANDERSON,

Chairman, 

Committee on Interior and Insular Affairs,

U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: This is in response to your request for the views of the

Bureau of the Budget on S. 898, a bill to amend section 35 of the Mineral Leasing

Act of 1920 with respect to the disposition of the proceeds of sales, bonuses,

royalties, and rentals under such act.

The Mineral Leasing Act of 1920 provides for the disposition of revenue received

from royalties and rentals from leases issued under that act. Under its proEXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET,

Washington, D.C., May 8, 1962.
4 MINERAL LEASING REVENUES

visions, States share in this Federal revenue to the extent of 374 percent, with Alaska receiving 90 percent. S. 898 would provide that 90 percent of such

revenues be paid to the State within whose boundaries the leased lands are situated.

Such a major revision in the traditional sharing formula should be considered only in the event sharply defined and compelling reasons are presented to justify it. It is our view that an upward revision in the State's share of this revenue is not warranted at this time.

Accordingly, the Bureau of the Budget would not favor the enactment of S. 898 at this time.

Sincerely yours,

PHILLIP S. HUGHES,

Assistant Director for Legsilative Reference.

Senator BIBLE. Senator McGee, we will be happy to hear from you at this time.

STATEMENT OF HON. GALE W. McGEE, A U.S. SENATOR FROM THE

STATE OF WYOMING

Senator McGEE. I would suggest, Mr. Chairman, that this measure which Senator Hickey and I have introduced is a culmination of efforts. initiated many years back by one of our earlier distinguished col- leagues and a great Governor of Wyoming, Senator Lester Hunt, and it is an attempt to try to arrive once again at one of the changing facts of our time. That is in our State, where over half of our land is federally owned and a substantial segment of that which is not federally owned has the mineral rights controlled by the Federal

Government, we find that this severely restrains and restricts our

sources of State funds, and we are asking for a more liberal allocation of these funds back to the State so that the State may successfully

support its own programs without having to keep its hand out all the time, and unnecessarily so in many instances.

The Acting Governor of Wyoming, Jack Gage, had made a very vigorous presentation of this particular cause. The natural resources board, which is represented here, likewise has done a very excellent job on this. The schoolteachers of my State are deeply concerned.

We have little ceiling on our boarded capabilities for financing our own school operations and we are desperately seeking to expand the State's economic tax base, and toward that end we think that there is great merit in the suggestion that Senator Hickey and I have put here in S.

898.

Mr. Chairman, thank you very much for affording me the oppor- tunity to appear before your committee and testify in favor of S. 898, which has been introduced by Senator Hickey and myself.

I am certain that the members of this committee are familiar not only with the contents and effects of this bill but also are aware of the considerable background and history surrounding it. The dis- tinguished chairman of this committee, Senator Anderson, recalls,

I am sure, the appearance of the late Senator Lester Hunt of Wyoming

before this same committee during the 1st session of the 83d Congress in 1953 in support of his bill, S. 807, which sought an end similar

to that sought by our S. 898.

Senator Hunt's bill differed in that he proposed to transfer all of the mineral rights underlying Federal lands except forest reserves,

national parks, and other similar reservations, to the State; and

S. 898 simply proposes to return to the States 90 percent of all moneys

received from sales, bonuses, and rentals.
MINERAL LEASING REVENUES 5

This matter is of vital concern to the people of my State as well

as all other public land States. One can begin to appreciate the

significance when he realizes that in Wyoming, for instance, approximately one-half of the land is owned by the Federal Government.

Of this land, the Federal Government owns both surface and mineral

rights.

In addition to this, the Federal Government holds mineral rights

only on apprcodmately an additional 20 percent. This means that

the Federal Government, in fact, owns and controls the mineral rights

on approximately 70 percent of the lands in Wyoming. This ratio

of Federal ownership varies by States. A survey of the 11 Western

States shows that the Federal Government owns a high of 86.4 percent of the lands in Nevada and a low of 29.6 percent in the State of

Washington.

It is difficult to explain the philosophy behind the Federal Government's retention of this large and significant portion of the land area,

of the public land States. A brief look into American history indicates that States which were admitted to the United States were to be

admitted on a basis equal with the Original Thirteen States. In this

very important aspect, however, this equality has not been recognized.

The Original Thirteen Colonies retained all theirs upon admission to

the Union. In the western area, however, our States, including Wyoming, disclaimed title to the public lands within their boundaries upon

their admission as States.

It would appear that the enactment of S. 898 would be an important

step at this time to rectify the inequity which now exists in this area.

Under S. 898, as contrasted to Senator Hunt's bill, the Federal Government would, in fact, retain control of the minerals and retain full

control over their administration. To handle the costs of this administration, the Federal Government would retain 10 percent of the

royalties and other fees received. The remaining 90 percent would

be turned over to the State in whose boundaries this income arose.

Mr. Chairman, the people of my State are extremely interested in

securing passage of this bill. Governor Gage has devoted considerable time and attention in explaining this bill and its merits to Governors of the other States as well as to other public officials and private

citizens. Senator Hickey and I have cosponsored this bill.

Our natural resources board has gone on record endorsing this bill

and will furnish a witness to testify in support thereof later on during

these hearings. In addition to these, I have had considerable correspondence including letters from educators throughout the State

expressing their unqualified approval of and support for this measure.

In order to put Wyoming and the Other public land States on a

more equal basis with the others, I recommend to this committee the

enactment of S. 898.

Thank you again, Mr. Chairman and members of the committee.

Senator BIBLE. Thank you, Senator McGee.

Our next witness is Senator Hickey, a valued member of the Committee on Interior and Insular Affairs.

Senator HICKEY. I would like to introduce Mr. J. A. Buchanan,

who is the director of the Natural Resources Board for the State of

Wyoming. Mr. Buchanan has just recently had a throat operation

and I am sure he will have some requests that will cut down the

testimony required from him and I hope the chairman will grant it.

85790-62-2
6 MINERAL LEASING REVENUES

Senator BIBLE. We will certainly honor that and it can be understood, Mr. Buchanan, that your statement can be incorporated in full in the record at this point if you care to, just in your own interest.

and the interest of time, just highlight this full statement.

STATEMENT OF J. A. BUCHANAN, DIRECTOR, WYOMING

NATURAL RESOURCES BOARD •

Mr. BUCHANAN. Mr. Chairman and members of the subcommittee,

I would first like to express Governor Gage's regrets that he was

unable to appear before you with his statement in support of S. 898.

He has been very active in support of this bill, and he has asked that

I present the statement in his absence.

I am J. A. Buchanan, as the worthy Senator told you, executive

director of the natural resources board of the State agency responsible

for the development of Wyoming's resources, and a board of which

the Governor is an ex officio member. Both the Governor and the

natural resources board have their offices in Cheyenne.

The Governor's statement, is that embodied in the booklet, "Equality for the Western States—A Case for the Return of 90 Percent of

Mineral Royalties to the State of Origin." This booklet was prepared by the Wyoming Natural Resources Board, and I would at this

time like to read the text, with one slight correction, and request

that the tables on page 4 through 8 be entered in the record.

The people of the West are particularly conscious that the Federal

Government owns so large a part of the surface of their respective

States and often an even larger part of the mineral rights. The

inequity of the situation makes the proposal to return a larger share

of the receipts under the terms of the Minerals Leasing Act of 1920

important to the Western States. Such a proposal is embodied in

S. 898, introduced by Wyoming's Senators in the 1st session of the 87th

Congress in early 1961.

The original colonies retained all their lands, and other States, east

of the Rockies for the most part, were admitted on an equal footing

with the original States.

Treaties with France and Mexico made it clear that new Western

States would have equal status. But Wyoming, for example, disclaimed title to the public lands within the State at the time of admission to statehood, so that at present the U.S. Government owns the

surface and mineral rights of some 32 million acres and the mineral

rights to an additional 12 million acres, or 52 percent of the land area,

and 70 percent of the mineral land area in the State, respectively.

These facts are not given to support a claim for the turning over of

federally held land to the State, however desirable this may be.

What the West desires is equal treatment, and the first step toward this

goal for the Western States could be the return of mineral royalties

to the State of origin.

Two different philosophies may be identified which explain the

revenue-sharing plan now in use. These may be called the Federalcustodial-interest philosophy and the tax-equivalent-payment

philosophy.

Under the Federal-custodial-interest philosophy, the Federal

Government would hold and manage land for the benefit of the
MINERAL LEASING REVENUES 7

people of the State where the lands are located without any financial

return above the cost of stewardship.

A modification of this philosophy treats the people in a general

region not limited to the particular State where the Federal lands

are located as beneficiaries of the Federal landholdings. The Taylor

Grazing and Mineral Leasing Acts, for example, seem to reflect these

interpretations more than any other payment arrangement.

Then there are those who maintain that Federal lands are held for

the benefit of all the citizens of the entire country, a view which

challenges any revenue sharing with citizens of a particular region of

the country. Even when revenue sharing is endorsed as an appropriate payment arrangement there is a diversity of opinion as to the

proper percentage allocation to States and/or local governments.

The present allocation of 37Y, percent of Federal mineral royalties

to the States is adequate to replace whatever receipts the States

would derive from taxation of the Federal mineral lands if they were

privately owned. But this is an ex facto rationalization, as the

legislative history of the Federal decision establishing that percentage

indicates that the decision resulted from compromise and is rather

arbitrary.

The fact that Congress decided to return to the States via the

reclamation fund an added 52 percent of the income receipts from

mineral lands, reserving only 10 percent for administrative costs,

lends some credence to the claim that Congress has recognized the

custodial principle. Complete adoption of such a philosophy would

suggest the propriety of returning to each State all Federal receipts

from mineral lands within the State, minus Federal administration

costs. This is the philosophy behind S. 898.

The existing situation seems to be a modification of this philosophy,

in that the group of States receiving the benefit of the 52 -percent

contribution to the reclamation fund are generally the same States

containing the mineral lands. However, the individual States do

not share in the reclamation fund in direct proportion to contributions

to that fund from mineral lease royalties within the individual States.

This is clearly shown in table B, which is to be entered in the record.

The Minerals Leasing Act of 1920 was entitled as "An act to promote the mining of coal, phosphate, oil, oil shale, gas, and sodium on

the public domain." Under its terms, a royalty on mineral production

on federally owned land and other land on which the Federal Government has retained the mineral rights is paid to the Federal Government.

Table B shows the royalties paid by the States affected. It also

shows the redistribution of those receipts to the States (37% percent)

and to the reclamation fund (523/2 percent). In addition, it shows the

Bureau of Reclamation cost of plant, property, and equipment built

and in progress, and the relationship of the mineral royalty payments

as a percentage of the cost of those projects.

As shown in table B, 12.3 percent of the Bureau's cost of plant and

equipment has been financed by mineral royalties in the reclamation

fund. The remaining 87.7 percent is financed from the following

sources:

1. General appropriations from the Treasury.

2. Reclamation fund revolving revenues such as "repayments"

and "profits."
S MINERAL LEASING REVENUES

3. Other smaller sources.

It is evident that the reclamation program no longer depends upon

the mineral royalties.

When the reclamation fund was established in 1902, it was the only

means of financing Federal reclamation projects in the arid West.

After 1920, the accruals under the Minerals Leasing Act became an additional source of revenue to that fund.

Money appropriated out of the reclamation fund is, in general,

reimbursable to that fund. Repayments have, therefore, become an

important contributor to the growth of the fund.

Reclamation fund receipts from mineral royalties have not kept

pace with the needs and possibilities for reclamation, so that the

financing has become increasingly dependent upon money appropriated from the general fund of the Treasury. In short, the mineral

royalties are no longer as important in financing reclamation as they

were in the early years.

Reclamation projects can and do stand upon their own merits under

congressional appropriation methods. Approximately 90 percent of

project costs are reimbursable and will be added to the reclamation

fund when repaid from power and water revenues.

We are not against the reclamation fund—we only think the mineral

royalties are no longer essential to the solvency of either the reclamation fund or the reclamation program in the West.

In the meantime, if the Western States had the additional 52% percent in royalty revenues they could make direct and immediate use

of these funds derived from the production of mineral wealth on the

public lands within their respective borders. For example, part of

these revenues could be used to construct a system of State parks

adjoining the reservoirs created by reclamation dams. Table C shows

the additional funds which would have been available to the States

in 1960 under such a 90-percent plan.

We in Wyoming are not against reclamation. Far from it. It

can be shown that reclamation pays. Arguments that reclamation

contributes to the glut of farm commodities are for the most part

unsound. The contribution of reclamation to the West cannot be

measured in dollars and cents. But the individual States, with their

individual problems, know best the projects in the future which will

have to be built, but which will be too small for Bureau of Reclamation

consideration. To finance these projects, in addition to those outlined in table A, the States will have to have the funds. The problem

of the future for the Western States is getting money for small water

projects and other similar projects. It is necessary that we all unite

for the fullest development of the West.

Senator BIBLE. Thank you, Mr. Buchanan.

Senator ANDERSON. I was just going to ask this question. The bill

would provide a substantial sum of money to a number of the Western

States, wouldn't it?

Mr. BUCHANAN. Yes, sir.

Senator ANDERSON. Principally Wyoming and New Mexico?

Mr. BUCHANAN. Well, we hope it will help both of us and the rest

of the States. We are very neighborly in helping them out with our

money.

Senator ANDERSON. Actually in the State of Texas, for example, if

Texas owned this real estate would they not get the revenues from it?
MINERAL LEASING REVENUES 9

Mr. BUCHANAN. But there are no Federal lands in Texas that I

know of.

Senator ANDERSON. I thought there were some so-called "tidelands" in Texas.

Mr. BUCHANAN. That was one of the things that we tried to get through once before.

Senator ANDERSON. Doesn't the State of Texas now obtain a sub- stantial amount of money from these submerged lands beyond the line of mean low tide—lands that the Supreme Court of the United States held to be under what it called the "dorninium" and the "im- perium" of the Government of the United States, rather than the State. Did we not once before try to get merely the same treatment for our States that Texas was given?

Mr. BUCHANAN. That is right. The gentleman from New Mexico will remember our board president coming in at that time when Price Daniel, who is now their Governor, was Senator from Texas, and he asked Senator Daniel to incorporate this in his bill and Senator Daniel said, "No. We will get a separate bill through for you." But the next year he was back in Texas. He wasn't with us any more here. Senator ANDERSON. I am sure we both remember that fact because

we were both ambitious at that time.

Senator BIBLE. Do we have any further questions of Mr. Buchanan? Mr. Buchanan, thank you very much.

(The tables presented by Mr. Buchanan are as follows:)
TABLE A.-Federal mineral royalties received by Wyoming I

Calendar year

Total to

Wyoming

()1

For schools

(2)

Common

school

permanent

fund

()3

University

building

improve- ment

(4)

1921 $748, 446 $374, 223 $74, 845

1922 1, 743, 875 871, 938 174, 388

1923 2, 424, 482 1, 210, 304 230, 780

1924 4,223, 299 2, 000, 000 $111, 649 360,000

1925 2,980, 537 1, 490, 268 268, 248

1926 2, 584, 107 1, 292, 054 232, 570

1927 1,911, 890 955, 945 172, 070

1928 1, 102, 484 551, 242 99, 224

1929 996,591 498,296 89,693

1930 1, 227, 926 613,963 110,513

1931 813,474 406, 737 20,000 73, 213

1932 537,862 268,931 48,408

1933 453, 560 226. 780 40, 820

1934 425,517 212,758 38,297

1935 521, 663 260,831 46,950

1936 490, 426 245, 213 44, 138

1937 513,693 257,847 46,412

1938 683, 503 341,752 61, 515

1939 643,237 321,619 57,891

1940 653, 289 326, 644 58, 796

1941 778, 819 389, 410 70,094

1942 1, 003, 089 501, 545 90.278

1943 872,022 436,011 78,482

1944 1, 675, 614 837,807 150,805

1945 1, 438, 805 719,402 129,492

1946 1,251, 928 625, 964 112,674

1947 1,860, 532 930,266 167, 448

1948 3, 388, 536 1, 694, 268 304,968

1949 4,047, 542 2. 000, 000 23, 771 360, 000

1950 3,300, 536 1, 650, 268 297, 048

1951 4,866, 721 2,000, 000 433,360 360, 000

1952 5, 469,342 2, 000, 000 734, 671 360,000

1953 5, 726,097 2, 000, 000 863, 048 360,000

1954 7, 302, 940 2, 000, 000 1,651, 470 360,000

1955 8, 396, 916 4, 198, 458 360,000

1956 9, 357, 725 4, 678, 863 360,000

1957 11, 109, 738 5, 554, 869 360, 000

1958 11, 694, 956 5,847, 478 360,000

1959 12,075, 688 6, 037, 844 360,000

1960 12, 651, 566 6,325, 783 360,000

1961 13, 431, 374 6, 715, 687 360,000

Total 147, 382, 344 69, 871, 265 3, 817, 970 8, 050, 060

University

permanent

fund

(5)

University

excess

royalty

fund

(6)

Highway

commission

(7)

Highway

permanent

maintenance

fund

(8)

IIighway

commission

for counties

(9)

Counties fo

roads

(10)

$269,440 $14,969 $14,968

627, 795 34, 878 34, 878

856, 264 63, 567 63, 567

$20, 097 1, 400, 000 $78, 155 126,699 126,698

1, 043, 188 89,416 89,411

904, 437 77, 523 77, 523

669, 161 57, 357 57, 357

385, 869 33, 075 33, 071

348,807 29,898 29,898

429, 774 36, 838 36, 838

264,716 24,404 24,404

188, 252 16, 136 16, 136

158, 746 13, 607 13, 607

148, 931 12, 766 12, 766

182, 582 15, 650 15, 651

171,649 14, 713 14, 712

180,493 15,471 15,471

239, 226 20, 505 20, 501

225, 133 19, 297 19, 297

228, 651 19, 599 19, 59c

272, 587 23,365 23,361

351,081 30,093 30,091

305, 208 26, 161 26, 161

586, 465 50, 268 50,268

503, 582 43, 164 43, 164

438, 175 37,558 37, 558

651,186 55,816 55,811

1, 185, 988 101,656 101,651

4,279 1, 400, 000 16,640 121, 426 121,426

1, 155, 188 99,016 99,011

78,005 1, 400, 000 303,352 146,002 146.002

132,241 1, 400, 000 514,270 164,080 164,086

$155, 349 1, 400, 000 604, 134 171,783 171,783

297,265 1, 400, 000 1, 156,029 219,088 219,088

395, 722 2,938, 921 251, 907 251,907

482, 195 3, 275, 204 280, 732 280, 732

639, 876 3, 888, 408 333, 292 333, 292

692,546 4, 093, 234 350,849 350,849

726,812 4, 226, 491 362, 271 362,371

778, 641 4, 428, 048 379, 547 379, 547

848,824 4, 700, 981 402,941 402,941

234. 621 5, 017, 230 48,943, 860 2,672, 579 4, 387, 380 4,387, 380

1 Calendar year production but funds received on fiscal year basis.

NOTE.-Figures may not add due to rounding.

Source: State treasurer's office, Cheyenne, Wyo.

MINERAL LEASING REVENUES 
Alabama 

Alaska 

Arizona 

Arkansas 

California 

Colorado 

Florida 

Idaho 

Illinois 

Indiana 

Iowa 

Kansas 

Louisiana 

Michigan 

Minnesota 

Mississippi 

Montana 

Nebraska 

Nevada 

New Mexico 

North Dakota 

Oklahoma 

Oregon 

South Dakota 

Texas 

Utah _ 

Washington 

Wyoming 

Nonproject property 

Total 

TABLE B.-Mineral Leasing Act receipts and allocations

Total, fiscal

1960

Total, 1920

through

fiscal 1960

37

/12percent to States 52

/12percent to

reclamation fund State,

percent of

reclamation,

total

Bureau of

Reclamation,

cost of plant,

property, and

equipment

Percent

Mineral

royalties

to fund as

percent of

cost of

Fiscal 1960 1920-60 Fiscal 1960 1920-60 built and in projects

progress

$2,156 $245,553 $808 $92,082 $1,073 $216,397 0.05 

3, 064, 989 14, 4129, 525 2, 787, 939 12, 137, 063 $32, 863, 181 0. 9 

676, 157 3, 001. 237 253, 559 1, 125,266 269, 536 1,339, 527 . 3 347, 257, 541 10,0 0.4 61,878 253, 183 23,204 94,944 38, 507 110,923 .03 

6, 498,875 164, 602, 262 2, 755,388 62, 380, 982 3, 475, 883 82, 177, 956 19. 1 880, 143,000 25. 3 9. 3 9, 154,007 104, 387, 078 3, 432, 990 39, 149,406 5, 170,360 52,300, 523 12. 2 215, 660, 752 6.2 24. 3 364 6,470 57 2,347 17 3,222 

237, 203 2,866, 566 88, 951 1, 074, 955 122, 197 1, 458, 563 .3 174, 336, 158 5.0 .8

142 113 75 

160 84 84 

3, 397, 963 .1 322,317 1, 659, 508 120,869 622,310 145,717 773,224 .2 69, 098, 784 2.0 1.1 257,557 2, 670, 512 96,664 1, 001, 359 192,238 1, 381, 543 .3

1,588 65,953 596 24, 734 1,218 34,030 

10, 431, 631 .3 6,467 60, Ill 2,425 22, 541 3, 213 29,961 

4, 586, 482 39, 733, 777 1,761. 994 14, 975, 419 2, 480, 394 19,605, 126 4. 6 220, 530, 626 6.3 8. 9

17, 695 186,238 6,636 69, 840 8,317 90, 597 .02 112, 077, 085 3. 2 . 08

427, 739 8, 050, 975 160,402 3,019, 115 188, 113 4, 114, 175 1.0 106, 098, 920 3.0 3. 9 17,603, 124 131, 505, 577 7, 774, 844 60, 562, 134 7, 475, 267 62, 497, 906 14. 5 96, 885,361 2. 8 64. 5 220,316 2,539, 783 82,618 952, 798 108,966 1, 269,692 .3 52, 380, 004 1. 5 2.4

100, 646 745, 021 48, 742 323, 780 36,353 353, 420 .08 31, 398, 021 . 9 1. 1

144, 708 797, 814 54, 266 299, 501 22,203 356,828 .08 77, 304, 199 2. 2 . 5 272,010 2, 194,340 102,004 822, 263 108, 730 1, 077, 212 .3 84, 682, 361 2. 4 1.3

32, 949, 226 .9 

7, 268, 335 49, 292, 959 2, 729, 621 18, 490, 891 3, 626, 597 23, 724, 165 5. 5 112, 286,301 3. 2 21. 1

1,447 185,034 500 66,099 658 96,759 .02 600, 305, 828 17.2 .02 33, 165,394 353, 821, 140 12, 437.023 132, 121, 693 16, 906, 881 176, 775, 622 41. 1 221, 901,973 6. 4 79. 7

1, 554, 223 

84,091, 454 883,300, 918 34, 722, 100 349, 431, 635 40,382, 520 429, 787, 530 100. 0 3, 483, 543, 138 100.0 12. 3

Sources: Tables 120 and 126, 1960 Statistical Appendix to Annual Report of the Director, Bureau of Land Management; pp. 20 and 57-8, Report of the Commissioner of the Bureau of Reclamation, 1960.
12 MINERAL LEASING REVENUES

TABLE C.-Mineral royalty distribution to Western States under present situation

and under 90-percent proposal

Western State

(1)

Present situation 1 Linder 90-percent return proposal 2

Total

royalties,

fiscal 1960

(2)

Alaska 

Arizona 

California 

Colorado. 

Idaho 

Montana 

Nevada 

New Mexico 

Oregon 

Utah 

Washington 

Wyoming 

$3, 064,989

676, 157

6, 498, 875

9, 154, 007

237,203

4, 586, 482

427, 739

17, 603, 124

144, 708

7, 268, 335

1,477

33, 165,394

37/12percent

to States

(3)

52/12percent

to reclamation fund

(4)

10 percent

to Treasury

(5)

90 percent

to States

(6)

Increase to

State (col.

6-col. 3)

(7)

$2, 787,939 $306,499 $2, 787, 939 

253, 559 $269, 536 67, 616 608,541 $354, 982

2, 755,388 3, 475, 883 649,888 5, 848, 987 3,093, 599

3, 432, 990 5, 170,360 915, 401 8, 238, 606 4, 805, 616

88,951 122, 197 23,720 213,483 124, 532

1, 761, 994 2, 480,394 458,648 4, 127, 834 2,365, 840

160, 402 118, 131 42, 774 384, 965 224, 563

7, 774,844 7, 475, 267 1, 760, 312 15, 842, 812 8, 067, 968

54, 266 22,203 14, 471 130,237 75, 971

2, 729, 621 3, 626, 597 726,834 6, 541, 501 3, 811, 880

500 658 148 1,329 829

12, 437,023 16, 906, 881 3,316, 539 29, 848, 855 17, 411,832

1 Not shown is 10 percent to U.S. Treasury.

2 Based on 1960 figures in col. 2.

NOTE.-Hawaii has no public lands and is therefore not affected.

Source: Table B.

TABLE D.-Federal ownership of lands in Western States, June 30, 1959 1

Washington

California

Oregon 

Arizona 

Idaho 

Nevada 

Utah 

Colorado_

Montana..

New Mexico

Wyoming_

State Percent federally ownedFederal

lands

Total land

area

Acres Acres

. 29. 6 12, 660,034 42, 743,040

44. 9 45,070, 899 100, 313, 600

51.2 31, 579, 997 61, 641, 600

44. 6 32, 395, 612 72, 688,000

64. 2 34,049, 968 52, 972, 160

86. 4 60, 726, 336 70, 264,960

69. 1 36, 465, 676 52,701, 440

36. 3 24. 156,024 66, 510,080

29. 7 27,814, 747 93, 361, 920

35. 1 27,299, 889 77, 767,040

48.4 30, 218, 916 62, 403, 840

RANK BY PERCENT OF LAND AREA

Percent Percent

1. Nevada 86. 4 7. Arizona 44. 6

2. Utah 69. 1 8. Colorado 36.3

3. Idaho 64.2 9. New Mexico 35.1

4. Oregon 51.2 10. Montana 29. 7

5. Wyoming 48. 4 11. Washington 29. 6

6. California 44. 9

1 Excludes Indian or trust lands.

Source: Statistical Appendix to the Annual Report of the Director, Bureau of Land Management, 1960

Senator BIBLE. Would you like to proceed with the Department

witnesses, Senator Hickey?

Senator HICKEY. I think we have Mr. Roberts, who is a pro witness,

and I think the departmental witnesses will raise some questions for

you now.

Senator BIBLE. The reports would seem to indicate that.

Senator HICKEY. I put the strongest case in first.

Senator BIBLE. We will next hear from Mr. Roberts from Casper,

Wyo., representing Wyoming Oil Industries Association. Do you

have a prepared statement, Mr. Roberts?

Mr. ROBERTS. Yes, sir.

Senator BIBLE. You may proceed.
MINERAL LEASING REVENUES 13

STATEMENT OF A. W. ROBERTS, EXECUTIVE VICE PRESIDENT,

WYOMING OIL INDUSTRY COMMITTEE

Mr. ROBERTS. My name is A. W. Roberts, and I appear here today

as executive vice president of Wyoming Oil Industry Committee

which has a membership of 275 Wyoming oilmen representing all

divisions of the oil industry including exploration, production, transportation, refining, and marketing.

I am here to speak in favor of Senate bill 898 as introduced by

Senator J. J. Hickey for himself and Senator McGee.

First, I would like to state that neither the oil industry itself nor

the organization I represent, stand in any way to benefit from adoption

of this bill to any greater degree than any and every other citizen and

taxpayer in our State or in the other States in which such public

lands exist.

Our interest in this matter stems from our firm belief that all States

of the United States are entitled to fair and equal treatment from our

National Government. The Wyoming Oil Industry Committee believes that Wyoming and the other public land States are not at

present receiving such fair and equal treatment and that we cannot

and will not receive such fair and equal treatment until this bill

is adopted.

In the interest of doing all things within our power to secure fair

and equal treatment for our State and its citizens, and the other

public land States and their citizens, and since the oil industry is the

principal instrument involved in the production of the mineral wealth

involved, we as an organization adopted by unanimous vote on June 23,

1960, a resolution urging action by the Congress of the United States

to accomplish the results which will be obtained by adoption of S. 898.

I am here to reemphasize and reaffirm the position of our organization

on this subject.

We believe that the pattern was clearly set at the time the Thirteen

Colonies were combined to form the first 13 States of the United

States, for the States to receive ownership to the lands and resources

contained within its boundaries. This pattern was reaffirmed again

and again as other States were formed and made a part of the United

States.

As a point that we believe adds even more emphasis to the fact

that the States were considered to be entitled to the benefits of ownership of the land and resources within its boundaries, those States

having shoreline as part of its border were granted ownership of

minerals even beyond their actual surface ownership, as Senator

Anderson brought out a few moments ago.

The contrast between this clearly established pattern and the

treatment of the public land States such as Wyoming where 48 percent

of the surface and 70 percent of the mineral resources is even now

under Federal ownership, emphasizes the inequity that exists.

An additional, and to us a very important point, that supplies more

weight and emphasis to further establish the intent of Congress concerning ownership of resources within its boundaries, is to be found

in the treatment accorded the State of Alaska which was granted the

return of 90 percent of its mineral royalties on becoming a part of the

United States.

85790-62 3
14 MINERAL LEASING REVENUES

We fully realize and appreciate the fact that much of the royalty

income from minerals retained by the U.S. Bureau of Reclamation

has been used to the benefit of public land States as well as nonpublic

land States. We can, by stretching a little, see that in the past there

might have been justification for the retention of these funds for such

purposes.

In view of the present status of reclamation projects, and especially

since many, if not most, of such projects are assumed to be selfliquidating, it is difficult for us even by stretching, to find justification for continuing under this same distribution of funds.

Wyoming is a comparatively young State and it is only now beginning to develop. It has a tremendous potential and we are sure it

will provide its share of the space needed to absorb the population

explosion in our country as it is presently supply food and clothing

from its agriculture and energy supplies from its resources, oil, coal,

and uranium.

We have provided well for the present citizens of our State in terms

of schools and highways and other necessities. We are currently

spending an average of $454 per year per pupil to educate our children—one of the highest such costs in the United States.

We are rapidly completing our Interstate Highways and providing

State primary and secondary as well as a system of farm to market

roads.

We are proud of the fact that we have done as much as we have

even without the funds from mineral royalties which are under discussion here and which we so strongly feel rightfully belong to our

State.

We are faced with a rapid growth in population and development

in the near future—even greater growth and development than our

sister States because of the fact that we are a young State where

there is room for such growth and development.

We realize that we are woefully lacking in transportation facilities

to take care of the growth and development we are sure will occur.

With this growth and development will come the need for additional

educational facilities. While we have operated our State efficiently

and effectively even lacking the funds the return of these royalties

would provide and without the benefit from taxes on almost half of

our surface area we do not feel that the citizens of our State should be

called upon for the additional sacrifices to provide the facilities needed

in the future without the benefit of these funds.

We respectfully request the favorable consideration by this committee of this bill, S. 898, which will restore to the State of Nklyoming

and the other public land States the income to which it is rightfully

entitled and which was intended to inure to the benefits of the States

throughout the entire history of our Nation. We request that this

committee set the wheels in motion that will provide equal treatment

for Wyoming and the other public land States with that granted to

other States.

Senator BIBLE. Thank you, Mr. Roberts.

Mr. Chairman?

Senator ANDERSON. Would you go farther? We were talking

about coal this morning. Would you give 90 percent of revenues

from the coal on the Federal lands to the States as well?
MINERAL LEASING REVENUES 15

Mr. ROBERTS. I feel that 90 percent of the royalties from these

developments should be returned to the States, whether it be oil,

coal, or the various other deposits.

Senator ANDERSON. You mean it is needed?

Mr. ROBERTS. Yes, sir; very definitely.

Senator ANDERSON. This looks to be a good morning for New

Mexico. I think I should stop right there.

Senator BIBLE. The Senator from Utah?

Senator Moss. No questions.

Senator BIBLE. Senator Long.

Senator LONG. No questions.

Senator BIBLE. Senator Metcalf?

Senator METCALF. Would you go so far as to say 90 percent of all

income from natural resources on the public lands should go to the

States?

Mr. ROBERTS. No, sir; I think it has been traditional that since

the Federal Government collects these funds that 10 percent be

retained for the administration costs and for collection and distribution

of the funds.

Senator METCALF. And 90 percent of the income from our timberlands, for instance, should go to the State?

Mr. ROBERTS. This is a little bit different picture in that this is not

royalty payments. This is payment for, as I understand it, the

timber itself, rather than a payment of royalty from the development

of the resources.

Senator ANDERSON. I think you are right there. Timber is a

staple, recurring crop. We can harvest timber again and again, but

once all the mineral resource is gone it is gone forever. I think the

theory has always been in timber you are paying a share of the tax

that would normally have been received for this item from private

ownership.

MT. ROBERTS. Yes, sir.

S3nator ANDERSON. I know several times when we had the question

of 0. & C. lands in the West and so forth that the basis upon which

this allocation is made is by way of being in lieu of taxes.

Mr. ROBERTS. Yes, sir.

Senator ANDERSON. And not a question of the extinguishment of a

resource that will not be replaced. This is a renewable resource.

Mr. ROBERTS. Yes, sir.

Senator ANDERSON. Would Senator Hickey's bill effect any change

in the disposition of revenues from, say, Teapot Dome? His bill

would take the resources from the naval reserves and give them to

the State as well. Heretofore they have been covered directly into

the Federal Treasury.

Mr. ROBERTS. I am not completely familiar with that phase of it.

Senator ANDERSON. I can be very badly wrong, but I think the

revenue from oil in the naval reserves goes to the Treasury without the

payment of these royalties.

Mr. ROBERTS. I believe that is correct.

Senator ANDERSON. It is a question of whether such payments

ought to be continued in case the bill is passed or whether they should

take those for the States also. You are on a little different ground

with the naval reserve, are you not?
16 MINERAL LEASING REVENUES

Mr. ROBERTS. Yes, I believe so. It would seem to me that this is a

different type of development than we are concerned with in this

particular instance. However, I would defer to Senator Hickey on

this. I believe that he probably has a great deal more information

on this particular thing than I do.

Senator ANDERSON. You would at least agree that we might take

a careful look at that as we were passing on the bill.

Mr. ROBERTS. Yes, sir.

Senator ANDERSON. The counsel of the committee, Stewart French,

just handed me title 30, section 191 of the United States Code, which

talks about the disposition of money received from these naval reserves and provides that they shall be deposited as miscellaneous receipts in the Treasury. I don't think any State gets any portion of

the mineral reserve.

MT. ROBERTS. Not to my knowledge.

Senator BIBLE. Senator Metcalf, did you have further questions?

Senator METCALF. That is all for now.

Senator BIBLE. Senator Long?

Senator LONG. Mr. Roberts used Alaska with its special treatment,

it is true, of 90 percent of its mineral royalties.

Mr. ROBERTS. Yes, sir.

Senator LONG. Wouldn't you agree, however, that Alaska is a very

special case as compared with the other 49 or with any one of the

States and should not be used as an argument for treatment accorded

the other 49?

Mr. ROBERTS. I am afraid I couldn't agree wholeheartedly with

that viewpoint, Senator.

Senator ANDERSON. I am glad you didn't, Mr. Roberts, because

some of us were very happy to be generous with Alaska in the hope

that same generous treatment might someday come to Wyoming

and New Mexico.

Mr. ROBERTS. That is the reason for bringing this out. I feel that

the public land States as such, in which large areas and particularly

large portions of the mineral royalties are owned by the Federal Government, should have this 90 percent return in lieu of the loss of tax

revenues and various other things that would otherwise accrue to

them.

Senator LONG. I should be very pleased to have some special consideration given to those States where such a high percentage of the

land is controlled by the Federal Government. Unfortunately, however, the State of Hawaii doesn't have any minerals.

Mr. ROBERTS. None that are developed so far, Senator. Perhaps

this is in the future.

Senator ANDERSON. May I just say there, Mr. Roberts, that you

can't tell what the good Lord will finally permit them to have. There

were many people that were very interested in the fact that there was

and never would be any oil in Arizona, but you are not unmindful of

what has happened in that Four Corners area, and these wells are

very interesting and Arizona in time might be quite an area.

One of the Indian reservations was for a while one of the most hotly

sought after parcels of ground in the United States. There is a certain oil man who still believes that the land owned by one of these

Indian tribes in Arizona, if he could lease it on what he regards as a

reasonable basis, because it is highly speculative, would probably bring
MINERAL LEASING REVENUES 17

in as much oil as any area in the country; so Hawaii may eventually

come.

When we were talking about making a State out of Hawaii the

Question of the island of Palmyra got into it, as the Senator from

Hawaii will remember, and some of us objected to the inclusion of

Palmyra in the boundaries of the State because that might have made

everything between Palmyra and the other islands "tidelands" and

subject to the State.

Mr. ROBERTS. Yes, sir. I might call attention to the fact that in

Nebraska back in the early 1930's the State was very anxious for oil

development and put up a bonus for the first oil to be produced

in the State and Nebraska had been drilled rather extensively

without finding any oil, and, of course, as you know now, Nebraska is

a fairly large production State. It is not one of the top 10, but it is

certainly a substantial producer of oil, so there is a lot of hope for

Hawaii and other States yet.

Senator ANDERSON. I don't want to take up all the chairman's

time, but there is a foundation in Texas that was set up by a cattleman so that his cows and his cow herd that he loved would always

have a place to stay-7,300 acres was the only part of his ranch that

was definitely not included in any oil development, and he permitted

himself to take a couple million dollars a year in oil revenues from the

area that was productive, but staked out this little 7,000-acre pasture

so that no matter how rich he got or his relatives got they would

never give up the cow business entirely and always have a few cows

and a few horses to ride and a few people to ride them, and he died

and left this worthless land, which he thought would produce a few

hundred dollars a year and pay enough to see that a cowboy looked

after these few head of cattle that were on it.

Then of course they drilled deeply and last year the royalty was

a little over three-quarters of a million dollars and the foundation

doesn't quite know what to do with the money. It will be a million

and a half dollars in a very few years.

Senator Long is going to live to see a great oil production, I am

sure, in his part of the world.

Senator LONG. I am more optimistic by the minute.

Senator BIBLE. Thank you, Mr. Roberts. We appreciate your

testimony a great deal.

Mr. ROBERTS. Thank you.

Senator BIBLE. Senator Hickey, did you desire to proceed next?

Senator HICKEY. I wonder if I may submit for the record a statement of the Wyoming Taxpayers Association.

Senator BIBLE. The statement of the Wyoming Taxpayers Association will be made a part of the record at this point.

Senator HICKEY. The statement of the Wyoming Wool Growers

Association.

Senator BIBLE. That likewise be made a part of the record at this

point.

Senator HICKEY. Statement of the president of the University of

Wyoming which relates to whatever things cannot be printed in the

record there just delete.

Senator BIBLE. The official statement will be made a part of the

record.
18 MINERAL LEASING REVENUES

Senator HICKEY. An expression of the Wyoming Mining Association.

Senator BIBLE. The telegram from the Wyoming Association will

be made a part of the record at this point.

Senator HICKEY. An expression of the Rocky Mountain Oil & Gas

Association.

Senator BIBLE. A wire from Robert B. Laughlin, executive vice

president of the Rocky Mountain Oil & Gas Association, will be made

a part of the record at this point.

(The statements and communications referred to follow:)

STATEMENT OF THE WYOMING TAXPAYERS ASSOCIATION, 1 DUANE W. RIGGERT,

EXECUTIVE DIRECTOR

The association has had a favorable position on the intent and purpose of this

legislation for nearly a dozen years now. The material to follow has been excerpted from the public statements and materials of the association during this

period of time.

When one reviews the manner in which each of the States became one of the

United States, the inequity of treatment of a number of States becomes clear,

especially the 11 Rocky Mountain and Pacific States. Federal retention of land

in these States and an even greater holding of minerals emphasizes this point.

The matter is further emphasized by the question of State ownership of the

marginal sea along the ocean and gulf coasts and the allocating to Alaska of

90 percent of the Federal mineral royalties rising within her borders.

A change in distribution would result in a lesser portion to the reclamation

fund. But the reclamationists claim that projects are self-liquidating. The few

desirable projects still proposed should recommend a revision of the distribution.

If the projects are largely self-liquidating, then the pouring of mineral royalty

money into the fund represents recovery of the project money twice.

More money will be returned to the reclamation fund by far than has been

invested in Wyoming by the Federel Government in plant property and equipment as reclamation projects according to current financing arrangements.

A Bureau of Reclamation official in April 1962 reported that the Bureau's

investment in Wyoming was "$227,342,677 or $22,882,677 more than the amount

paid into the reclamation fund from mineral royalties and land sales." Mr. John

N. Spencer, director of region 7 of the U.S. Bureau of Reclamation, Denver,

reported to the annual meeting in Cheyenne of the Tri-State Generation ik

Transmission Association that the total fund accumulation from Federal land

sources in Wyoming through June 30, 1961, was $204,460,000. Also reported was

the statement that Wyoming has contributed almost a third of the total

$679,407,991 paid into the reclamation fund.

These fund accumulations are the accretions from the sale of public lands and

proceeds from the Minerels Leasing Act of 1920, both through June 30, 1961.

But the USBR statement neglects to mention two very important points.

First, the vast majority of the cost of reclamation projects will presumably

be reimbursed through irrigation and power revenues. For example, current

Bureau reports show that the Kendrick project first authorized in 1935 and now

almost completed has a total project price tag of $31,573,289, has reimbursable

repayment assignments of $31,573,289, and has repaid $6,088,901 to the reclamation fund by June 30, 1961, in revenues, over and above interest and operation

and maintenance expenses, of which $6,005,753 came from power revenues.

The second point is that the benefits and use of some reclamation facilities

constructed in Wyoming are to a large degree downstream in another State.

For example, while over 50 percent of the cost of facilities of the North Platte

project show up in Wyoming, approximately 80 percent of the irrigable area

outlined for the project lies in Nebraska.

The main point is that the projects are assumed to be self-financing for the

most part and that payments of mineral royalties from Wyoming into the reclaI The Wyoming Taxpayers Association, organized in 1937, is a private nonpartisan, nonprofit organization.

Seeks economy and efficiency in government. Acts to offset pressure groups contriving added government

services for their own particular benefit. Provides assistance to State and local governmentpl officials

through the preparation of unbiased factual studies. Is composed of over 1,000 members from all counties

in Wyoming. Is the only agency in Wyoming, public or private, giving wide publicity to the financial

affairs of Federal, State, and local governments.
MINERAL LEASING REVENUES 19

mation fund simply increase the rotating source of money that can be used by

the Bureau to finance more power and irrigation projects, with the number of

economically feasible reclamation projects having been vastly reduced.

The figures making up the $227,342,677 figure invested in completed works,

construction in progress, and other physical property as of June 30, 1961, are

allocated within Wyoming per the following projects:

Eden $7,988,434

Kendrick 31, 112,369

Minidoka (Idaho) 2, 249,469

Missouri River Basin 121,930, 112

North Platte (Nebraska) 14,356,884

Palisades (Idaho) 841, 193

Riverton 24, 146,595

Seedskadee (Colorado River storage participating project) 2,040,595

Shoshone (Montana) 22,677,035

For those projects that have interstate connections and effect it is not possible

to state that a certain part of any particular receipts or matured repayment

contracts would apply specifically as repayment of project costs expended within

the borders of Wyoming. Therefore, it cannot be stated that Wyoming itself

has repaid such and such part of facilities built in Wyoming from these repayment

sources.

The works completed in Wyoming as of June 30, 1961, totaled $221,184,905.

Three major breakdowns of these works are provided in the Bureau's reports:

Irrigation works $70, 255, 775

Electric works 86, 782, 700

Multipurpose 64, 146, 430

In some projects the power sales are expected to pay for large portions of the

facilities costs chargeable to irrigation purposes. For example, for the Kendrick

project mentioned above, the current and ultimate repayment of reimbursable

capital costs to be repaid from water users, contributions, irrigation water rental

and service, and miscellaneous receipts is only $83,148. Power revenues of the

project are scheduled to return $16,753,869 as a reimbursable item and to take

on irrigation obligations of $14,281,876. Other obligations to be repayable by

power revenues under scheduled ultimate repayment during the payout period

are $8,789,912 for interest charges and $23,384,344 for operating expenses. Some

$11.1 million in power revenues had been used for these latter two purposes by

last June 30 for this project.

(NoTE.-The source of the figures used here regarding projects is the "Report

of the Commissioner of the Bureau of Reclamation, 1961, Statistical Appendix.")

According to the General Services Administration, the acreage of federally

owned lands totaled 408,553,398 acres as of June 30, 1958, in the first 48 States.

This includes 358,657,194 acres of public domain and 49,896,204 acres acquired

by other methods and does not include such trust areas as Indian reservations.

Included in the above public domain figure is about 169 million acres labeled

vacant public lands which are unappropriated and unreserved.

Alaska is 99.2 percent owned by the Federal Government with 362,670,638

acres of public domain and 2,776 acres acquired by other methods.

The predominant usage of federally owned land in the 48 States as of June 30,

1956, was as follows: Percent

federally

Predominant use: owned land

Agriculture 0. 1

Grazing 44. 5

Forests and wildlife 42. 0

Industrial .7

Storage .2

Housing, buildings, and institutional .2

Power development and distribution .5

Reclamation and irrigation 2.0

Flood control and navigation 1. 1

Parks and historic sites 3.8

Military (except airfields) 4.5

Airfields .5

Since World War II the problem of Federal versus State control of the marginal

sea area in the States bordering the oceans and the Gulf of Mexico has been
20 MINERAL LEASING REVENUES

widely discussed. The lands involved are those submerged lands lying between

the ordinary shoreline and from 3 miles to several times that distance seaward.

Minerals and States rights (and dollars) are the principal ingredients of the dis- cussions and actions regarding the submerged lands. While this involves claims

off the shorelines, S. 898 deals with minerals wholly within State boundaries.

When this matter of minerals and submerged lands was being considered by

Congress in 1953, other Western States were attempting to gain a greater share

of control over natural resources within their boundaries. The late Senator Hunt

of Wyoming appeared on February 27, 1953, before the Senate Interior and

Insular Affairs Committee, which was at that time holding hearings on the sub- merged lands oil question. Senator Butler, chairman of the committee, in a

letter to Senator Hunt stated:

"You must know that I am in sympathy with the basic purpose of your bill

to give the States a far greater share of control over natural resources within their boundaries.

"However, I am not at all sure that we should inject that issue into the already complicated submerged lands matter."

Chairman Butler prevailed.

A more recent development is the provision regarding Federal mineral royalties %ffecting Alaska when that State was admitted to the Union.

[In percent]

From Alaska From other

States

Federal mineral royalties go—

To the U.S. Treasury 

To the States in which the leased lands are located, the revenues to be

used for the benefit of public roads, public schools, or other public eduational institutions 

.the reclamation fund to be used in financing reclamation projects 

10

so

10.0

37. 5

52. 5

Federal mineral ownership acreage is greater than Federal land ownership in

a number of States. For example, in Wyoming, the Federal Government owns

some 48 percent of the surface but in addition owns the mineral rights on about

70 percent of the land area of the State. This latter high percentage comes about

by the Federal Government retaining such rights when divesting itself of land

and by insisting upon and obtaining the mineral rights on land which it acquires.

The Bureau of Land Management manages the mineral resources on about 58

million acres of lands in private ownership on which the Federal Government

owns the mineral rights.

The Mineral Leasing Act provides for a division of the proceeds without relation

to particular loss by the States. When the act was passed, undoubtedly it was

assumed there would be a somewhat equitable distribution to the respective

States comparable to their contributions to the fund. But this is not the case.

Ostensibly, the cost allocations of reclamation projects that are defined as

"reimbursable" will be repaid from the several activities of the projects as set up

under repayment contracts.

When a project is spoken of as having "paid out" or completed its repayment

contract, the Government presumably still retains ownership and the revenues.

At the same time, as these projects are being paid out, the mineral royalties

continue to accrue, allowing the reclamation fund in effect to be paid twice for

each project investment.

In the name of equity and commonsense, these Federal royalty moneys should

go to the States of origin to help offset the effect of so much tax-exempt Federal

land ownership rather than to help build additional presumably economically

feasible and self-financing tax-exempt holdings.

STATEMENT OF WYOMING WOOL GROWERS ASSOCIATION, DOUGLAS, WYO.

The Wyoming Wool Growers Association strongly urges passage of legislation

which will extend to other States, as it did to Alaska, a 90-percent share of mineral

royalties.

According to the latest Interior Department calculation, the Federal Government owns 48.4 percent of Wyoming's land area.

We very strongly feel that the retention of these lands in itself is an act of

discrimination, inasmuch as the same policy was not followed in the case of the
MINERAL LEASING REVENUES 21

older States. Failure to extend the treatment accorded Alaska to other public

land States heightens the discrimination, inasmuch as they are denied fair return

of revenues from resources developed within their areas.

Again according to the latest figures available, Wyoming received only $12.3

million of the $34.7 million in distributed royalties. Under the correct Alaska

formula, Wyoming would have received some $30 million.

We very strongly feel that Wyoming and the other Western States be given

equal treatment, and the first step toward this goal could be the return of mineral

royalties to the State of origin.

If the Federal Government is to maintain the injustice of denying the Western

States the use and revenues that might be derived from a large part of their land

areas, surely the distribution of receipts from public lands operations should be

dictated by the source of origin of these revenues.

May the Senate hearing committee give very thoughtful consideration, to the

90-percent mineral royalty return and recommend that very affirmative action be

taken to equalize the injustice that now exists.

STATEMENT OF DR. G. D. HUMPHREY, PRESIDENT OF THE UNIVERSITY OF

WYOMING

IMPORTANCE OF 90 PERCENT MINERAL ROYALTY RETURN TO HIGHER EDUCATION

IN WYOMING

Wyoming has two basic types of wealth to feed into the coffers of the Nation—

its land and its people. In the development of land resources there have been,

since the State was settled, two major activities—agriculture and the production

of mineral wealth.

There are two basic differences between these uses. One is the fact that, for

the most part, agriculture is a permanent industry. It is in a position to return

that which it takes from the soil and even to increase the productivity of the land.

The production of minerals, on the other hand, is extractive, and that industry is

not in a position to return any of the wealth it takes from the State.

The second difference is that agriculture is largely a domestically owned and

operated industry and the industry producing mineral wealth is largely owned

outside Wyoming. For the most part it is operated by Wyoming residents, but

over half of the value of minerals produced goes to pay for supplies, services, and

profits outside the State.

Now to consider the second of the State's resources—her people.

This State has an obligation to educate her younger citizens, even knowing that

a large proportion of them are being educated to work elsewhere in the United

States. On the basis of present knowledge of the State population, it is expected

that the fall enrollment at the university will increase from 4,344 this year to

9,870 by 1974. Enrollment at the junior colleges of the State appears to be following a somewhat similar trend.

If costs of instruction per student continue to rise also, the cost of educating

the young people who want to go on to college could, by 1980, be three times the

cost in 1958. This would not include any of the other services performed by

institutions of higher education in the State.

At the same time personal income, which is the basis for revenue for this

activity, can be expected almost to double. This means, of course, that there

will be a great demand on State revenues for purposes of higher education.

The first, most obvious, solution, of course, is to increase taxes. This is not

an easy thing to do in view of the fact that Wyoming people are already carrying

one of the heaviest tax burdens in the Nation (see accompanying map).

There is another possible solution to this problem. Referring again to the

chart we see that, if postwar trends are maintained, the amount of royalties

received by the Federal Government from minerals will increase at a much more

accelerated rate than will the income of the general population. In fact, by 1980

it should triple the 1958 level.

This, then, offers a very sensible solution to the dilemma of the 3-to-2 spread

between education costs and personal income. If the State were to receive 90

percent of these royalties, they could help very materially in sharing the burden

of increased costs of higher education.

It seems most appropriate that this resource, which is extractive—hence will

eventually disappear from our economy—should help bear the burden of educating

the youth of Wyoming. Only through education and knowledge can other

industries be developed to take the place of these when they are gone.
22

300

250

200

150

100

50

MINERAL LEASING REVENUES

TRENDS IN COST OF HIGHER EDUCATION,

PERSONAL INCOME, AND MINERAL ROYALTIES

1958-61 Actual 1962-1980 Projected

1958=100

1 1 1 1 1 I

Cost of Higher

Education

Government

Mineral

Royalties

Personal

Incna

1 1 1

1958 1960 1965 1970 1975

Source: Projections by Division of Business and Economic

Research based on past World War II Trends, and

School Enrollment Predictions of Committee on

Higher Education in Wyoming.

1980
PER CAPITA REVENUE FROM TAXES, STATE AND LOCAL GOVERNMENTS, 1959

"r ••.• •

c

f2.:5

117.;

01.6

•••,,•`14.1.41.4",

8169_

8174,

0187

....

3202

•!:)188

'

• • ....... - • •

8197

S7f, .8161

$2`1z

,

st.22

8125

81(19 1

'./

. , ' ‘

01 

(1

'2.2 : $111 f - •,•184 5 :1„_...„ . .- ._:

1 1•,;-4;,-„....;-,.... . 4i '\ .1. . '‘•

'--876

...\.,

:

•

Source: Statistical abstract of the United States, 1961.

United States, $184.

MINERAL LEASING REVENUES 

t•D

C.4
24 MINERAL LEASING REVENUES

Hon. J. J. HICKEY,

U.S. Senate, Washington, D.C.:

Wyoming Mining Association strongly favors S. 898 which would return 90 percent of mineral royalties from federally owned lands to the State of origin.

Our views are similar to those outlined by the Wyoming Taxpayers Association in its statement submitted to the Subcommittee on Public Lands for inclusion in the May 15 hearing. Please submit this telegram for the record.

WYOMING MINING ASSOCIATION,

R. W. BEAMER, Executive Secretary.

Hon. JOSEPH J. HICKEY,

U.S. Senate, Washington, D.C.:

The Rocky Mountain Oil & Gas Association endorses the passage of S. 898,

which is a bill to amend section 35 of the Mineral Leasing Act of 1920, with respect

to the disposition of the proceeds of sales, bonuses, royalties, and rentals under

such act. The wisdom of Congress in providing for the return of 90 percent of

the proceeds under the act in the case of Alaska, should, we believe, be applied

to the other public-land States. S. 898 would accomplish that.

ROBERT B. LAUGHLIN,

Executive Vice President,

Rocky Mountain Oil & Gas Association.

Senator HICKEY. I think the people from the Bureau of Reclamation of the Interior Department are now ready to testify.

Senator BIBLE. We will be very happy to hear from Mr. Landstrom

and Mr. Davis of the Department of the Interior.

STATEMENT OF KARL S. LANDSTROM, DIRECTOR; ACCOMPANIED

BY MAX CAPLAN, CHIEF, DIVISION OF MINERALS; MARK WELT,

CHIEF, DIVISION OF BUDGET AND FINANCE, BUREAU OF LAND

MANAGEMENT; AND BRUCE DAVIS, CHIEF, PROGRAM AND

FINANCE, BUREAU OF RECLAMATION, DEPARTMENT OF THE

INTERIOR

RIVERTON, WYO., May 12, 1962.

CASPER, WYO., May 14, 1962.

Mr. LANDSTROM. I am also accompanied by Max Caplan and Mark

Welt, Chief of the Division of Budget and Finance of the Bureau of

Land Management.

Mr. Chairman, there is a brief statement to accompany the

Department's report I would like to read, if you permit.

Senator BIBLE. You may proceed. The official report of the

Department has been made a part of the record heretofore.

Mr. LANDSTROM. This bill would provide that 90 percent of the

moneys received from leasing the mineral rights in the public lands,

including naval petroleum reserves, be paid to the State within whose

boundaries the leased lands are situated.

Section 35 of the Mineral Leasing Act of February 25, 1920, as

amended (30 U.S.C. sec. 191), provides for the disposition of all

money received from royalties and rentals from leasing issued under

the act. Under that section receipts are divided three ways: 374

percent being paid to the State within the boundaries of which the

leased lands or deposits are located, 52 percent to the reclamation

fund, and 10 percent to the Treasury of the United States as

miscellaneous receipts.

Each State is required to use its 37% percent of the receipts for the

construction and maintenance of public roads or for the support of

r
MINERAL LEASING REVENUES 25

schools or other public educational institutions. Receipts from leases

in the State of Alaska are treated similarly except that, instead of

52% percent being assigned to the reclamation fund, 52% percent is

paid to the State for disposition by its legislature as it deems advisable.

This 52% is in addition to the 37% noted above and thus the State

of Alaska receives 90 percent of the receipts from mineral leasing

within its borders. All receipts derived from mineral leasing within

naval petroleum reserves are deposited in the Treasury as miscellaneous receipts.

The Reclamation Act of June 17, 1902, established as a Federal

activity the reclamation of the arid and semiarid lands of the West

financed through a specially created fund known as the reclamation

fund supported by proceeds from the sales of public lands, and, upon

enactment of the 1920 Mineral Leasing Act, by the portion of the

income from mineral leasing.

The reclamation States have derived considerable pecuniary benefits

from the reclamation activities. The diminution or elimination of the

mineral receipts now credited to the reclamation fund would jeopardize

the reclamation program of the Department.

Although funds from the General Treasury have been made available for reclamation activities there appears to be no apparent reason

why the large measure of support of the reclamation fund by the

accretion from mineral leasing should be imposed upon the general

funds of the Treasury. In view thereof, the Department urges that

this bill not be enacted.

Senator ANDERSON. Then I take it it is purely because of loss of

revenue?

Mr. LANDSTROM. Yes, sir; it would be necessary for the reclamation fund to be very substantially supported out of the general funds

if this fund should not be made available, and the Department also

has pointed out in its statement that it knew of no reason, at this time

at least, for the additional distribution of this large amount to the

various States.

Senator ANDERSON. Is the reclamation fund made very much

larger? Has it been made very much larger by all these projects

that you have put in in the Western States, such as the ones in Washington, Oregon, Idaho, and so forth.

Mr. LANDSTROM. Yes, sir. For many years the reclamation fund

has not been adequate to finance the reclamation program so there

has been additional money appropriated.

Senator ANDERSON. That some day is going to be repaid, isn't it?

Mr. LANDSTROM. Many parts of it. Substantial parts will be paid;

yes, sir.

Senator ANDERSON. Most of it, isn't it?

Mr. LANDSTROM. I would think most of it would be repaid; yes, sir.

Senator ANDERSON. And when that is repaid will the reclamation

fund be pretty sizable?

Mr. LANDSTROM. Well, sir; I do not believe that it goes back into

•the reclamation fund. Mr. Davis could answer that.

Senator ANDERSON. Have you any figure to show what the reclamation fund will be when the current reclamation projects are fully

repaid to it?

MT.. LANDSTROM. May we ask Mr. Davis to comment?
26 MINERAL LEASING REVENUES

Senator BIBLE. Certainly. Mr. Davis, you may respond to the

Senator's question.

Mr. DAVIS. The reclamation fund is a special fund receiving, as

Mr. Landstrom reported, the receipts from certain Federal activities

and certain accretions, but these are reappropriated annually, sir, so

the fund itself does not grow. The procedure of the Appropriations

Committee has been to draw down from the reclamation fund each

year the total estimated amount of the accruals for the preceding year,

leaving only a small residue annually and as the new accretions come

in they are then reappropriated, running at the level of approximately

$120 million a year at the present.

You are very correct, sir, that that has increased from the early

years based on the additional revenues from these mineral leases and

from repayments and power revenues from the completed projects,

but the fund itself does not grow because of this annual drain on it

which practically cleans it out.

Senator ANDERSON. But the return to the reclamation fund 20 or

30 years ago from the repayment of projects was rather small; was it

not?

Mr. DAVIS. Yes, sir.

Senator ANDERSON. HOW small?

Mr. DAVIS. During the period, say, 1910-20, it ran on the average

of $7 to $10 million a year.

Senator ANDERSON. As repayment from reclamation alone.

Mr. DAVIS. No, sir; as total income to the fund.

Senator ANDERSON. Let's take repayment alone. How about repayment alone?

Mr. DAVIS. Under the heading of collections, which is construction

repayments, operation and maintenance repayments, power revenues,

and some very minor miscellaneous revenues, the amount collected

has grown from, in 1910, approximately $1% million to, in 1930, a

level of $6 million.

Senator ANDERSON. It is way above that. There was $50 million

last year from power revenue.

Senator BIBLE. He said 1930.

Mr. DAVIS. In 1950 it was up to $25 million and in 1960 it was $65

million.

Senator ANDERSON. And as the years go by it will increase steadily;

will it not?

Mr. DAVIS. Yes, sir.

Senator ANDERSON. Because you have had very large repayments

and very large power revenues.

Mr. DAVIS. Yes, sir.

Senator ANDERSON. Can you not see a time when those will be

sufficient to take care of the reclamation needs of the country? Are

we not running out of reclamation projects? The _good damsites

have been used up and projects are harder and harder and harder to

find.

Mr. LANDSTROM. If I may comment there, Senator, there are a lot

of good dryland reclamation projects that don't require water that

the Bureau of Land Management is very interested in, in restoring

and rehabilitating rangeland.

Senator ANDERSON. You are not going to irrigate rangeland?
MINERAL LEASING REVENUES 27

Mr. LANDSTROM. No, sir; it wouldn't be irrigation; moisture reseeding in various species of grasses.

Senator ANDERSON. All I am trying to say is there is money that

is going to come into the reclamation fund.

Mr. DAVIS. All I can say is in our long-range forecast in the foreseeable future, and this is in the area of 10 to 20 years, we do not

see the end of possible water developments for the West. They are

becoming more expensive. They have been going into multipurpose

and are basinwide in nature.

Senator ANDERSON. But the multipurpose ones pay back pretty

quickly, don't they, and when you get in lots of power revenues they

pay back pretty fast?

Mr. DAVIS. No, sir; because of the additional cost of these remaining jobs on the irrigation side the traditional repayment period of

40 to 50 years is still required to get the money back.

Senator ANDERSON. Well, the point is that if this reclamation

fund is going to be receiving a great deal of money from the payments,

then it doesn't need money from oil revenues. I would like to see

it depend upon itself to some degree if we are going to have these

tremendous revenues coming back from reclamation. It would seem

to me that we ought to do something else with oil royalties. Of

course, if we take all the Texas oil royalties and put them in the

reclamation fund we would be in pretty good shape in reclamation,

but their moneys are not charged. When this battle was on we tried

to get the same treatment for these States as the tidelands of Texas,

Louisiana, and California got and as the Alaska State itself got.

Can you think of a good reason, Mr. Landstrom, why Alaska should

get 90 percent?

Mr. LANDSTROM. I believe the reason given at the time, Senator,

as I am sure you recall also, was that Alaska was not a reclamation

State and did not have reclamation projects at the time.

Senator ANDERSON. I am not sure, because I was having something

to do with the handling of the bill and I seem to remember that a

Feat many more projects are coming along in Alaska that will rim

mto huge sums and are very feasible because they have tremendous

amounts of waterpower along with them.

Mr. LANDSTROM. IS it not true, however, that the State of Alaska

would require special legislation for each project, and would not come

in under the general 1902 act.

Mr. DAVIS. That is true and the revenues from the Alaska project

do not go to the reclamation fund. It is not a reclamation project.

Senator ANDERSON. We are having a hearing next week on a $45,

million project up there and I would be happy without Alaska reclamation but I don't know that Senator Gruening agrees with me.

Mr. DAVIS. The funds from the Eklutna project are returned to

the general fund of the Treasury.

Mr. LANDSTROM. I think you would agree that this provision has

been set as part of the general package affecting the statehood of

Alaska at the time and so on.

Senator ANDERSON. We were trying to develop Alaska just as Senator Hickey is trying to develop Wyoming, and New Mexico, and

other States, and based on that premise we all realize we could use

more money, but is there any other reason other than the fact that

the reclamation fund might want this money.
28 MINERAL LEASING REVENUES

Mr. LANDSTROM. Yes, sir. The Department points out in its report

that:

In the unlikely event that the Congress should decide that there is no longer

any need for reclamation activities, there are other conservation programs, for

example, parks, wildlife refuges, which should be considered before any such

donation is made to the States.

And it is now known that there is a request for legislation to establish a land acquisition fund for the special purpose of financing outdoor

recreation acquisition.

Senator ANDERSON. I know that. I realize that. They would like

to take the funds from these Western States and use them all across

the country, but we are not quite that generous. We like to have

our own money too. All right. I have no other questions.

Senator BIBLE. Senator Long?

Senator LONG. No questions.

Senator BIBLE. I have no further questions.

Mr. LANDSTROM. Thank you, Mr. Chairman.

Senator BIBLE. Now, Senator Hickey.

STATEMENT OF HON. J. J. HICKEY, A U.S. SENATOR FROM THE

STATE OF WYOMING

Senator HICKEY. Senator Bible, I will just submit the statement

that has been prepared on my behalf to the committee and make a

few comments.

Senator BIBLE. Your statement may be reported in full at this

point in the record.

(The statement referred to follows:)

STATEMENT OF HON. J. J. HICKEY, A U.S. SENATOR FROM THE STATE OF WYOMING

Mr. Chairman and members of the subcommittee; Speaking this morning in

support of S. 898, a bill to amend section 35 of the Mineral Leasing Act of 1920

with respect to the disposition of the proceeds of sales, bonuses, royalties, and

rentals under such act, I appear as a representative of a State which has provincial

status under this act. We in Congress are dedicated to equality of treatment

before the law, and yet in one very significant area we condone a serious inequality

sanctioned by law. I refer to the fact that the western public land States are

denied the right of authority over large areas within their borders.

A great deal of the wealth produced in these States derives from the natural

resources of the land itself. Ownership of much of this land has been retained

by the Federal Government and more than half the income from it, in the form

of sales, bonuses, royalties, and rentals, does not stay in the States to develop

their economies, but comes here to Washington to the reclamation fund. Under

the Mineral Leasing Act of 1920, the system of allocation of this income is as

follows: 373.4 percent to the State which produced it, 523.4 percent to the Federal

reclamation fund, and 10 percent for administration.

You will not find any condition even faintly comparable to this in the Eastern

States. They own their own land; the Federal Government could not take over

tracts of acreage in New York or Illinois, or Tennessee, nor could it expropriate

income earned from the land in any of these States, for they are sovereign States

in the true meaning of the word. We in the western public land States do not

enjoy that status.

It is the contention of my colleague, Senator McGee, and me, sponsors of S. 898,

and of the people of our State that the 523.4 percent presently allocated to the

reclamation fund should be retained by the State.

This seems an eminently equitable arrangement to me, since most of the great

reclamation projects of the West are reimbursable and the Government is now

being paid back the money it put into them through the reclamation program

inaugurated more than half 4 century ago. Today over half the costs of reclama-
MINERAL LEASING REVENUES 29

tion projects are financed directly from the Treasury, so it would seem logical

that the general fund completely finance such projects and, of course, receive the

reimbursements made by the users of these projects through the years. One

additional advantage to this procedure is that it would give Congress, and not a

Federal bureau, control over the reclamation program.

I really feel that Wyoming is entitled to the revenue earned in the State. With

the Federal Government owning 52 percent of our surface, as well as the mineral

rights to an additional 18 percent of the land, large sums of our wealth are drained

off to be used in other States.

Since the Mineral Leasing Act was enacted in 1920 Wyoming has contributed

to the reclamation fund $176,775,622, more than twice as much as the second

largest contributor, California, which has sent $82,177,965 to the fund. During

those years $221,901,973 has been spent on reclamation in Wyoming by the

Federal Government. On the other hand, California has benefited to the tune

of $880,143,000; Washington (which contributed $66,099 to the fund) has

had $600,305,828 spent there; and Arizona, which contributed $1,399,527, has

reclamation projects on which the fund has spent $347,257,541.

We realize, of course, that a small State like Wyoming is going to have a hard

time convincing those States which benefit so handsomely from our natural

resource wealth that money earned in Wyoming should be used in Wyoming.

But we are going to put up a fight for what we really feel is ours by right.

Thank you.

Senator HICKEY. I would like to call attention to the fact that the

State of New Mexico, who, like ourselves, is anxious to develop,

passed in their 25th legislature a resolution or joint memorial much

the same as the Wyoming State Legislature did which memorialized

the Congress of the United States to amend the Federal leasing act

to provide for the distribution of income from the leasing of Federal

land for oil, gas, and other minerals to all States wherein lands leased

are under an equal basis.

I would like to sustain what has heretofore been said with regard

to the equality that I think our Intermountain States are entitled to.

In comparison to the land east of the Mississippi River our Western

States have been left outside with the exception of Alaska and its 90

percent. We ask for the same kind of treatment. There are many

statistics in these reports, but the strange thing I found when I went

down and spent some time at the Department and looked at what the

situation was down there under the accuracy of their reclamation fund

which Senator Anderson spoke of was that there was a discrepancy of

about $500,000 in the Wyoming account alone.

It was based on the following historical facts: One, that the initial

funds put into the reclamation fund came from the sale of lands, the

sale of public lands. This was from 1902 to 1920. In 1920, of course,

with the leasing act and the bringing in of considerable minerals from

all of our Western States the fund began to grow and it grew tremendously, and I might say that this has been recognized, Senator

Long, by the National Education Association, because in 1950 these

were their recommendations.

They said, and I quote from the National Education Association,

"Status and Fiscal Significance of Federal Land in the 11 Western

States, 1950," pages 157-158:

A case might be made for a larger share of Federal mineral royalties on the

grounds that if these lands were State owned, as some people think they should

be, all the royalties and not just three-eighths of them would accrue to the States.

This argument is strengthened by the fact that the Federal Government retains

10 percent of these mineral leases, allocating the other 52.5 percent to the States

by way of the reclamation fund. The argument then rests on the question of

whether the distribution between public roads and schools, on the one hand, and

reclamation, on the other hand, is logical and defensible.
30 MINERAL LEASING REVENUES

The National Education group seems to put in question foremost,

and I concur with them, that here we have an opportunity with the

tremendous increase in funds that has occurred in the Department

to give our States a helping hand, and as of June 30, 1960, these were

the facts. The agencies are very reluctant to give you dollars and

cents.

I spent days down there and finally went to the Secretary to get

some dollars and cents figures, and these are what they gave. They

say:

Money appropriated out of the reclamation fund is in general reimbursible to

that fund. Repayments, therefore, have become an important contributor to

the Government of the fund. Under these arrangements $1,586,866,462 had

passed into the fund by June 30, 1960. From the $1,667,202,727 has been expended to finance reclamation works of all dimensions throughout the 17 reclamation States. On this same June 30 the balance was $119,663,735.

Now this, of course, is the kind of tremendous balance that is kept

on hand. As the reclamation projects minimize, and I am sure from

time to time they will, it seems to me, as was pointed out by the

chairman, that there will be a tremendous amount of money available

and I am sure if the States are not given some of that it will just

contribute to the expansion of other areas that perhaps the State

should have something to say.

Senator BIBLE. Mr. Chairman.

Senator ANDERSON. I compliment Senator Hickey upon again

bringing this matter up. It reminds me of the quotation from a

newspaperman years ago that no great problem is settled until it is

settled right; and it is true that we have lost our fight two or three

times, but the problem has never been settled right. I hope he keeps

right on with it because there isn't any real reason why eventually

this reclamation fund can't pour back into the Federal Treasury

millions of dollars and will do so, and if we tried to keep some of this

money on hand as we originally discussed we would have a great

endowment fund of well over a billion dollars.

I am just wondering if there is a discrepancy in accounts for these

Mineral Leasing Acts. Maybe we should ask the Comptroller

General sometime to audit them along with you and get a figure that

everybody can agree upon.

Senator HICKEY. I think it would be a real service, only attempted to do Wyoming and found a $500,000 discrepancy.

Senator ANDERSON. I feel very strongly that these States which

didn't get their public domain ceded to them and now find themselves

without these revenues should now have them. I think the fact that

we have given to the States of Texas, Louisiana, California, Mississippi, and other coastal States the federally owned mineral deposits

beneath the submerged lands within their State boundaries might be

regarded as setting a precedent for us to get 90 percent.

I think it is simple justice, and I hope we get it.

Senator HICKEY. Thank you, Senator.

Senator BIBLE. Senator Long?

Senator LONG. Mr. Chairman, I want to express my pleasure at

the presentation of the materials on behalf of this bill, and particularly

I would say to the distinguished Senator from Wyoming that he is

very wise in selecting his materials. The National Education Association in this field is generally very sound; that is, they give most

careful attention to it.
MINERAL LEASING REVENUES 31

Senator HICKEY. Thank you.

Senator BIBLE. Thank you, Senator Hickey. I think this is as

ably presented a case as I have had the pleasure of hearing in a long,

long time. I know of your interest in it and we know you are going

to keep up this fight. You are certainly to be complimented on the

splendid work you have done to date on it.

Senator ANDERSON. Senator, may he just add one word in here.

Is it not true, as we have been talking about, that this revenue which

now would appear large to Wyoming and New Mexico may with the

passing of years prove just as valuable to Arizona, Nevada, Utah, and

every other State?

Senator HICKEY. That certainly is true.

Senator ANDERSON. Because it was only a short time ago you

could have gotten a geologist to bet you better than even money

there would never be any oil developed in Arizona, but there is going

to be lots of it and they are tremendously interested in that State.

We don't know when this wheel of fortune will turn around and some

State which doesn't suspect, one of the Dakotas or both of the Dakotas

or Nebraska, will find itself rich in oil resources, and we should have

some such treatment as this.

I think all of the public land States of the West stand to gain enormously from the passage of this legislation, not as much on the basis

of what now is known as on what might happen. I went back some

time ago and looked at some articles which I had written as a young

newspaperman talking about the mineral resources of New Mexico

and was surprised to realize that there were many minerals which now

were very valuable but which I never mentioned in my articles because

there was no way of knowing about them.

I think it was something in the early 1920's or it was written earlier

than that. It goes back and dates me a little bit. It was an article

in 1918 or 1919, but along came some people named Snowden and

McSweeney and they were drilling for oil and hit potash, and one of

the counties in my home State produced one time 90 percent of all

the potash produced in the United States. Previously nobody ever

regarded that as an asset.

Yet it was a very tremendous one. Nobody prior to World War II

paid any attention to yellow dust that was lying around, but tremendous quantities of uranium are now handled and mined and

tremendous investments made, $16 million in one mill. I don't know

what we will find. We don't know what mineral it is we may find

useful, but if these resources are tied down to the States in which they

are discovered and they get a chance to obtain a large share of them

it may solve some of their financial problems in future years.

Senator HICKEY. I certainly appreciate Senator Anderson's comments because I think here is the area of the lack of understanding

that has denied us some consideration for many years.

Thank you, gentlemen. Thank you, very much.

Senator BIBLE. Thank you, Senator Hickey.

With that the hearing will conclude on Senate 898.

(Whereupon the subcommittee proceeded to other business.)

(The following statements and communications were ordered

placed in the record:)
32 MINERAL LEASING REVENUES

STATEMENT OF THE WYOMING COUNCIL FOR ECONOMIC DEVELOPMENT

The Wyoming Council for Economic Development is an organization composed

of the major businesses and agricultural groups of the State. The purpose of

the organization is "to provide an informal forum for the exchange of views and

to develop cooperation in promoting plans and principles in which the members

have a mutual and unanimous interest, for the economic well-being, growth, and

progress of Wyoming and its citizens.

The first formal action of the council was to give our wholehearted support to efforts aimed at returning 90-percent mineral royalties to Wyoming. It is indic- ative that a group representing such a broad segment of Wyoming's economy and

whose purpose is economic development, should choose to support this issue as its first action. We shall not take your time with a summary of the various percentages and dollar amounts. We are certain our fine natural resources board and Wyoming Taxpayers Association will provide you with these significant figures.

We feel there is no more important element to the future prosperity and development of Wyoming than the return of the royalties paid on resources taken from

our State. We hear almost daily of various Federal programs proposed to encourage economic development. We suggest that much more efficient and effec- tive development could be the result if the Federal Government would release

to the States the royalties from their own production.

We do not oppose reclamation nor the reclamation fund. As businessmen, we

must insure that the varied enterprises engaged in are sound economically. Reclamation projects can and should meet the same criteria.

As you noticed in the statement of purpose, the council's bylaws specify that

policy stands must be unanimously approved by all member organizations. Even

though we represent a wide range of economic interests in Wyoming, we unite in

urging the passage of legislation which will return 90 percent of the mineral

royalties to the State.

We appreciate the opportunity of presenting our views to the committee.

WYOMING EDUCATION ASSOCIATION,

Cheyenne, Wyo., May 10, 1962.

Hon. J. J. HICKEY,

Senate Office Building, Washington, D.C.

DEAR SENATOR HICKEY: This statement is presented to you as testimony in

favor of the Senate bill with reference to the mineral royalties in the various

States which will have a hearing on May 15. The Wyoming Educational Association and its various affiliates are very interested in securing favorable action on

this bill (Senate bill 898).

We believe that the return of 90 percent of the mineral royalties to the State of

its origin is very justifiable due to the fact that over 50 percent of the land area

of Wyoming is owned by the Federal Government. Of its 62,403,480 acres, the

United States ownes oil and other minerals under 44 million of Wyoming's 62 million acres. It owns both the minerals and the surface of 32,055,721 acres of our

land, which constitutes over 51 percent of Wyoming's vast area. A return of

only 37% percent of the royalties to the State, we feel, is an unfair distribution

considering the fact that the Federal Government owns much more than that of

our land area.

The State of Wyoming faces serious problems in providing enough funds for

our schools, our municipalities, and other areas of government. We are unhappy

that millions of dollars accruing to the Federal Government from the income on

mineral production on Wyoming public lands will be used for projects in other

States. Wyoming is rich in mineral resources and we believe that our State

should be the beneficiary of the returns from these resources.

We are deeply grateful to you, Senator Hickey, for making an effort in the

of Wyoming in the introduction of this bill, and we will do everything in

our power to help you secure favorable action on it.

Respectfully yours,

CHESTER H. BOWEN,

Executive Secretary.
MINERAL LEASING REVENUES 33

Hon. J. J. HICKEY,

U.S. Senate,

Washington, D.C.

DEAR SENATOR HICKEY: We have received information that there will be a

hearing on May 15 on Senate bill 898, which concerns the return of mineral

royalties to a number of States. The Wyoming School Boards Association will

appreciate very much your extreme efforts to secure favorable action on this bill.

We have had a very keen interest in this for some time and through our continued

efforts a committee, consisting of one member from each of the western public

land States, is presently collecting information on this important matter.

Last fall, the following resolution was passed unanimously at our convention

having the largest crowd in history:

Whereas the delegate assembly, at six previous conventions, has passed a resolution asking for a larger return of the mineral royalties on public lands: Now,

therefore, be it

Resolved, That the Wyoming School Boards Association continue its study

with other interested groups in the State of Wyoming, and also with other States,

to effect a return of 90 percent of the mineral royalties.

We appreciate your efforts in behalf of the welfare of Wyoming, and if the intent

of this resolution can be carried out, it will greatly benefit not only our schools

but other constituents.

Sincerely yours,

WYOMING SCHOOL BOARDS ASSOCIATION,

Laramie, Wyo., May 10, 1962.

MTS. DOROTHY F. BUSH,

President.


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