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    "title": "1976/03/31 - Grazing Fees Meeting",
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    "ocrText": "The original documents are located in Box 57, folder \"1976/03/31 - Grazing Fees Meeting\"\nof the James M. Cannon Files at the Gerald R. Ford Presidential Library.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain. The copyrights to materials written by other individuals or organizations are presumed to\nremain with them. If you think any of the information displayed in the PDF is subject to a valid\ncopyright claim, please contact the Gerald R. Ford Presidential Library.\nDigitized from Box 57 of the James M. Cannon Files at the Gerald R. Ford Presidential Library\nMarch 30, 1976\nMEETING TO DISCUSS GRAZING FEES\nWednesday, March 31, 1976\n2:30 p.m. (45 minutes)\nThe Cabinet Room\nFrom: James M. Cannon\nI.\nPURPOSE\nSenators and Representatives from the Western States\nwant to discuss with you the increase in grazing fees\non public lands.\nII. BACKGROUND, PARTICIPANTS AND PRESS PLAN\nA. Background\nIn January, the Secretaries of Agriculture and\nInterior announced the grazing fees to be\ncharged on Federal lands for the 1976 grazing\nseason. The fees were increased about 50 percent\n(TAB A). This was in accord with your budget\ndecision and consistent with the recommendation of\nthe House Interior Appropriations Subcommittee.\nThe setting of fees always has been very contro-\nversial. The ranchers and their representatives\nsay the fee is too high (Congressman Santini's\nletter, TAB B). Others say it is too low compared\nto rates charged for private lands.\nThe present system for determining grazing fees\non national forests (Agriculture) and public\ndomain rangelands (Interior) was implemented in\n1969 after a long study and battle with grazing\ninterests. The fees are based on fair market\nvalue (FMV), calculated annually using private\nR.\nFORD\nGERALD\n- 2 -\nlease rates as a reference point and an agreed\nupon formula. Instead of immediately going to\nFMV, however, the difference between the lower\nfees prevailing before 1969 and the FMV was to\nbe closed in ten annual increments. FMV would\nbe reached by 1980. The 1980 fee would still\nbe less than private lease rates, recognizing\nthat the permit holder is responsible for fence\nmaintenance, etc., and assuming poorer forage\non public lands.\nThe annual increase was foregone in 1970 and the\nincrease was limited to 3 percent in 1972. You\ndecided to forego the 1975 increase because of\nthe then economic condition of ranchers.\nCongress has already addressed this issue. An\namendment to the BLM Organic Act sponsored by\nSenator Hansen to establish a new formula for\nsetting the grazing fee was defeated in floor\naction. However, a subcommittee of Senate\nInterior Committee has scheduled hearings on\nApril 30 to discuss S. 3071, a bill containing\nthe Hansen formula. OMB believes that the proposed\nformula bears no relationship to fair market value\nand therefore is conceptionally wrong. An Admin-\nistration position has not been finalized on S. 3071.\nIn the House, a subcommittee is considering whether\nto include a grazing formula prior to clearing\nits version of the BLM Organic Act.\nThe Congressmen have already taken their arguments\nto the Departments and have been told that any\nreversal of the current decision must come from\nyou.\nAttached at TAB C are tables comparing grazing\nfees with private lease rates. TAB D provides\ntrends of beef and calf prices and farm costs.\nB. Participants: See list attached at TAB E.\nC. Press Plan: To be announced.\nFORD i LIBRARY GERALD\n- 3 -\nIII. TALKING POINTS\n1. I understand that the increase in grazing\nfees may be compounding the problems of\nsome of the stock operators.\n2. I recognize that production costs are going\nup while the cattle prices are going down.\n3. As you know, I decided last year to forego the\nincrement for a year, and this year's rate is\nnot as high as the original formula called for.\nGWH/pt 3-30-76\ncc:WH files\nFORD & GERALD LIBRARY\nFee per Animal Unit Month * (AUM)\n($ millions)\nFiscal Year\nForest Service Bureau of Land Management\nTotal Receipts\n1969\n$ .60\n$ .44\n9\n1974\n$1.11\n$1.00\n18\n1975 Formula\n$1.60\n$1.51\n27\n1975 Actual\n$1.11\n$1.00\n18\n@\n1976 Fair\nMarket Value $1.94\n$1.94\n35\n1976 Announced\nRate\n$1.60\n$1.51\n27\n*Animal unit month - a grazing unit comprised of one COW and its calf\nor the equivalent (5 sheep, etc.) foraging for one month\nGERALD\ntab A\nLIBRATA 0809\nCARICE\n2-1\n1403 LONGUCHTH House OFFICE Building\nWATER NO Please Reduces\nCongress of the United States\nPuace Linds\nWASHINGTON, D.C. 20513\nMINES AND\nTELEPHONE (202) 223-3963\nHouse of Representatives\nINTERSTATE AND\nC.STRICT CAFICES:\nFOREIGN COMMERCE\nSUITE -323 Frotenal EUILDING\nWashington, D.C. 20515\nSUBCOMMATEZ3,\nSCO 3 VESA3 BOULEVAND SOUTH\nTHANSPORTATION COMMERCE\n3 Vegas, NEVADA 89101\nOVERSIGHT AND INVESTIGATIONS\nTELEPHONE: (702) 383-6573\nFebruary 19, 1976\nSUITE 2024 FEDERAL BUILDING\nSELECT COMMITTEE Crs AGING\n3:0 BOOTH STREET\nRIV, NEVADA 89302\nTELEPHONE: (702) 734-5637\nTAB\nFE\nThe Honorable Gerald R. Ford\nPresident of the United States\nThe White House\nWashington, D. C. 20500\nDear Mr. President:\nWe are writing to request a meeting with you on a matter of the greatest\nconcern to ourselves and our States.\nRecently, the Department of Interior compounded the already serious\neconomic problems of America's stock operators by announcing a 51% increase in\nthe fee charged for stock grazing on the public lands. If fully implemented,\nthis new policy will cost Western cattlemen and wool growers more than Five\nMillion additional dollars in 1976. Given current economic conditions - cost.\nof agriculture production up 25% since 1973, selling price of Western cattle\ndown nearly 20% since 1973 - this proposed increase in grazing fees will be\na fatal blow to many Western stock operators.\nAmerica 's consumers will also suffer as a direct consequence of this\ngrazing fee increase. Consumers will eventually absorb the increased grazing\ncost and may additionally be confronted with a dwindling supply of meat.\nTherefore, from both consumer's and producer's perspectives, the increased\ngrazing fee is untimely, ill-advised, and will impair your Administration's\nsuccess in controlling inflation.\nFurthermore, because recent court decisions raise the imminent possibility\nof reductions in grazing allotments and because the West is in the grip of a\nsevere drought, the proposed 51% grazing fee increase is especially burdensome\nthis year. A partial rollback of this fee increase would, under these cir-\ncurstances, be particularly welcome and appropriate.\nAs representatives of Western states, we have sought support within the\nDepartment of Interior for a partial rollback of this fee increase. In meeting\nwith Secretary Kleppe and with the Bureau of Land Management Director, Curt\nBurklund, we were advised that you alone could reverse or revise the 1976\nfee schedule. We, therefore, request the opportunity to discuss with you the\n1976 fee, as well as proposals for a revised fee formula.\nFORD & GERALD LIBRARY\nThe Honorable Gerald R. Ford\nFebruary 19, 1976\nPage Two\nIt is our hope that a formula can be agreed upon by the Administration,\nthe Congress and the livestock industry that will assure a future grazing\nfee that is related to costs of production. The basic concept was agreed to\nin 1974 by both the Departments of Interior and Agriculture. Only through\nsuch a formula can we provide the opportunity for our vital family ranches\nto survive.\nwe would hope to meet with you at your earliest converience.\nAS the grazing fee increase is scheduled to take effect on March 1, 1976, //\nWith best regards, I am,\nSincerely,\ns\nNAMES D. SANTINI\nMember of Congress\nJDS:sq\nLIBRARY GERALD R. FORD\nThe Honorable Gerald R. Ford\nFebruary 1976\nPage\nallen Thee 19, IT. Howe Heared Runnel\nSteve Symme\nMay Baueus May Haum\nTed Gunn 7m Kay\nTen Rreelin\nSan Seiger\nJhB Carlan\nFame Lakars\nKany foldwater\nFORD : GERALD LIBRARY\nFebruary 19, 1976\nPage Four\nJoseph in Montoya\nCustoms P.H.\nMineion R\nLIBRARY GERALD R. FORD\nPrivate Lease Rates, Fair Market Value,\nScheduled Fees, and Actual Fees\n(Dollars per AUM)\nPrivate\nFair\nForest Service\nBureau of Land Management\nLease\nMarket\nOriginal\nOriginal\nYear\nRate\nValue\nSchedule\nActual\nSchedule\nActual\n1968\n3.74\n-\n-\n-\n-\n.33\n1969\n3.82\n1.25\n.60\n.60\n.44\n.44\n1970\n4.05\n1.29\n.71\n.60\n.57\n.44\n1971\n4.06\n1.36\n.86\n.78\n.73\n.64\n1972\n4.17\n1:37\n.94\n.80\n.83\n.66\n1973\n4.57\n1.41\n1.05\n.91\n.96\n.78\n1974\n5.82\n1.54\n1.25\n1.11\n1.18\n1.00\n1975\n5.75\n1.96\n1.74\n1.11\n1.69\n1.00\n1976\nNA\n1.94\n1.80 1/\n1.60\n1.76 1/\n1.51\nBecause of slippage in the schedule this is now calculated to be $1.65 for\nForest Service and $1.58 for Bureau of Land Management.\nGERALD\nR.\nFORD\nLIBRARY\nWestern Beef and Calf Prices\nand Farm and Ranch Costs\nWestern Beef Prices\nWestern Calf Prices\nFarm and Ranch Costs\n$ per 100 wt.\n$ per 100 wt.\nof Production Index\n1968\n$24.50\n$28.12\n104\n1969\n27.40\n31.60\n109\n1970\n27.90\n34.34\n114\n1971\n30.30\n36.33\n120\n1972\n34.40\n44.49\n127\nJ\n1973\n44.13\n55.36\n145\n1974\n37.90\n34.66\n168\n1975\n36.80\n28.56\n185\nGERALD\nLIBRARY FORD\n3-30-76\nParticipants\nThe President\nSecretary Kleppe\nSecretary Butz\nJack Marsh\nDick Cheney\nMax Friedersdorf\nJim Cannon\nBill Kendall\nJim Cavanaugh\nCharles Leppert\nRoyston Hughes\nGeorge Humphreys\nHouse\nSenate\nMax Baucus\nHoward Cannon\nJohn Conlan\nPete Domenici\nThomas Foley\nJake Garn\nGeorge Hansen\nClifford Hansen\nAllan Howe\nPaul Laxalt\nManuel Lujan\nJames McClure\nGunn McKay\nGale McGee\nTeno Roncalio\nMike Mansfield\nHarold Runnels\nJoseph Montoya\nJim Santini\nFrank Moss\nJoe Skubitz\nSam Steiger\nSteven Symms\nCurt Berklund, Director, Bureau of Land Management\nJack Horton, Assistant Secretary for Land & Water Resources\nRegrets\nCongressman James Haley\nCongressman Theodore Risenhoover\nCongressman Al Ullman\nCongressman William Wampler\nSenator Dewey Bartlett\nSenator Henry Bellmon\nSenator Frank Church\nSenator Robert Dole\nSenator Paul Fannin\nSenator Barry Goldwater\nSenator Lee Metcalf\nSenator Herman Talmadge\nFORD & GERALD LIBRARY\nTHE WHITE HOUSE\nWASHINGTON\nREQUEST\nMarch 31, 1976\nMEMORANDUM FOR:\nJIM CANNON\nFROM:\nSTEVE McCONAHEY\nSUBJECT:\nGrazing Fees\nAttached is a copy of my recent letter to Governor O'Callaghan\ndiscussing the Administration's position on grazing fees.\nThis memorandum was reviewed by OMB and seen by George\nHumphreys. If you would like to discuss this issue before\nthe 2:30 meeting, I will be available.\nAttachment\nNewda\nGURALD\nMarch 25, 1976\nDear Governor O'Callaghan:\nThis is in response to our earlier communications on the\nrecent increase in grazing fees on Federal lands.\nThe President fully appreciated your position on this\nmatter as indicated last year when he declared a one\nyear moratorium on any fee increase. However, the\nAdministration continues to believe that grasing fees\non Federal lands should be based on the fatt-market\nvalue and that the present formula for determining the\nvalue is logical and equitable.\nAs you know, the fee seating system established in 1969\nis in fact an incremental process to reach fair-market\nvalue by 1980. This gives ranchers advance knowledge of\nthe approximate fee for adjustment purposes. Because of\nprevious fee moratoriums, we are lagging behind the\noriginal schedule even with the recent increase. This\nyear's increase is the increase scheduled for last year.\nAfter considerable review, we feel that the proposed\nincrease should be retained.\nIn response to your suggestion of phasing the increase,\nwe believe such action would complicate further the system\nof grazing fees on Federal land. Since most billings are\nsent out before use begins, we estimate that 40% of the\nfees will already be paid by April 1.\nWe do realise that the increase will affect the economic\nstatus of some ranchers. However, there are Federal\nassistance programs aimed at minimizing this impact. The\nEmergency Livestock Credit Act provides for guaranteed\nloans to ranchers who otherwise could not qualify for a\nloan. In addition, a second Farmers Home Administration\nprogram provides similar assistance to smaller operations.\nI hope that these programs are brought to the attention of\nthe impacted ranchers.\nLIBRARY GERALD ? FORD\n- 2 -\nFinally, the Administration believes that the additional\nrange improvement funds raised through equitable grazing\nfees will increase the benefits of Federal land not only\nfor gecreased grazing capacity but also in erosion con-\ntrol and wildlife habitat.\nI hope this letter clarifies our position in grazing\nfees. If you have any additional questions, please call.\nSincerely,\nStephen G. McConahey\nSpecial Assistant to the President\nfor Intergovernmental Affairs\nThe Honorable Mike O'Callaghan\nGovernor of Nevada\nExecutive Chambers\nCarson City, Nevada 89701\nSGMcC:MMB:jz Z\nBERALD R FORD LIBRARY\nTHE STATE OF NEVADA\nEXECUTIVE CHAMBER\nCARSON CITY, NEVADA\nMIKE O'CALLAGHAN\nFebruary 10, 1976\nGOVERNOR\nThe President\nThe White House\nWashington, D.C.\nDear Mr. President:\nI had looked forward to accepting the\ninvitation extended by you and Mrs. Ford to the\ngovernors of the states and territories to join\nyou at dinner on February 23. However, I now\nfind that pressing obligations here in Nevada\nwill prevent me from attending the annual Mid-\nWinter meeting of the National Governors' Con-\nference in Washington. Thus, I must regretfully\ndecline.\nOn another matter, I would like to call to\nyour attention a matter of serious concern to the\nlivestock industry of Nevada. The subject is the\ngrazing fee levied on ranchers who use the public\nland under the provisions of the Taylor Grazing\nAct.\nOn December 31, the Bureau of Land Manage-\nment, Department of Interior, announced it will\nincrease grazing fees fifty-one percent as of\nMarch 1, 1976. At that time, BLM spokesman said\nyou had not allowed the Bureau to increase grazing\nfees in 1975 \"because of difficult economic factors\nfacing the western livestock industry\". I do not\nbelieve the economic factors cited have changed\nto the extent that a fifty-one percent increase\nis now justified.\nFORD\nGERALD\nLIBRARY\nThe President\n2-10-76 - page 2.\nI know you are aware that few businesses\nin our economic spectrum are capable of absorbing\nsuch a burden as part of overhead operating ex-\npenses during a single year. We can anticipate\nmany ranchers will sell off large portions of their\nherds in order to survive this sudden and drastic\neconomic blow. The ultimate result, for some at\nleast, may be bankruptcy and, in any event, it may\nbe many years before the American livestock industry\nrecovers from such a blow.\nI am not suggesting that an increase in\ngrazing fees is unwarranted. Rather, it is my con-\nviction that this kind of arbitrary adjustment will\nwork extreme hardship on a great many western live-\nstock producers. Accordingly, I respectfully urge\nyou to take executive action to reduce the percentage\nof increase to be imposed this year and thereby\nassure the continued economic stability of one of\nAmerica's most essential industries.\nAgain, please accept my warm appreciation\nfor your invitation. You have my warm good wishes.\nSincerely,\nLIBRARY GERALD FORD\nTHE WHITE HOUSE\nWASHINGTON\nFebruary 24, 1976\nMEMORANDUM FOR:\nPAUL O'NEILL\nFROM:\nSTEVE McCONAHEY\n8m\nSUBJECT:\nIncrease on Grazing\nFees on Federal Lands\nAttached is a memorandum to Jim Cannon regarding grazing\nfees. I would appreciate receiving from you your reaction.\nAttachment\nLISSAUX GERALD FORD\nFee per Animal Unit Month (AUM)\n($ millions)\nFiscal Year\nForest Service Bureau of Land Management\nTotal Receipts\n1969\n$ .60\n$ .44\n9\n1974\n$1.11\n$1.00\n18\n1975 Formula\n$1.60\n$1.51\n27\n1975 Actual\n$1.11\n$1.00\n18\n1976 Fair\nMarket Value $1.94\n$1.94\n35\n1976 Announced\nRate\n$1.60\n$1.51\n27\nGERALD\nR.\nFORD\n2-12-76\nFeb. 12, 1976\nGrazing Fees on Federal Lands\nBackground Paper\nIn January, the Secretaries of Agriculture and Interior announced the grazing\nfees to be charged on Federal lands for the 1976 grazing season. The fees were\nincreased about 50% (see attached table).\nThe setting of fees always has been very controversial. Some say the fee is too\nhigh, and others say it is too low compared to rates charged for private lands.\nThe present system for determining grazing fees on national forests (Agriculture)\nand public domain rangelends (Interior) was implemented in 1969 after a long study\nand battle with grazing interests. The fees are based on fair-market value (FMV),\ncalculated annually using private lease rates as a reference point and an agreed upon\nformula. Instead of immediately going to FMV, however, the difference between the\nlower fees prevailing before 1969 and the FMV was to be closed in ten annual increments.\nFMV would be reached by 1980. The annual increase was foregone in 1970 and the increase\nwas limited to 3 percent in 1972. President Ford decided to forego the 1975 increase\nbecause of the then economic condition of ranchers.\nThe Congress is also interested in this issue. The Report by the House Interior\nAppropriations Subcommittee on the 1976 appropriations bill recommended the 1976\ngrazing fees be $1.60 per animal unit month (AUM) for the Forest Service and $1.51\nper AUM for the Bureau of Land Management (BLM). This is the fee level recommended\nby the Departments of Agriculture and the Interior and approved by the President.\nIt was announced on January 2, 1976, and is effective for the grazing year beginning\nGERALD\nMarch 1. The Committee report reaffirmed the Federal intention to achieve FMV by 1980.\nLISTATY\nAnimal unit month - a grazing unit comprised of one COW and its calf or the\nequivalent (5 sheep, etc.) foraging for one month.\nJanuary 29, 1976\nDear Mr. Attorney General:\nThe President has asked me to thank you for your telegram\nof January 23, 1976, requesting a moratorium on raising\nthe 1976 grazing fee to $1.51 per animal unit month. As\nyou know, the Secretaries of the Interior and Agriculture\nhave announced the increases that you anticipated.\nWhile the increase may appear large in percentage terms,\nwe do not balieve it is unreasonable in view of several\nfactors. First, the reason the increase appears large\nthis year is that the President agreed to forego an increase\nlast year. Second, the fee is still at least $.50 below the\nfair market value for Federal lands, which is significantly\nbelow the rate on private lands. Any rate below the fair\nmarket value discriminates in favor of those livestock\noperations which have Federal permits. Third, approximately\nhalf of the BLM increase will be available for making range\nimprovement investments which in the long run should help\nthe permittees. Fourth, the Emergency Livestock Credit\nAct makes available $1.1 billion in the FY 1976-1977 period\nfor ranchers who need financial assistance, which is more\nequitable than providing subsidies to all ranchers through\nlower grazing fees.\nWe appreciate receiving your views on this subject.\nSincerely,\nGrorge W hays\nGeorge H. Tumphreys\nAssociate Director\nDomestic Council\nThe Honorable Robert List\nAttorney General\nState of Nevada\nCarson City, Nevada\nGWH/pt 1/28/76\nOc:WH files\ngen\nFORD is GERALD LIBRARY\n7\n3\n5\nGH\nThe Thite House\nMashington\nWHD029 730P EST JAN 23 76\nWAB218(1911) (2-043925E023)P 01/23/76\nICS IPMBNGZ CSP\n1976 JAN 23 PM 9 06\n7028321890 TDBN CARSON CITY NV 256 01-23, 0315P PST\nPMS HONORABLE GERALD R FORD, PRESIDENT OF US\nPJAN 24 AM 9 07\nMAIL ROOM\nWHITE HOUSE\nWHITE HOUSE OFFICE 1600 PENSYLVANIA AVE\n10\nWASHINGTON DC 20500\nn\nDEAR MR PRESIDENT\nON JAN 21, 1976 THE NEVADA BUREAU OF LAND MANAGEMENT OFFICIALS WITH\n14\nTHE APPROVAL OF THEIR WASHINGTON SUPERIORS ANNOUNCED THE ADOPTION OF\nIS\n15\nA NEW INTENSIVE RANGE MANAGEMENT PROGRAM FOR THE STATE OF NEVADA IT\n17\nCALLS FOR A CLOSING OF 90 PERCENT OF ALL PUBLIC OWNED RANGELAND IN\n13\n19\nTHE STATE OF NEVADA FOR A CRITICAL 2 AND 1/2 MONTH PERIOD\n20\nON A REVIEW OF THE SITUATION IT IS MY FIRM BELIEF THAT THE\n21\n22 A NNOUNCEMENT OF THIS PROGRAM HAS BEEN MADE PREMATURELY WITHOUT\n23\nADEQUATE STUDY BEING DONE INTO THE SEVERE ECONOMIC IMPACT THIS\n24\n25\nPROGRAM WILL HAVE ON THE CITIZENS IN THE STATE OF NEVADA AND THE\n26\n&\nFORD\n2\n3\n4\n5\nLIVESTOCK INDUSTRY WITHIN THE STATE AND NATIONWIDE IN AN EVER\nINCREASING INFLATIONARY ECONOMY THE GOVERNMENT SHOULD SEEK TO AID\nIT'S CITIZENS RATHER TO INCREASE THE OVERALL BURDEN ON THEM THIS\n10\nANNOUNCED PROGRAM HAS BEEN MADE WITHOUT A THOUROUGH AND EXTENSIVE\n11\nSTUDY INTO THE NEEDS FOR IT'S ADOPTION IN ALL PARTS OF THE STATE OF\n12\n13\nNEVADA\n14\nFURTHER IF THERE HAS BEEN DAMAGE TO PORTIONS OF THE PUBLIC RANGE IN\n15\n16\nTHE STATE OF NEAVDA I SUBMIT THAT IT IS PARTLY BECAUSE OF THE ACTS\n17\nOF THE FEDERAL GOVERNMENT IN ITS MANAGEMENT OF THESE LANDS\n18\n19\nTHEREFORE I URGE THAT PRIOR TO IMPLEMENTATION OF THIS PROPOSED\nB\nPROGRAM A MORE COMPLETE STUDY TO BE DONE AS TO THE ECONOMIC IMPACT\nr.\n=\nIT WILL HAVE THE NEED FOR SUCH AN EXTENSIVE PROGRAM AND THE\nw\nDEVELOPMENT OF REASONABLE ALTERNATIVES WHICH THE LIVESTOCK INDUSTRY\n\"\nX\nCAN LIVE WITH I INVITE YOUR ATTENTION AND YOUR INTERVENTION IN THIS\n15\n4 ? 3 5 s\n1\n**\n2\n3\n4\ns\nIMPORTANT MATTER\n6\nZ\nBEST REGARDS\n8\nROBERT LIST ATTORNEY GENERA OF NEVADA\n9\n10\nNNNN\n11\n12\n13\n595\n14\n15\n15\nit\n17\n13\n19\n20\n21\n22\nV\n23\n24\n25\n25\ni\nFORD\nTHE WHITE HOUSE\nWASHINGTON\nINFORMATION\nMarch 31, 1976\nMEMORANDUM FOR THE PRESIDENT\nFROM:\nJIM CANNOL Jan\nSUBJECT:\nMineral Leasing Receipts\nDick Cheney thinks that the subject of State's\nshare in mineral leasing receipts may come up\nin your meeting today with the Western Congressmen.\nThe attached background paper may be useful to you\nin case the subject does arise.\nFORD & LIBRARY GERALD\nSHARING FEDERAL\nMINERAL LEASE RECEIPTS WITH STATES\nThe Mineral Leasing Act of 1920, as amended, provides\nthat States receive 37-1/2 percent of Federal mineral\nleasing receipts except for Alaska which receives 90 per-\ncent. Fifty-two and one-half percent is designated for\nthe Reclamation Fund for use in the construction of\nirrigation and other water projects by the Department of\nthe Interior except in Alaska where the Reclamation program\ndoes not operate. Ten percent of the receipts are deposited\nas miscellaneous receipts of the Treasury.\nSince the cost of the Reclamation program exceeds these\nmonies, it is necessary to use appropriations from the\nGeneral Fund for the Reclamation program.\nIn addition to the Mineral Leasing Act, there are a variety\nof other acts that provide for the sharing of Federal grazing,\ntimber and geothermal receipts with States and in some cases\nwith counties.\nSeveral bills have been introduced in Congress that would\nraise the State share (summary of bills - TAB A). The\nAdministration has opposed any alteration of the formula\non the grounds that all the proposals are arbitrary and bear\nno relationship in amount or timing to problems of social\nand economic impacts generated by mineral development on\nFederal lands.\nTo meet the problem, the Administration proposed legislation--\nH. R.11792 and S.3007--on February 4, 1976. To date, there\nhave been no hearings scheduled.\nThe proposed legislation was designed to implement the\nfollowing principles:\nAssistance should be available only where\nimpacts actually occur.\nAssistance should be available at the time of\nneed, which is primarily at the front end, and\nit should end after it is no longer needed.\nAssistance should be tied to all Federal energy\nresources and it should be available to all juris-\ndictions in need regardless of geographic location.\nFORD & GERALD LIBRARY\nSUMMARY OF BILLS\nThe following bills would alter the existing State share\nof mineral leasing receipts:\n1.\nH.R. 6721 (Mink) Coal leasing -- passed House --\nwould increase State share to 50 percent. Adminis-\ntration has supported coal leasing bill but without\nchanging payments to States.\n2.\nS.391 (Metcalf) Coal leasing and surface mining --\npassed Senate -- would increase State share to 60 per-\ncent.\n3.\nS.507 (Haskell) Bureau of Land Management Organic Act --\npassed Senate -- would increase State's share of\nreceipts to 60 percent and would provide 3 percent\nloans for impact aid. Administration proposed similar\nBLM Organic Act but without these provisions.\n4.\nH.R. 9717 (Evans) Payments to States based on acreage\nof Federal lands -- may be reported shortly. Would\npermit State and county to elect to receive either\n$.75 per acre or their current share of Federal\nreceipts under several existing laws including mineral\nleasing.\n5.\nS.521 (Jackson) amends OCS Act -- passed Senate. Would\nincrease payment to States under Mineral Leasing Act\nto 60 percent and provide impact aid program.\n6.\nS.586 (Hollings) Amends the Coastal Zone Management\nAct -- passed Senate. Would increase payments to\nStates under the Mineral Leasing Act to 60 percent.\nCompanion bill, H.R. 3981, which has passed House,\ndoes not amend Mineral Leasing Act.\nWhile no conference action has been scheduled for either\nthe coal leasing (H.R. 6721 and S. 391) or the Coastal\nZone Management legislation (S. 586 and H.R. 3981), such\naction is very likely this spring.\nFORD\nGERALD\nLIBRAST\n- 2 -\nAssistance should not stimulate over building\nand should not replace State and local tax effort.\nThe program should be administratively simple and\nprovide maximum discretion to the States in deter-\nmining the types and location of public facilities.\nThe end users of energy and the population which\nbenefit from the economic development should bear\nthe financial responsibility of providing public\nfacilities except in cases where the energy activity\ndoes not materialize as projected due to circum-\nstances beyond the control of the States and\nlocalities.\nIt provides for a $1 billion revolving fund for loans, loan\nguarantees, and planning grants. Assistance would be\navailable according to a formula based upon population in-\ncreases resulting or expected from Federal energy resource\ndevelopment. The governors of affected States would have\nbroad discretion to determine the form and distribution of\nassistance within their States. Loans would be forgiven\nunder certain circumstances when the Federal energy develop-\nment and related activities failed to occur as expected and\ntherefore would not support repayment.\n&\nFORD\nGERALD"
}