(The extract from the document referred to follows:)

PRECEDENTS FOR EARMARKING FUNDS

The method provided in H.R. 3846 of setting aside certain revenues from particular sources is neither unprecedented nor novel in any way. Set forth below are a few of the examples of similar legislation, some of it of long standing, for generally allied purposes.

1. Highway trust fund. -The fund is obtained from excise taxes (on gasoline, diesel fuel, trucks, buses, tires, etc.); such revenues being earmarked and set aside in the trust fund to meet expenditures for Federal-aid highways (Highway Revenue Act of 1956 (70 Stat. 374)).

2. Forest road fund. Ten percent of the annual revenues from the national forest activities is earmarked and available under the permanent appropriation roads and trails for States, for construction and maintenance in the particular State from which such proceeds are derived (16 U.S.C. 501).

3. Pittman-Robertson Act. -Eleven percent of the excise tax on the manufacture of firearms and ammunition is earmarked for purposes of the act. Such fund is used to reimburse States a share of the costs of wildlife restoration projects and related matters (16 U.S.C. 669).

4. Dingell-Johnson Act.-Earmarks 10 percent of the excise tax on sportfishing tackle; such funds being used to assist States in connection with fish restoration and management projects (16 U.S.C. 777a-k).

5. Pribilof Islands fund. - Receipts of sale from sealskins and other wildlife products of Pribilof Islands are earmarked and made available for administration of the islands (72 Stat. 339).

6. Yellowstone school fund. A portion of the revenues received from visitors to Yellowstone National Park are earmarked for use in providing for school facilities (62 Stat. 338).

7. Reclamation fund. Repayment and other revenues from irrigation and power facilities, certain receipts of sales, leases, and rentals of Federal lands in 17 Western States are earmarked and made available for expenditures for purposes of the act (43 U.S.C. 391).

The foregoing relate to the earmarking of receipts for various Federal programs. In addition, there is considerable earmarking of receipts going directly to States, as shown on pages 478 and 479 of the budget of the United States, 1965.

The CHAIRMAN. This list is only a partial one: The Mineral Leasing Act of 1920 earmarks 90 percent of its revenues. Then there is, I believe, an earmarking in the legislation pertaining to sugar.

Also in this connection, I would like to call attention to the fact that S. 1401 provides for such earmarking for a definitely limited period of time; namely, only 5 years. After that, absent new legislation, the income would go into the Federal Treasury again.

Although S. 1826 is not at this time before us for committee action, the bill deals with disposition of Outer Continental Shelf revenues, as does S. 1401, and for convenient reference I will direct, without objection, that the text of S. 1826 appear at this point in the record of these hearings, together with the administrative reports on it.

(The data referred to follow:)

[S. 1826, 90th Cong., first sess.]

A BILL Relating to the conservation of natural resources upon lands of the United States and amending certain provisions of the Outer Continental Shelf Lands Act and the Mineral Leasing Act

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION. 1. SHORT TITLE. - This Act may be cited as the "1947 Natural Resources Conservation Act".

SEC. 2. DEFINITIONS. As used in this Act "natural resources" include oil, gas, oil, shale, native asphalt, solid and semisolid and bitumen and bituminous rock (including petroleum bearing rock or sands from which hydrocarbons are recoverable after the deposit is mined or quarried), coal, phosphate, sodium, potassium, and sulfur in and under and that may be produced from lands or mineral interests owned or which hereafter be acquired by the United States.

SEC. 3. CONSERVATION LAWS APPLICABLE TO LANDS AND MINERAL INTERESTS OF UNITED STATES. -The laws of the several States providing for the conservation of natural resources so as to prevent the physical and economic waste thereof, as well as providing for the protection of correlative rights of all parties having an interest in the natural resources to which the laws are applicable and all valid regulations issued pursuant to such laws by regularly constituted governmental agencies charged with the administration thereof shall apply, without discrimination, to the exploration and development upon and the production of such natural resources from lands, including mineral interests, of the United States and lands which it holds as trustee situated within the boundaries of each State, as well as the subsoil and seabed of the Outer Continental Shelf which would be within the area of the State adjacent thereto if its boundaries were extended seaward to the outer margin of the Outer Continental Shelf or any lands extending beyond such margin owned or claimed by the United States and the conservation or other agencies of each such State charged with the administration of such laws shall have the jurisdiction, right, and power and authority to administer and enforce all such laws and regulations as to the lands and mineral interests of the United States and lands which it holds as trustee the same as they are administered and enforced with respect to other lands within the respective States.

SEC. 4. Subsections (a) (3) and (b) of section 4 of the Outer Continental Shelf Lands Act covering "Laws Applicable to Outer Continental Shelf" approved August 7, 1953 (43 U.S.C. 1333), is amended as follows:

Subsection (a) (3) is amended to read as follows:

"(a) (3) The provisions of this section for adoption of State law as the law of the United States shall never be intrepreted as a basis for claiming any interest in the seabed and subsoil of the Outer Continental Shelf, or the property and natural resources thereof or the revenues therefrom, except as provided in section 9 of this Act."

Subsection (b) is amended to read as follows:

"(b) The United States district courts shall have original jurisdiction of cases and controversies arising out of or in connection with any operations conducted on the Outer Continental Shelf for the purpose of exploring for, developing, removing, or transporting by pipeline the natural resources, or involving rights to the natural resources of the subsoil and seabed of the Outer Continental Shelf, and proceedings with respect to any such case or controversy may be instituted in the judicial district in which any defendant resides or may be found, or in the judicial district of the adjacent State nearest the place where the cause of action arose: Provided, however, That as to the enforcement of applicable State laws and regulations relating to the conservation of natural resources which may be produced from the Outer Continental Shelf lands the State courts of the States adjacent to such lands shall have concurrent jurisdiction with the United States district courts."

SEC. 5. Section 9 of the Outer Continental Shelf Lands Act approved August 7, 1953 (43 U.S.C. 1338), is amendd to read as follows:

"SEC. 9. DISPOSITION OF REVENUES. All rentals, royalties, and other sums paid to the Secretary or the Secretary of the Navy under any lease on the Outer Continental Shelf for the period from June 5, 1950, to the effective date hereof shall be deposited in the Treasury of the United States and credited to miscellaneous receipts and after the effective date hereof all of said moneys shall be deposited in the Treasury of the United States and 371⁄2 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 adjacent to the Outer Continental Shelf lands on account of which said moneys were received, to be used by such State for the construction and maintenance of public roads or for the support of public schools or other public educational institutions, as the legislature of the State may direct; and the balance of 621⁄2 per centum of all such proceeds shall be paid by the Secretary of the Treasury, as soon as practicable after December 31 and June 30 of each year, to the fifty States in the proportion that the population of each State bears to the aggregate population of all the States and for the purpose of making such distribution, the census of each State shall be based upon an estimate certified by the Bureau of Census to the Secretary of the Treasury prior to making each distribution. All moneys so distributed to the respective States shall be used for the support of public schools or other public educational institutions as the legislature of each State may direct. The distribution hereinabove provided of all moneys received after the effective date hereof shall also apply to all receipts after the effective date hereof, which are being or are to be held in escrow or suspense pending the determination of any controversy as to whether the lands on account of which said moneys are received constitute a part of the Outer Continental Shelf or a part of the lands of the State adjacent thereto."

SEC. 6. Section 35 of the Minerals Leasing Act, approved February 25, 1920, as amended (30 U.S.C. 191), is further amended to read as follows:

"SEC. 35. DISPOSITION OF MONEYS RECEIVED.-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; 60 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 or territory within the boundaries of which the leased lands or deposits are of were located; said moneys to be used by such State, territory, or subdivisions thereof for the construction and maintenance of public roads or for the support of public schools or other public educational institutions, as the legislature of the State or territory may direct; and, excepting those from Alaska, 30 per centum thereof shall be paid into, reserved, and appropriated, as a part of the reclamation fund created by the Act of Congress, known as the Reclamation Act, approved June 17, 1902, as amended, and of those from Alaska 30 per centum thereof shall be paid to the State of Alaska for disposition by the legislature thereof: Provided, That all moneys which may accrue to the United States under the provisions of this Act from lands within the naval petroleum reserves shall be deposited in the Treasury as miscellaneous receipts. All moneys received under the provisions of this Act not otherwise disposed of by this section shall be credited to miscellaneous receipts."

Hon. HENRY M. JACKSON,

U.S. DEPARTMENT OF THE INTERIOR,

OFFICE OF THE SECRETARY, Washington, D.C., February 20, 1968.

Chairman, Commmittee on Interior and Insular Affairs,

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

DEAR MR. CHAIRMAN: Your letter of February 3, 1968, requested this Department's report and comment on S. 1826, a bill "Relating to the conservation of natural resources upon lands of the United States and amending certain provisions of the Outer Continental Shelf Lands Act and the Mineral Leasing Act." We recommend against the enactment of S. 1826.

Section 2 of the bill would define the term "natural resources." The definition covers the specific minerals now in the Mineral Leasing Act. The use of the term "include" raises questions as to whether it covers other minerals not mentioned in that Act.

CONSERVATION LAWS RE: FEDERAL LANDS

Section 3 of the bill would make the laws and regulations relating to the conservation of natural resources of each State applicable to the exploration, development, and production of such resources from (1) all lands owned by the United States, e.g., national wildlife refuges, national parks, national forests, public domain, and Corps of Engineers lands, including mineral interests; and (2) lands held in trust by the United States, e.g., Indian lands. In addition, such laws of the coastal States adjacent to the Outer Continental Shelf would be extended to the subsoil and seabed of the Shelf which would be within the boundaries of each such State, if its boundaries were extended to the full width of the Shelf and to any lands beyond the Shelf's margin which are owned or claimed by the United States. The specific conservation laws are those designed "to prevent the physical and economic waste" of the natural resources, "as well as providing for the protection of correlative rights of all parties having an interest in the natural resources." The bill would transfer from the Federal Government to such States the authority to administer and enforce these conservation laws with respect to those lands and other interests of the United States.

OUTER CONTINENTAL SHELF REVENUES

Section 9 of the Outer Continental Shelf Lands Act (43 U.S.C. 1338) now provides that all revenues paid under leases on the Shelf shall be deposited into miscellaneous receipts of the Treasury. S. 1826 would amend this section of the Act by providing that (1) 371⁄2 percent of the deposited receipts must be paid semi-annually to the States adjacent to the Shelf lands where such revenues were produed for State public roads and public schools and other educational institutions, and (2) the balance of such revenues shall be paid semi-annually to all of the 50 States on a population basis. The bill also provides for a similar distribution of certain shelf receipts now held in escrow pending the termination of litigation. Read literally, the mineral distribution from OCS revenues called for by S. 1826 would be retroactive to August 7, 1953, by reason of the failure to modify the phrase "after the effective date hereof" which appears on page 4, lines 18 and 19 of the bill. We doubt, however, that such retroactivity was intended.

MINERAL LEASING ACT REVENUES

The bill provides that 60 percent of the monies received from leasing the mineral rights in the public lands shall be paid semi-annually to the State within whose boundaries the leased lands are situated. The monies are to be used for public roads and schools. In addition, 30 percent of the revenues, except those in Alaska, shall go to the Reclamation Fund. In the case of revenues from Alaska, 30 percent shall go to the State. Monies from the naval petroleum reserves go to the Treasury as miscellaneous receipts, as is now the case.

COMMENT

Outer Continental Shelf Lands. In 1953 Congress clearly and unmistakably first faced and decided the issue of interest in, and jurisdiction over, the Outer Continental Shelf in the enactment of section 9 of the Submerged Lands Act (43 U.S.C. 1302) which provides:

"Nothing in this chapter shall be deemed to affect in any wise the rights of the United States to the natural resources of that portion of the subsoil and seabed of the Continental Shelf lying seaward and outside of the area of lands beneath navigable waters, as defined in section 1301 of this title, all of which natural resources appertain to the United States, and the jurisdiction and control of which by the United States is confirmed."

This policy was reaffirmed later in that same year by sections 2 and 3 of the Outer Continental Shelf Act (43 U.S.C. 1331 and 1332) with express provisions that the submerged lands lying seaward of the areas granted to the States under the Submerged Lands Act are subject to the jurisdiction, control, and power of disposition of the United States. In section 4 (a) of that Act (43 U.S.C. 1333), Congress explicitly excluded the operation of State taxation laws to the Outer Continental Shelf, and further provided that the adoption of State law as the law of the United States on the Outer Continental Shelf for certain purposes "shall never be interpreted as a basis for claiming any interest in or jurisdiction on behalf of any State for any purpose over the seabed and subsoil of the Outer Continental Shelf, or the property and natural resources thereof or the revenue therefrom."

These expressions of the policies and intent of the Congress in enacting the 1953 legislation are repeatedly affirmed in the Committee reports. The Senate Committee report on the OCS Act (S. Rept. No. 411, 83d Cong.) points out that the purpose of the legislation is to assert the exclusive jurisdiction and control of the Federal Government in the OCS, and that it is the intent of the Congress that "no part of these revenues [from OCS leases] are to go to any coastal State for any purpose whatever". Also, the Senate debates of June 25, 1953 (Cong. Rec. pp. 7444-7489), on the various proposals to include in the OCS Act provisions to extend State boundaries to cover the OCS, to extend State conservation laws to the OCS, to permit State taxation on the OCS, and to provide for sharing of OCS revenues with the coastal States, clearly demonstrate the reasons for their rejection by the Congress. The floor leader on the then pending bill, Senator Cordon, said:

"The propounding of this amendment [reimbursement of coastal states from OCS revenues] is simply Chapter III in the attempt of the States along the gulf to get some portion of the receipts from the areas outside their boundaries. Call them reimbursements; call them local taxes or call them severance taxes, or what have you; what is desired is some portion of the receipts from Federal resources in the area outside those States.

"Mr. President, so far as I am concerned, if I did not stand on my feet and oppose this amendment, I would feel I was guilty of bad faith to the United States Senate. I do not believe there is a Senator who did not understand, when we passed the submerged lands bill, that we were excluding from its operation any interest on the part of those States in any area outside their boundaries. I intend to stand unequivocally upon that principle as it was enunciated here, at least by the acting chairman of the committee, when the submerged lands bill, Senate Joint Resolution 13, was before the Senate."

We are not aware of any circumstances existing today that would support the complete reversal proposed by S. 1826 of the 1953 express congressional policy which was established after full consideration and debate.

In regard to the revenues derived from Shelf activities, we would like to make two comments:

First, only a few days ago this Department strongly endorsed S. 1401 with amendments which would place about 20 percent of the prospective income from the Outer Continental Shelf into the land and water conservation fund. S. 1826, however, would prevent us from using these revenues. We believe that this would be extremely unfortunate, as there is a definite need to strengthen the fund for the benefit of the people of all the States by assuring it a new source of revenue. S. 1401 supplies this need. We believe that it is one of the most vital pieces of conservation legislation to be considered by the Congress this year.

Second, the States would receive a substantial payment on a semi-annual basis from earmarked funds with no method of control through the normal budgetappropriation process. This payment would be totally unrelated to any demonstrated social or economic program need. This type of a Federal payment program eliminates all flexibility that the President and the Congress normally have in determining priorities in the budget-appropriation process. We consider this approach to providing Federal financial assistance to the States very undesirable.

Conservation Measures. - We are strongly opposed to removing from the Government and handing over to individual States authority to prescribe, as a Federal responsibility, conservation measures involving, among other things, the rate of production from the shelf and inland Federal lands. This is, in our view, doubtful from a constitutional standpoint and unsound as a policy matter. The Federal Government must be able to adopt and apply Federal laws, regulations, and policies to these lands consistent with the various program needs. There must obviously be consultation and coordination between the Federal Government and the States in such matters, but the abdication of responsibility by the United States called for by S. 1826 over what is, after all, the Nation's property cannot be reconciled with the Federal system prescribed by the Constitution. The constitutional issues are fully discussed in the report of the Department of Justice in whose views we concur.

Mineral Leasing Act Revenues. - 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: 371⁄2 percent being paid to the State within the boundaries of which the leased lands or deposits are located, 521⁄2 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 371⁄2 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 521⁄2 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% percent is in addition to the 371⁄2 percent noted above and thus the State of Alaska receives 90 percent of the receipts from mineral leasing within its borders.

We believe that before any attempt is made, by amendment of the Mineral Leasing Act, to increase the present revenue distribution to the States in which federally owned minerals are produced considerable study and evaluation should be made of both the various methods of distribution and the objectives to be attained. Adequate study of this has not been made to date. Even upon completion of study of this complex issue, the executive branch would require extensive review of the many views which would undoubtedly be expressed before any final position could be obtained on the issue. The States which are the principal re