County Payments Saga in Congress

BY American Forest Research Council, “AFRC News” June 17, 2008

On June 5, Representative Peter DeFazio (D-OR) introduced a bill to extend the Secure Rural Schools and Community Self-Determination Act for an additional four years. The bill sparked a heated debate amongst members of the Oregon delegation regarding the offsets used to fund it and the partisan manner in which it was brought to the floor. Although the vote was 218-193, it
was brought to the floor under suspension, meaning it required a two-thirds majority to pass.

The bill was criticized by many Republicans, including Representative Greg Walden (R-OR),
because funding for the Payments in Lieu of Taxes program (PILT) had been stripped out of the
bill prior to being brought to the floor. The greatest controversy, however, surrounded the offsets
which relied on forced changes to royalty requirements contained in deepwater oil and gas leases
signed by the Clinton Administration in 1998 and 1999 which did not include price thresholds
and have cost the Treasury billions of dollars.

DeFazio argued that the oil and gas offsets could generate as much as $3.3 billion in county
payments for the next four years, but Republicans said the bill would tap a source of funding that
three other pieces of legislation have already claimed and the courts have deemed legally
questionable. Before the vote, Walden proposed an alternative offset proposal endorsed by the
National Education Association and the counties and schools coalition that would pay for county
payments and PILT by retaining the federal share of new lease revenues from domestic energy
production on the outer continental shelf. However, this alternative was not permitted to be
considered by the full House since the bill was introduced under suspension of the rules, which
bars amendments. The Democrats have been hesitant to bring the bill up under regular rule
(requiring only a simple majority vote) because they fear amendments would be attached that
relate to domestic oil exploration in ANWR during a time of increasing gas prices.

Senate Action

Last month, the Senate attached a one-year $400 million extension for the county payments
program to this year’s $165 billion Iraq supplemental spending bill. This inclusion remains the
only current viable legislative vehicle to provide an extension for the county payments program.
The path forward remains uncertain, however, since Blue Dog Democrats in the House oppose
the inclusion of deficit domestic spending in the supplemental and the President has threatened to
veto the legislation on similar grounds.

O&C Payments Increased

Representatives DeFazio and Norm Dicks (D-WA) did include a provision in the Interior
Appropriations Bill that would deliver 75 percent of the receipts generated from timber harvest
on the O&C county lands to O&C counties. Originally the O&C Act called for 75 percent of the
timber receipts to go to those counties, however, that percentage was reduced to 50 percent
during the 1950’s and has remained at that level ever since. The Congressional Budget Office
estimates that this will generate an additional $9 million in FY09.Should the county payment bill
not be reauthorized, the counties will again have to rely strictly on their share of federal timber
harvest receipts, which are likely to fall far short of the payments they would receive under the
proposed extension.

/Tom Partin

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