Richard Bryan

Mr. BRYAN

Mr. BRYAN. Mr. President, I am always pleased, when I have the opportunity, as I do this afternoon, to support, and in this instance actually propose, legislation that benefits both the American taxpayer and the environment. The amendment I am offering today eliminates a subsidy used primarily by large timber companies that not only has negative consequences for the taxpayers but also a detrimental effect on the environment. Each year, American taxpayers spend millions of dollars to subsidize the construction of roads needed for logging on national forest lands. The appropriations bill before us today contains a $47.4 million appropriation for the Forest Service to assist in the construction and reconstruction of timber roads in our national forests. In addition, the bill, and accompanying report, provide affirmative direction to the Forest Service instructing them to continue the purchaser credit program without limitation. The purchaser credit program allows the Forest Service to subsidize the road construction costs of timber companies by granting credits to them equal to the estimated cost of the roads that they need in order to access their timber. The timber purchasers can then use the credits to pay for the timber being harvested. Last year these purchaser credits were valued at nearly $50 million. In the House-passed version of the Interior appropriations bill a limit of $25 billion was placed on the value of purchaser credits that may be offered by the Forest Service in fiscal year 1998. The bill before the Senate today eliminates this cap completely, and the report accompanying the bill makes it clear that ``The committee has not specified a ceiling for the amount of purchaser credits which can be offered'' to timber companies. The result of this language is an open- ended subsidy for the timber industry. My amendment stands for a very simple proposition. If a timber purchaser needs to build a road to harvest timber, the timber purchaser should have to pay for it. The amendment which I am offering eliminates the purchaser credit program and cuts $10 million from the Forest Service timber road construction and reconstruction account. In addition, my amendment provides that road construction costs incurred by timber purchasers are to be treated as timber revenues for the purpose of payment to States for use on roads and schools in the counties where national forests are located. The result of this latter provision is that counties will be held harmless as a result of the elimination of the purchaser credit program. For those of my colleagues who are not familiar with this program, let me give a brief description of how the purchaser credit program operates. When the Forest Service wants to use purchaser credits to build the road to a planned timber sale, and parenthetically that is about 90 percent of the time, it must estimate the cost to build the road, the value of the timber in the sale area, and the road right-of- way. Prospective purchasers go through a similar process of estimating their roadbuilding costs and their estimated value of the timber they must pay for to the Forest Service. Considering all of these factors, the prospective purchasers submit their bids accordingly. When a purchaser is awarded the contract for the timber sale the Forest Service establishes the dollar value of the purchaser road credit attached to that sale and credits the account in that amount to the timber contract holder as the road is constructed. The contractor, therefore, has immediate access to the credits to be used in place of cash deposits and the agency, the purchaser, is also given discretion to use the credit on any timber sale contract that it holds in the forest. The Forest Service allows the transfer of purchaser credits between timber sales located within the same national forest. Now the ability to transfer credits aids a purchaser's ability to manage its timber sale portfolio cash flow. Since road construction often delays timber harvest, purchasers who can rapidly transfer road credits to another sale from their portfolio can attain lower portfolio management costs. The result is analogous to an interest-free loan for timber purchasers. The opponents of this amendment contend eliminating the purchaser road credit will devastate the timber industry. Their claim could not be further from the truth. The Bureau of Land Management in several States is successful at selling timber and getting the necessary roads constructed without the use of the purchaser road credit that is exclusive to the Forest Service. The effects on the Forest Service timber sale program of eliminating the purchaser credit program and requiring that roads be constructed pursuant to specified standards as the BLM and the States require would be environmentally and economically beneficial. Eliminating road credits will force purchasers to internalize the cost of road construction into their bid price for the timber. The result is a more balanced system that provides equal treatment for all purchasers of publicly owned timber, BLM and Forest Service lands. Without the purchaser credit program it is likely that fewer roads would be built and less habitat would be fragmented. Purchasers are less likely to want to build extensive road networks if they have to pay cash for them. Consequently, timber sales with high road building costs will be less attractive to purchasers than timber sales with low or no road building costs. Another important aspect of eliminating the purchaser credit program is that it will shift responsibility for estimating road costs from the Forest Service to purchasers. If markets are competitive, such a shift should provide a more accurate and an efficient road cost accounting system. An independent study of timber sales in the Pacific Northwest found that the Forest Service estimates for road construction costs can be as much as 30 percent higher than actual costs for the industry to build those roads. A recent report from the General Accounting Office discovered that Forest Service estimates of road costs include a profit margin for purchasers. It also found that the Forest Service lacked accountability for the accuracy of their road cost estimates because purchasers are not required to report actual costs of construction and reconstruction. So if actual road costs are overestimated, the extra purchaser credits awarded and subsequently traded for timber represent a windfall profit for the purchaser, a profit that comes at the public's expense. This inefficient situation would be eliminated if purchaser credits were abolished. Contrary to what you will hear from my opponents of this proposal, my amendment will not end logging in the national forests. Requiring timber purchasers to pay for road construction costs will likely reduce timber sales in roadless areas where the environmental and economic costs of logging are the greatest. I believe this is sound public policy. Roadless areas are not good places to produce commercial timber because they tend to be a high elevation, steep, and inaccessible. The timber sales in these areas are the ones that cause by far the most environmental problems and the ones which are the biggest money losers because of the high cost of road building. Let me invite my colleagues' attention to an excellent article entitled ``Quiet Roads Bring in Thundering Protests,'' an article that ran earlier this year in the New York Times that illustrated the environmental damage caused by road construction. A biologist with the Idaho Fish and Game Department, Chip Corsi, notes in the article that researchers have found that as little as 1.7 miles of road per square mile forest have the effect of reducing the complement of fish species in an area. Mr. Corsi added that in Idaho, in Coeur d'Alene National Forest we have from 4 to 10 to 15, up to 20 miles of road per square mile, so it is extreme. That is his direct quote. Many scientists have found that road building threatens wildlife because it causes erosions of soils, fragments intact forest ecosystems, encourages the spread of noxious weeds and invasive species and reduces habitat for many animals needing a refuge from man. It has been found that when the roads wash out they dump rocks and soil on lower slopes into stream beds and even when they remain intact, roads act as channels for water and contribute further to the erosion of lands and streams. Let me invite my colleagues' attention to one example of that. This is the Clearwater National Forest in Idaho. At the top of the picture one can see a road cut through the forest. This is the erosion that has occurred as a result of a road having been logged and the runoff sedimentation that has occurred as a consequence of that. That is a major contributing problem to the environmental degradation that is occurring in our national forests. Scientists say the overall effect is that the streams and rivers fill with silt, and the shallower waters mean degraded fish habitat and more flooding. Many of my colleagues are aware that the declining water quality of lakes, rivers, and streams in our national forests is a serious problem. The USDA Undersecretary Jim Lyons has stated that our No. 1 water quality problem in the national forest system is roads. According to the Forest Service, 922 communities get their drinking waters from national forest streams that are frequently adversely affected by building logging roads. In Idaho, over 960 streams are rated as water- quality limited by the EPA because of contamination. Over half of these streams are degraded by logging and roadbuilding. In addition, after the winter storms of 1995 and 1996 in the Pacific Northwest, the Forest Service found that in Idaho 70 percent of the 422 landslides were associated with logging. In my home State of Nevada, the road network through Lake Tahoe has been identified as a major contributor to the degradation of water quality and decline in the clarity of the lake. Mr. President, I know this firsthand, having spent a decade of my life as a resident of northern Nevada and having over the last 50 years visited the Lake Tahoe basin frequently. During the President and Vice President's recent visit to Lake Tahoe the President announced that the Forest Service would decommission or obliterate roughly 290 miles of old logging roads in the basin over the next 10 years. At Lake Tahoe, Mr. President, we have seen a rapid and radical decline in water clarity. One of the most pristine lakes in North America and the entire world, marveled at by Mark Twain and all of the early pioneers at one time, a little more than a decade ago, you could see 100 feet into the bottom of parts of that lake. In less than 30 years there has been an environmental degradation of more than a third. So today you can actually see, in terms of clarity of the water, less than 70 feet. A primary cause is the logging of that basin, initially during the Comstock Lode and the mining discoveries of the mid-to-late 19th century. I observed firsthand, not as a scientist but as a layman, looking at the roads and seeing the runoff that occurs. The siltation that occurs, that goes into the lake, has been a serious environmental problem. It has been estimated that it will require several hundred millions of dollars in order for this clarity and the environmental degradation that is occurring on an ongoing basis to be reversed. There are no guarantees, even at that. My point, Mr. President, is we may have been ignorant in the past as to what caused the problems. Those of our forebears a century ago were less knowledgeable than we are of the environmental consequences. But it certainly cannot be an excuse for our generation because we know what the costs are, and the costs are not just in the new road construction itself. The costs lasts for generations thereafter as we pay as American taxpayers to try to abate or minimize or mitigate the damage that will occur. Now, opponents of this amendment will claim that forest roads need money to be maintained and that the cuts contained in my amendment will allow roads to deteriorate, causing further environmental damage. I want to speak to this point. The amendment which I offer does not affect the Forest Service road maintenance budget. I want to repeat that: The amendment which is offered this afternoon does not affect the Forest Service road maintenance budget. This amendment only eliminates the subsidy of new timber roads. These are entirely separately funded accounts within the Forest System. As a matter of public policy, I would argue it makes more sense to maintain roads that we already have than spending a great deal of money building new roads. Forest Service Chief Michael Dombeck has stated that there is a $440 million backlog of maintenance needed on 232,000 miles of national forest roads. Addressing this need would have considerable environmental benefits such as reducing erosion from roads and stormproofing existing culverts. It is important to remember that the timber industry's responsibility for maintaining logging roads ends with the sale of timber and its subsequent harvest, leaving all future maintenance costs to the American taxpayer. I want to emphasize once again, as I did a moment ago, the distinction between road reconstruction and road maintenance. Opponents of this amendment will seek to measure the distinction but road construction means starting with an abandoned road which may have trees growing in it and may be partly contoured and rebuilding it for the purpose of entering an area to conduct logging activities. Reconstruction is only undertaken for access to timber sales. Maintenance is keeping any forest road, timber, recreation, or general purpose, in good repair. The average cost of maintaining a mile of road is about $543. The average cost of reconstructing a mile of road is more than $12,000 a mile. Consequently, cutting funds for reconstruction will not hurt road maintenance. Now, another erroneous claim I want to address involves whether logging roads are needed for recreational activities in the national forest. The answer, Mr. President, is no. According to the Forest Service, logging roads are built at a lower standard and cost less than recreation and general purpose roads. Logging roads are usually unpaved dirt and are often usable only by high-clearance vehicles, while recreation and general purpose roads generally are either paved or gravel and are usable by all passenger cars. On average, purchaser credit logging roads cost $15,000 per mile in 1996, while recreation roads cost $63,000, and general purpose roads cost $65,000 per mile. The Forest Service plans to construct over 130 miles of recreation and general purpose roads in fiscal year 1998. My amendment would not reduce funding for either of these two accounts. Mr. President, let me be perfectly clear on what my amendment does not do. It does not--I repeat, it does not--prohibit logging or road construction in roadless areas. There is no provision in this amendment that even references roadless areas. Many interest groups opposed to this amendment have circulated erroneous information claiming that road construction would be prohibited in roadless areas. I can assure my colleagues that is not the case. In any event, roadless areas are only a small portion of the timber base in our national forests, and the national forests provide only 4 percent of the Nation's overall wood for paper products. Let me illustrate that point, if I may, Mr. President. One can see what has occurred in terms of the timber harvest in the country and on the national forests. This chart begins in 1950 and continues through 1995. We can see that the overall U.S. timber harvest, both national forests and otherwise, has by and large increased over the last 45 years. It would appear to be in the area of about 18 billion cubic feet a year. You can also see what happened with respect to the national forests. The amount that is harvested there has been declining in recent years, and I believe that is because there is a recognition that there are other important values that the National Forest Service provides to the American people: recreational opportunities, esthetic values, habitat protection, all of which seem to be reflected in this trend line. So my point is that the National Forest Service timber harvest represents about 4 percent of the Nation's overall harvest and, in my view, will not have an economic consequence that will, in any way, make it impossible for the United States to meet its harvest requirements. Now, my amendment does not eliminate all funding for timber road construction either. A similar amendment was offered in the House by Congressman Porter and Congressman Kennedy, which would have eliminated virtually all funding for timber road construction. That amendment, incidentally, was very, very narrowly defeated on a vote of 211 to 209. Let me make the point again. The Porter-Kennedy amendment would have eliminated virtually all funding for new timber road construction. My amendment would reduce the amount of the current appropriation, as proposed, by $10 million, reducing it from a $47.4 million budget. Opponents of this amendment are somewhat disingenuous when they claim that it will decimate the timber road construction program. Finally, Mr. President, I want to make my colleagues aware that this amendment has the strong support of the Clinton administration. I want to introduce into the Record a copy of the letter from the Secretary of the Department of Agriculture, Mr. Dan Glickman. I ask unanimous consent to have this letter printed in the Record.

Mr. BRYAN. Mr. President, Secretary Glickman's letter is in strong support of the amendment that I am offering this afternoon. I also add, Mr. President, that the amendment is also strongly supported by a broad coalition of environmental and taxpayer organizations, including the Wilderness Society, Sierra Club, Friends of Earth, U.S. PERG, Taxpayers for Common Sense, and Citizens Against Government Waste. In addition, more than 60 newspapers across the country have editorialized in support of the amendment. I simply close by making this observation, and I ask my colleagues to consider this one important point. If the purchaser credit program is not a subsidy for the timber purchasers, as the opponents of this amendment claim, then why are they fighting so hard to preserve it? Mr. President, I hope my colleagues can join with those advocates of the environment, those advocates of responsible governmental fiscal practices and support this amendment, because it is a win for the environment and a win for the American taxpayers. Mr. President, I reserve the remainder of the time. I yield the floor. Mr. GORTON addressed the Chair.

Mr. BRYAN

Mr. BRYAN. Mr. President, I rise today to introduce legislation that will protect consumers from a new, egregious banking practice that gives new meaning to the old expression, ``The check's in the mail.'' This practice involves financial institutions sending unsolicited checks to consumers, some of whom have no prior relationship with the financial institution at all. These checks in fact obligate the recipient to a loan with interest rates as high as 25 percent. I invite my colleagues' attention to a format that is frequently used. This check is sent in a window envelope in which the recipient sees his or her name, opens it up and believes that indeed a check has been sent to him or to her. What may at first appear to be pennies from Heaven is in reality a loan backed by exorbitant interest rates and punitive loan terms, but these details are only found in the fine print often on the back of the check. While only a few banks are engaged in this practice, it is nevertheless a growing practice and needs to be stopped before it gets completely out of hand. For example, one bank has booked $1 billion of these unsolicited loans in a period of 18 months. At a time when personal bankruptcies are at an all-time high --many attribute that to easy credit-card debt--the practice in which consumers are enticed into taking a loan that they really have not sought should concern all Americans. I fear for the long-term consequence of these loans should the economy take a sudden downturn and these loans are left in default. The bottom line, Mr. President, is loans should only be issued when an application has been made and approved, with the consumer fully understanding the terms of the loan. In the case of these loans, all the pertinent information consumers need to know about fees, charges, interest rates is in microscopic print and most frequently on the back of the check itself. Mr. President, banks are trying the patience of the American consumer with their ever increasing use of fees and questionable market practices. My State of Nevada has gone through a series of bank mergers that have left customers frustrated and confused. Service has been downgraded, accounts lost and fees increased. According to one report, the number of types of fees charged by banks increased from 96 to 250 while the banking industry itself continues to earn record profits-- surpassing $50 billion. These unsolicited checks are setting rates right up against the usury ceilings with some carrying rates as high as 25 percent. Adding insult to injury, these checks are targeted to people who can least afford to pay these exorbitant rates but are easily tempted by the lure of easy money. Mr. President, I want to commend Congressmen Hinchey and Gonzalez in the House for raising this issue. I look forward to the Banking Committee holding hearings on this important legislation. The distinguished chairman of the subcommittee has indicated that it is his intention to hold hearings on this issue. I look forward to processing this legislation as quickly as possible.

Mr. BRYAN

Mr. BRYAN. Mr. President, I rise today to introduce legislation that will protect consumers from a new, egregious banking practice that gives new meaning to the old expression, ``The check's in the mail.'' This practice involves financial institutions sending unsolicited checks to consumers, some of whom have no prior relationship with the financial institution at all. These checks in fact obligate the recipient to a loan with interest rates as high as 25 percent. I invite my colleagues' attention to a format that is frequently used. This check is sent in a window envelope in which the recipient sees his or her name, opens it up and believes that indeed a check has been sent to him or to her. What may at first appear to be pennies from Heaven is in reality a loan backed by exorbitant interest rates and punitive loan terms, but these details are only found in the fine print often on the back of the check. While only a few banks are engaged in this practice, it is nevertheless a growing practice and needs to be stopped before it gets completely out of hand. For example, one bank has booked $1 billion of these unsolicited loans in a period of 18 months. At a time when personal bankruptcies are at an all-time high --many attribute that to easy credit-card debt--the practice in which consumers are enticed into taking a loan that they really have not sought should concern all Americans. I fear for the long-term consequence of these loans should the economy take a sudden downturn and these loans are left in default. The bottom line, Mr. President, is loans should only be issued when an application has been made and approved, with the consumer fully understanding the terms of the loan. In the case of these loans, all the pertinent information consumers need to know about fees, charges, interest rates is in microscopic print and most frequently on the back of the check itself. Mr. President, banks are trying the patience of the American consumer with their ever increasing use of fees and questionable market practices. My State of Nevada has gone through a series of bank mergers that have left customers frustrated and confused. Service has been downgraded, accounts lost and fees increased. According to one report, the number of types of fees charged by banks increased from 96 to 250 while the banking industry itself continues to earn record profits-- surpassing $50 billion. These unsolicited checks are setting rates right up against the usury ceilings with some carrying rates as high as 25 percent. Adding insult to injury, these checks are targeted to people who can least afford to pay these exorbitant rates but are easily tempted by the lure of easy money. Mr. President, I want to commend Congressmen Hinchey and Gonzalez in the House for raising this issue. I look forward to the Banking Committee holding hearings on this important legislation. The distinguished chairman of the subcommittee has indicated that it is his intention to hold hearings on this issue. I look forward to processing this legislation as quickly as possible.

Mr. BRYAN

Mr. BRYAN. I thank the Chair. (The remarks of Mr. Bryan pertaining to the introduction of S. 1163 are located in today's Record under ``Statements on Introduced Bills and Joint Resolutions.'') Mr. GORTON addressed the Chair.

Mr. BRYAN

Mr. BRYAN. Mr. President, the balanced budget agreement before us is an historic document. The agreement puts us on the path to a balanced budget in 2002, the first balanced budget since 1969. The agreement contains significant changes for Medicare, Medicaid, and welfare. The Children's Health Insurance Initiative is also a momentous move toward ensuring all children in this country will not want for lack of health care. This was my first year as a new member of the Senate Finance Committee. The committee spent many hours debating and considering the myriad of issues involved in developing the Medicare and other health areas of this budget bill. These issues were complex, the debate long, and decisions very difficult to make. As with any far-reaching legislation, no one, including myself, agrees with every provision included. New Medicare Choices and Benefits New choices are provided for Medicare beneficiaries to choose how they would like to receive their health care. These choices include: continuing the traditional fee-for-service Medicare; provider sponsored organizations which are similar to HMO's, except they are operated by medical providers rather than insurance companies; private fee-for- service; preferred provider organizations which allow beneficiaries to choose doctors outside their HMO network; continuing current private plan HMO's that generally provide more benefits, including prescription drug coverage, than traditional Medicare, at a lower cost. A medical savings account combined with a $6,000 high-deductible policy option will be tested as a demonstration project limited to 390,000 participants. This $6,000 deductible is nearly three times as high as the maximum deductible allowed in last year's health care reform law. I supported the Senate version which would have limited the demonstration to 100,000 participants, and established a cap on out-of-pocket expenses of $3,000, which were not accepted in the final budget agreement. With the bill's high deductible, there is serious concern regarding whether any but the most affluent Medicare beneficiaries will be able to choose this option, and if they do, what the impact of the loss of those generally healthier and younger beneficiaries will be on the traditional Medicare fee-for-service option expenses. Medicare beneficiaries' future health will be improved with the inclusion of new preventive health care services. These new services include mammography, PAP smears, diabetes, prostate and colorectal screening, bone density measurement, and vaccines. medicare fraud and abuse prevention This budget bill also builds on efforts to reduce Medicare fraud and abuse efforts included in last year's Health Insurance Portability and Accountability Act. A new toll-free telephone number is established to allow Medicare beneficiaries to report fraud and billing irregularities directly to the Inspector General of the Department of Health and Human Services. It is hoped the toll-free hotline will encourage beneficiaries to be even more diligent in reviewing their Medicare bills, and reporting any discrepancies. Additionally, Medicare beneficiaries will be given the right to request an itemized billing statement for their Medicare services. Suppliers of durable medical equipment must provide information as to persons with an ownership or control interest in the company. These suppliers, and home health agencies, comprehensive outpatient rehabilitation facilities and rehabilitation agencies are all required to post a surety bond of $50,000. These are efforts to ensure only legitimate Medicare providers are certified, and to reduce the incidences of fraud and abuse in these services. The Secretary of Health and Human Services will be able to refuse to enter into, or renew a Medicare agreement with a provider, either an individual or an entity, who has been convicted of a felony under Federal or State law for an offense which would be inconsistent with the best interests of Medicare beneficiaries. If a provider has been mandatorily excluded from participating in Federal and State health care programs because of a conviction involving Medicare or Medicaid program-related crimes, patient abuse, or felonies related to health care fraud or controlled substances, the exclusion shall be for a period of 10 years if the provider has been convicted on only one occasion, and permanently excluded if the provider has been convicted on two or more occasions. Its the old three strikes and you are out reapplied. long-term medicare reforms As a member of the senate Finance Committee, I supported efforts that would have begun to make long-term Medicare reforms. I am disappointed none of these proposals were included in this final budget. Over the past 2 years, the rapidly rising costs of the Medicare program, and its future solvency, have been major concerns. The 1997 Medicare Trustees Report concluded the Medicare part A trust fund, providing hospital service coverage, is likely to become insolvent as early as 2001. This balanced budget does buy us approximately 10 more years of trust fund solvency. But unless we promptly address the solvency of Medicare, we will still face a medical and fiscal crisis as the baby boomers retire, and begin to rely upon Medicare. The Congressional Budget Office estimates that Medicare costs in 1997 will be $212 billion. In 2007, the costs are estimated to total over $467 billion--well over a 100 percent increase. In the year 2011 alone, the year the baby boom generation begins to reach 65 years of age, more than two and a half million individuals will become Medicare eligible. Medicare cannot come close to covering these future retirees, as well as those already retired, unless changes are made. This is the harsh reality we should have dealt with in this budget. I firmly believe a reduction in Medicare benefits for eligible beneficiaries should not occur. Yet, to ensure these health care benefits continue, changes must be made elsewhere in the Medicare program. Raising the Medicare eligibility age to coincide with the Social Security eligibility age, and increasing the costs of the Medicare Part B--the physician and outpatient services coverage--monthly premium of the most affluent 4 percent of all Medicare recipients are two ways to ensure our Medicare program remains solvent past 2001--and that benefits are not reduced for all older Americans. In fact, in 1983, during the Reagan administration, similar age eligibility requirement changes were made for Social Security beneficiaries to help prolong the solvency of that program as well. The Senate bill would have increased the age of eligibility for Medicare from 65 years to 67 years of age. Yet this shift would have taken place during a span of 25 years--from 2003 to 2027--and would not have affected anyone who is currently receiving Medicare benefits. One of the major criticisms of the Medicare age increase proposal was that it could leave many seniors without adequate health care coverage if they choose to retire earlier. Currently, if an individual wants to retire earlier than the Social Security retirement age of 65 years, the individual takes a reduction in his or her Social Security benefit. We could allow early retirees, who are Social Security eligible, to buy in to Medicare coverage earlier. This may, however, require higher costs for such beneficiaries, until they reached the age of full eligibility for Social Security and Medicare benefits. This final budget bill has bought us some time to deal responsibly with preserving Medicare. A national bipartisan commission will be established to recommend long-term Medicare reforms to ensure this vital health care program can meet the challenge of providing coverage for the baby boom generations. When this commission reports its recommendations, Congress must act upon its reform recommendations immediately. And it would be irresponsible of Congress not to make the tough, often unpopular, decisions that are going to be necessary to preserve this vital program. The sooner these reforms are made, the sooner we can ensure future Medicare beneficiaries will not face a reduction in covered medical services, and that Medicare survives into the 21st century.

Mr. BRYAN

Mr. BRYAN. Mr. President, I am pleased to join many of my colleagues from the West today in introducing the Mining Law Reform Act of 1997. The mining industry has always played an important role in our national economy, and particularly in the economies of many western States. From the discovery of the Comstock Lode in the 19th century, to the silver boom of the Goldfield-Tonopah area in the early 20th century, to the record levels of gold and silver production in the last decade, the mineral industry has historically played a vital role in Nevada's economy. For the fifth year in a row, Nevada's mines have collectively topped the 6 million ounce mark in gold production. In 1996, there was a total of 7.08 million ounces of gold produced in Nevada. The State's rich landscape has made Nevada the largest gold producer in the nation with 66.5 percent of all production. In addition, it now accounts for 10 percent of all the gold in the world. The most recent information from the State of Nevada indicates that direct mining employment in Nevada exceeds 13,000 jobs. The average annual pay for these jobs, the highest of any sector in the state, is about $46,000, compared to the average salary in Nevada of about $26,000 per year. In addition to the direct employment in mining, there are an estimated 36,000 jobs in the state related to providing goods and services needed by the industry. I would also like to note that Nevada mining companies must pay taxes like any other business, and they also pay an additional Nevada tax called the ``Net Proceeds of Mines Tax.'' The total Net Proceeds tax paid to the State in 1995 was approximately $33 million. With the addition of sales and property tax, the industry paid approximately $141 million in State and local taxes in 1995. In addition, the Nevada mining industry paid approximately $95 million in Federal taxes in 1995. The figures and statistics I have just mentioned are significant not only to emphasize the importance of the mining industry to the State of Nevada, but also to provide a context for the criticism often leveled against the industry that they enjoy a free ride for mining activities on Federal land. The bottom line is that the mining industry pays taxes just like any other business, and in Nevada they pay an additional tax targeted specifically to their industry. The issue of reclamation is also central to the mining law reform debate. I should note that Nevada has one of the toughest, if not the toughest, State reclamation programs in the country. Nevada mining companies are subject to a myriad of Federal and State environmental laws and regulations, including the Clean Water Act, Clean Air Act, and Endangered Species Act. Mining companies must secure literally dozens of environmental permits prior to commencing mining activities, including a reclamation permit, which must be obtained before a mineral exploration project or mining operation can be conducted. Companies must also file a surety or bond with the State or the Federal land manager in an amount sufficient to ensure reclamation of the entire site prior to receiving a reclamation permit. It is in the context of promoting the economic viability of the mining industry and of encouraging strong environmental reclamation efforts administered by the States that I view the debate over the reform of the Mining Law of 1872. As I have stated many times over the years, I feel that certain aspects of the 1872 mining law are in need of reform. Specifically, I feel strongly that the patenting provision of the current law should be changed to provide for the payment of fair market value for the surface estate--our legislation does that. All patents should also include a reverter clause, which would ensure that patented public lands would revert to Federal ownership if no longer used for mining purposes--our legislation does that. I believe that mining laws reform legislation should ensure that any land used for mining purposes must be reclaimed pursuant to applicable Federal and State statutes--our legislation does that. And finally, I believe that mining law reform legislation should impose a reasonable royalty on mineral production from Federal land--our legislation does that. The Mining Law Reform Act of 1997 addresses each of the concerns I have just outlined. It is my hope that this legislation will serve as the starting point for the debate over mining law reform this year. The time has never been more critical for Congress to enact comprehensive mining law reform. The aura of uncertainty that the industry has been forced to operate under for the last decade is causing many companies to look overseas for their future operations. The number of United States and Canadian mining companies exploring or operating in Latin America continues to grow dramatically. We must enact mining reform this Congress if we hope to secure the economic benefits we derive as a Nation from a healthy mining industry.

Mr. BRYAN

Mr. BRYAN. I thank the senior Senator from California. Mr. President, I rise to support the amendment offered by the senior Senator from California. In my view, and I speak as one who has appeared before the ninth circuit as an attorney, the provision included in this appropriation bill to divide the ninth circuit and create a new 12th circuit is inappropriate, ill-conceived and ill- advised. I must express my dismay that my colleagues on the Appropriations Committee have seen fit to usurp the jurisdiction of the Judiciary Committee on this matter. If there was ever an issue that deserved to be considered in a thoughtful and careful manner by the Judiciary Committee, it is the issue of reforming our Federal court system. The Commerce, Justice, State appropriation bill is clearly not an appropriate venue to debate an issue of this magnitude, one that will have far-reaching policy implications, not only for those of us in the West but for the entire Nation. The Ninth Circuit Court of Appeals Reorganization Act of 1997 would reformulate the ninth circuit to include California, Nevada and the Pacific territories, and create a new twelfth circuit consisting of Alaska, Arizona, Hawaii, Idaho, Montana, Oregon and Washington. In the 104th Congress, the distinguished senior Senator from Washington introduced legislation that would have placed California, Nevada, Arizona, Hawaii and the Pacific territories in the ninth circuit. That legislation was later modified by the Judiciary Committee to establish a new ninth circuit consisting of California, Hawaii and the Pacific territories, and I have been further advised that at one time a proposal was floating around that would divide northern and southern California into separate circuits. I mention these various iterations of dividing the ninth circuit to make the point that there is a variety of views as to how best to address the ninth circuit and whether or not it should be divided, and, if so, how it should be divided. But in my view, it is clear the proposal to divide the ninth circuit is more reflective of an act of political expediency than the prudential concerns related to the administration of justice. The sponsors of this provision claim that the ninth circuit is unable to effectively manage its caseload because it has grown too big and that the solution to this perceived problem is to divide the circuit. But this, I fear, is only a smokescreen, for the real reason splitting the ninth circuit being proposed at this time is simply that many do not like the decisions rendered by the circuit. While they will not admit that one purpose of dividing the ninth circuit is to change the substantive outcomes of decisions, the sponsors have made clear their displeasure with many decisions issued by the court, particularly in the area of natural resource protection. Surely not all of the decisions in the ninth circuit, or for that matter any circuit, come down the way that all of us would like. I, myself, have cosponsored legislation that would reverse the effect of some of the ninth circuit decisions. But I do not believe that differences over the decisions rendered by the ninth circuit are an adequate basis to split the circuit. What kind of precedent would the Congress then be setting? Would a circuit court of appeals face possible reconfiguration whenever Congress does not like the decisions being rendered? Does this Congress really want to support what is essentially judicial gerrymandering? I hope not. The ninth circuit serves nine Western States and has been one circuit for more than 100 years. Whenever the issue of splitting the circuit is put to a vote of the judges and lawyers in the circuit, the vote has been overwhelmingly to retain the circuit as it is currently constituted. Who better than those judges who comprise the circuit and those lawyers who represent litigants before the ninth circuit to determine whether or not the ninth circuit is working effectively or not? It has been my experience that neither judges nor lawyers have been shy about stating an opinion when they think something needs to be changed. The last study of the Federal Circuit Court of Appeals was by the 1973 Hruska Commission. A fellow Nevadan, the Honorable Charles Wiggins, a ninth circuit court judge, served as a member of that commission. Parenthetically, Judge Wiggins first served as a Republican Member of the House before serving on the ninth circuit. In a letter to California's senior Senator, he stated: My understanding of the role of the circuit courts in our system of Federal justice has changed over the years from that which I held when the Hruska Commission issued its final report in 1973. At that time, I endorsed the recommendations of the Commission calling for a division of the fifth and ninth circuits. I have grown wiser in the succeeding 22 years. We should heed Judge Wiggins' experience--act wisely and not precipitously in dividing this circuit. The last time a circuit court of appeals split was in 1980 when the fifth circuit was divided and the eleventh created. It should be noted that the judges of the fifth circuit unanimously requested the split, a situation we clearly do not have with the ninth circuit. In a recent letter, Judge Wiggins wrote me: Circuit division is not the answer. It has not proved effective in reducing delays. The former fifth circuit ranked sixth in case processing times just prior to its division into the fifth and eleventh circuits. Since the division, the new fifth circuit is still ranked fifth or seventh, while the new eleventh circuit now ranks 12th, the slowest of all circuits. The Ninth Circuit Court of Appeals judges are the fastest in the Nation in disposing of cases once the panel has received the case. So the ninth circuit would appear to take the appropriate administrative steps to manage its caseloads through innovative ways that other circuits use as models. The ninth circuit disposes of cases in 1.9 months from oral argument to rendering a decision. That is less than the national average by 2 weeks. This currently makes the ninth circuit the second most efficient circuit in the country. So it is obvious the circuit has recognized caseload management is an area that needs improving and is successfully addressing it. I find it particularly ironic that in this political environment in which budget decisions are hotly debated and new expenditures are closely watched that a new circuit would be proposed, because it is estimated that a courthouse alone would cost some $60 million and there would be additional costs that would be involved in the transition period. So, therefore, we would face the continuing cost of operating an additional circuit court when, at this point, no determination has been made in a fair and objective way that dividing the circuit is necessary. In my view, the ninth circuit has worked well for the nine Western States it serves and will continue to do so into the future. For those who believe the ninth circuit must be split, I urge the support of the Feinstein amendment to establish a commission to review the structure and the alignment of the Federal courts of appeals. This is a thoughtful and prudent way to address this issue. When the information necessary to determine whether any circuits need their geographical jurisdiction changed is available, we can then debate this issue more intelligently, having been thoroughly informed as to the facts. But let us not split the ninth circuit at this time. Mr. President, I yield the floor.

Mr. BRYAN

Mr. BRYAN. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. BRYAN. Mr. President, as I understand the unanimous consent, it is 30 minutes equally divided, if I might inquire of the Chair.

Mr. BRYAN. I yield myself 7\1/2\ minutes. Mr. President, the amendment I am offering today, along with Senator Kerry, Senator Gregg, and Senator Grams, addresses a continuing misuse of taxpayer dollars by the now infamous Market Access Program, which has previously been known as the Market Promotion Program, and before that the Targeted Export Assistance Program. As most Senators know, I have worked to eliminate this unjustifiable program for more than 5 years. But the resilient program keeps coming back to life under different names and without the consent of the full Senate. When efforts to eliminate the program have been blocked, I have tried to reform the program and end its subsidies to large corporate and foreign interests. Twice now the Senate has voted to reduce funding for this program to a level of $70 million annually, and twice the funding has been restored off the Senate floor. Today, I am asking the Senate to join me once again to put an end to this program's abuses. It is inexcusable to allow this program to continue to funnel Americans hard-earned tax dollars to foreign companies to subsidize their advertising budgets. When the Market Access Program was created more than 10 years ago it was called the Targeted Export Assistance Program and was intended to be used by trade organizations to counter unfair trading practices by foreign competitors to disadvantage U.S. exports, and reduce funds from the Department of Agriculture's Commodity Credit Corporation to promote U.S. goods in foreign markets. I don't think that anyone would disagree that expanding foreign markets for U.S. products is an important part of the overall competitive trade strategy. However, as this program evolved over the past 10 years the program was no longer limited to exporters facing unfair competition. Even as this body labored to cut back on Federal expenditures, scarce U.S. tax dollars continued to flow to major U.S. corporations as well as to foreign companies. Make no mistake. We are talking about more than $1.5 billion given away to corporate entities over the past decade. Unlike the Promotion Assistance Program provided through the Department of Commerce, these are grants. So they are never repaid. From 1986 to 1993, nearly $100 million of Market Promotion Program funds went to foreign companies. From 1993 to 1995, the program gave roughly $10 million to $12 million each year to foreign corporations. Many of my colleagues will recall that I joined with the distinguished ranking member of this subcommittee, Senator Bumpers, to try to end this blatant waste of taxpayer dollars, and the Senate backed us in our efforts. During consideration of the 1996 farm bill, the Senate voted 59 to 37 in favor of my amendment to prevent Market Access Program funds from flowing to foreign companies. The amendment provided that only ``small business,'' as defined by the Small Business Administration, and Kapra Vaultsted Cooperatives, would provide for assistance through programs. In addition, funds for the program which were at that time set at $110 million were capped at $70 million. So the Senate has been on record to limit the amount of money in this program at $70 million and to eliminate money from this program going to foreign companies. I make it clear. My preference would be to eliminate the entire program because I believe this is corporate welfare in its worst form. That has not been the will of the Senate. But twice the Senate has been on record capping this program and preventing money from going to foreign companies. In reviewing the action of the Foreign Agriculture Service since the 1996 farm bill changes took effect, it is clear however, that the Foreign Agriculture Service has not carried out the intent of the Senate in spite of the Senate's action to bar the distribution of Market Access Program funds to foreign companies. Companies based in the United Kingdom, Australia, and Saudi Arabia received more than $475,000 in fiscal year 1996 through this same program. There is a partial list of foreign companies that received funds after the Senate added in the 1996 agriculture bill a prohibition against money going to foreign companies. They did it by an ingenious but somewhat convoluted definition of what constitutes a foreign company. The purpose of this amendment is simply to do what the Senate has gone on record to do twice before, and that is to cap the amount of money going into the program at $70 million and to prevent money from going to foreign companies. I ask my colleagues to be supportive of this amendment. If I might cite an example. The Alaska Seafood Marketing Institute has received $55 million through this program since 1987. Supporters of this corporate giveaway would no doubt point out the importance of supporting Alaskan industry in foreign markets. But the Alaskan Seafood Marketing Institute gave at least $724,000 to USDA-listed foreign corporations in 1996 alone. So I must say it boggles the mind to imagine how much money has gone to these same companies since the program began in 1986. The National Peanut Council in 1996 distributed $50,000 to Internut Germany, $60,000 to Felix Polska, and $30,000 to the Basamh Trading Company of Saudi Arabia. All three of these companies were openly listed as foreign on the USDA list in past years. Yet, they continue to receive funds from the Market Access Program.

Mr. BRYAN. Mr. President, I send an amendment to the desk and ask for its immediate consideration.

Mr. BRYAN. I thank the Chair. I reserve remainder of my time. Mr. COCHRAN addressed the Chair.

Mr. BRYAN. My friend and colleague from Mississippi propounded, I think, a very fair question. Whose side are you on? Those who support the Bryan amendment are on the side of the American taxpayer. I believe that whether you come from a farm State or nonfarm State, when you are told that your hard-earned tax dollars go to foreign companies, that is offensive. I think it is not only offensive, it is without justification. How can we call upon the American people, in effect, to subsidize foreign companies with their own tax dollars. It is my view that this program is corporate welfare. It is also my view that this program ought to be eliminated. But that is not the issue today. The issue today is whether you favor cutting off money, taxpayer dollars, to foreign companies such as these that are illustrated here from Saudi Arabia, from France, the Netherlands, Germany, and Canada. We tried to do that. We tried to do that. But the bureaucrats have come up with some convoluted definition of what constitutes a foreign company that now makes it possible for foreign companies to receive these moneys notwithstanding the overwhelming vote of the Senate to express its displeasure. I could not resist a comment when my friend from Mississippi talked about the reforms that have taken place. This is a program that is in need of elimination. But I will say to you that the General Accounting Office as recently as March of this year had this to say about this Market Access Program, and I quote: Adequate assurance does not exist to demonstrate that Market Access Program funds are supporting additional promotional activities rather than simply replacing company industry funds. So, in effect, what is occurring here is a big scam, and the American taxpayer is the victim. Companies that receive these subsidies simply reduce the amount of money of their own corporate funds for their advertising budget and have it supplemented at the expense of the taxpayer. That neither encourages nor helps agricultural exports nor helps American agriculture, but it certainly dips deep into the taxpayer pocket, as it has for many, many years. This is the time to eliminate one of the fundamental abuses. That is money going to foreign companies. We thought we had done that in the last Congress. This definition in this amendment tightens that loophole that apparently the bureaucrats have been able to find and would put a cap which the Senate has previously voted on at $70 million. I will yield the floor and the remainder of my time.

Mr. BRYAN. I yield myself another 4 minutes, and I would certainly provide whatever time the distinguished ranking member would like to speak if he chooses to comment on this. Madam President, let me just point out that this program ought to be eliminated. The Senate has been resistant. But the Senate has gone on record twice as having said the program ought to be limited to $70 million. The present level would be $90 million. So this amendment seeks to in effect do what the Senate twice has gone on record as trying to accomplish. Second, my colleagues will recall that the other part of the amendment that we offered was passed by a vote of 59 to 31, which, I believe, was to eliminate money going to foreign companies. The bureaucracy is extraordinarily creative and ingenious. So companies that have historically since the advent of this program back in the 1980's were designated as foreign companies miraculously under a new definition after the Congress--this is the current law--went on record as saying not to allow this money to go to foreign companies. They have redefined ``foreign companies'' as ``nonforeign'' or ``domestic companies'' for purposes of this legislation. So one of the reforms that we thought that we got enacted in the last Congress--that is, to eliminate the flow of money to companies like this to Saudi Arabia, to France, to the Netherlands, to Germany, to Canada, the United Kingdom, and other companies. We thought we had closed that door. But the Foreign Agriculture Service had redefined what constitutes a foreign company. So what this amendment tries to do is to reinstate the intent of the Senate as passed by an overwhelming margin, and is currently the law to prohibit the flow of money in this program, the taxpayer dollars to foreign companies. I hope my colleagues will be supportive of this amendment as they have on two previous occasions. I yield the floor but reserve the remainder of my time.

Mr. BRYAN

Mr. BRYAN. Mr. President, I supported this compromise legislation in the Senate Finance Committee, and I intend to support its passage on the floor as well. While there are many aspects of this legislation which I believe could be improved, I applaud Chairman Roth for his efforts to produce a bipartisan, consensus bill that the great majority of the members of the committee could support. One of the areas where I believe the bill does not go far enough in correcting flaws in the House Ways and Means bill, however, relates to the treatment of investment in real estate. Since 1963, so-called real estate depreciation recapture resulting from straight line depreciation has been provided the same tax rate as other forms of capital gains. Under current law, this rate is 28 percent. Under the House Ways and Means bill, however, an unfair differential is created between the general capital gains rate, which is capped under the bill at 20 percent, and the tax rate applied to depreciation recapture, which is set at 26 percent. Many members of the Senate Finance Committee expressed serious concerns with this inequitable treatment of real estate investment, and significant efforts were made during the committee's consideration of this bill to provide equal treatment for depreciation recapture. Unfortunately, revenue concerns limited our ability to provide the 20 percent rate for depreciation recapture, and, in the end, the committee agreed to lower the rate for depreciation recapture to 24 percent. While a better result than the House Ways and Means Committee's 26- percent rate, the 24-percent rate in the Senate Finance bill still does not place real estate investments on an equal footing with other types of investment. I urge the leadership of both the Senate Finance Committee and the House Ways and Means Committee to reconsider this issue, and, during conference, to restore equal treatment for real estate investment. At a minimum, I urge the conference committee to resist any effort to increase the tax rate for depreciation recapture any higher than the 24 percent included in the Senate bill.

Mr. BRYAN

Mr. BRYAN. Mr. President, I rise today to recognize the innumerable contributions and outstanding leadership that have characterized the tenure of the Honorable Jesse Brown as the Secretary of Veterans Affairs. It is with great appreciation, as well as sadness, that I speak of his accomplishments today, as his term as the chief of the second-largest agency in the Federal Government will come to an end on the first of July. Under his guidance over the past 4\1/2\ years, the Department of Veterans Affairs has undergone some of the most fundamental changes in decades. In the past, such groundbreaking reforms and restructuring may have inspired fear on Capitol Hill and in veterans' facilities across the Nation, but with Jesse Brown at the helm, the Department has undergone a transformation with support, hard- earned at times, from both budget-cutters in Congress and from veterans across the country. When Secretary Brown took office in 1993, he was faced with an outdated health-care delivery system stretched to its limits trying to maintain too many large, aging hospitals. The Secretary rose to the challenge by closing hospitals that did not serve their patients well and beginning an overhaul of the entire VA medical system into a network of 22 regional provider regions. Within these regions, increased attention is being given to the quality of care available as well as to outpatient services. These changes, which are still taking hold in many places, demonstrate the vision that Secretary Brown brought to his work; a vision of changing with the times, but never giving up on the primary focus of providing services to veterans. Secretary Brown's unyielding drive to ensure that veterans have access to needed services is very important to Nevada, one of only two States in the Nation where the population of veterans is growing. While my State's problems are very different than those of a Northeastern or Midwestern State, Secretary Brown took these differences into account and has been instrumental in helping Nevada be more responsive to the needs of the men and women who have served our country. The Department of Veterans Affairs has begun to reallocate its resources so that Federal funds are made available where veterans' needs are most critical. In southern Nevada, where approximately 118,000 veterans already crowd existing facilities, new projects will allow Nevada's veterans to access doctors, counselors, and other benefits to which they are entitled. The Secretary has helped Nevada's underserved veterans gain access to the services they deserve through his active support for efforts to construct and expand desperately needed medical facilities in southern Nevada. Secretary Brown has come to the aid of Nevada's veterans during crises, as well, stepping in to help find a solution when one of the VA facilities in Nevada faced administrative problems. While I could go on much longer just discussing Secretary Brown's contributions to Nevada's veterans, I would be amiss if I did not mention the profound impact he has had on all American veterans and their families. He has tackled the most sensitive issues facing veterans, including his work to enact laws authorizing the VA to provide compensation and treatment for Persian Gulf war veterans' undiagnosed illnesses. He also expanded services to women veterans, which is evident at the new Addeliar D. Guy III Ambulatory Care center soon to open in Las Vegas. Finally, Secretary Brown confirmed the VA's commitment to all veterans in need by convening the first summit on the issues facing homeless veterans, and followed up on this by adding homeless programs to the services provided at VA medical centers. Again, this effort has a great impact in Las Vegas, where a large number of homeless veterans have needs that have, until now, largely gone unmet. With the help of the Department of Veterans' Affairs, however, Las Vegas will soon boast a new initiative that joins hands with the city and county to provide assistance to the homeless veterans in Las Vegas. Mr. President, I have only touched upon a few of the many positive changes and initiatives launched by Secretary Brown, and I have not even made mention of his previous service to his country as a soldier in Vietnam or as the director of the Washington office of the Disabled American Veterans. I am sure that Secretary Brown will continue to make this world more livable and more enjoyable for veterans in whatever challenges he pursues in the future, buoyed by his commitment to ``putting veterans first.'' Whether guaranteeing a home loan for a veteran just returned from a tour overseas, streamlining health care procedures at a local walk-in clinic, or intervening to prevent the eviction of elderly VA nursing home residents, Jesse Brown has proven that he, and the agency he led, do indeed put veterans first. When he announced his resignation, Secretary Brown said he wanted to be remembered as ``someone who made a difference in the quality of veterans' lives.'' I speak for the veterans of Nevada, and across the country, when I say that Jesse Brown will be remembered not only for improving veterans' access to needed benefits, but also for leading this agency with skill, with compassion, and most of all with an appreciation for the noble service of our Nation's veterans.

Mr. BRYAN

Mr. BRYAN. I thank the Chair. Mr. President, this is the wrong place and the wrong time to be considering an amendment of this nature. This would make a fundamental change in the tax law with respect to the percentage depletion for the recovery of mineral deposits, a provision that has been in the Tax Code for more than six decades. It would discriminate against only one type of mining activity--that which occurs on the public lands. The proponents of this amendment really are debating today changes they want to seek in the mining law of 1872. I do not disagree that changes need to be made. We are prepared, in representing a State in which this is such an important industry, to provide for royalty provisions, fair market value of the surface, as well as reclamation efforts. The ore body itself is a wasting asset. So a depletion allowance for mineral recovery is analogous to depreciation permitted on the improvements on real property. So this is not some exotic provision in the Tax Code. It recognizes that the ore body itself will be exhausted in a finite period of time, and it seeks to provide that kind of tax coverage. Finally, I want to point out, as my colleague from Utah pointed out, that this would be an administrative nightmare. At least one particular mining activity in my own State is derived at the source of title or possession of the land from six different sources. So you would have to identify where the minerals recovered are from six different sources in order to apply the provisions of the law. I urge its rejection.

Mr. BRYAN

Mr. BRYAN. I thank the distinguished Senator from Alaska, and I very much appreciate his statement, which I think effectively deals with the amendment that our friend from Arkansas has offered. Let me preface my comments while the distinguished Senator from Arkansas is in the Chamber that he noted that at the end of this Congress he will not be a candidate for reelection and this will represent his last Congress as a Member of this body. I must say that I regret the decision of the Senator from Arkansas. He has a distinguished record of public service in his own State as Governor and as a Member of this body. I have been pleased to share common cause with him on many, many issues which I believe in his public policy pronouncements are correct for the country, and he, indeed, has been a visionary in some of the things he wishes to do. I do not quarrel for one moment with his sincerity. I know the depth of his conviction and I know them to be deeply entertained. I believe, however, that the Senator's zeal for this issue has obscured some of the facts that I think important for us to understand before we follow the course of action that he would suggest to us. First, I want to point out the importance of this industry to my own State and to correct what is oftentimes, because of an oversimplified presentation, an impression that is given that the industry pays no taxes. We hear this continuously in the course of the debate on the mining law of 1872. According to the National Mining Association, the industry, coal and hard rock, paid more than $600 million in Federal taxes in 1995. The General Accounting Office issued a report recently --this is not a publication that emanates from the mining industry but a General Accounting Office report--that indicates the average tax rate for the mining industry from 1987 to 1992 was 35 percent. Now, that is compared with 23 percent for the automobile industry, 19 percent for the chemical industry, and 33 percent for the transportation industry. In Nevada alone, the gold mining industry paid more than $141 million in State and local taxes in 1995, including $32.7 million in property taxes. So let no one who is listening to this argument be misled that the industry pays no taxes, that it is given a free ride. That simply is not true. The industry pays a substantial amount of taxes at the Federal level, at the State level, and at the local level. This issue really is not about the depletion allowance. This is really the stalking horse for an issue which we have been debating for some years, and that is the mining law of 1872. There is no disagreement among Members that the mining law of 1872 needs to be updated and modernized. The industry recognizes that and is in agreement, and my colleague from Arkansas recognizes that. And there is, indeed, fundamental agreement on the general areas that need to be updated. Let me just refresh my colleagues' memories and identify the issues. The industry acknowledges that a royalty needs to be paid, and they are prepared to pay a 5 percent net proceeds royalty. Now, there is a difference as to how much the industry should pay, but there is a recognition on behalf of the industry that a net proceeds royalty tax is appropriate and the industry is prepared to pay that. Second, there is a recognition that the mining law of 1872 needs to be changed, and those who gain access pursuant to the law of 1872 need to pay a fair market value for the surface estate, in addition to the royalty which I have just indicated. That is a second area of agreement, the fair market value. Third, there is a fundamental recognition, if entry is gained as it is under the mining law of 1872 and there is no longer utilization of the land for that purpose, of the possibility of revert, allowing the Secretary of the Interior to revoke the authority and to reenter the lands at his discretion. There is a recognition of the need to pay a permanent maintenance fee for every claim that is held on Federal lands, and that fee needs to be made permanent; that an abandoned mines land fund should be established, and that as part of that a reclamation requirement be imposed as well.

Mr. BRYAN. Will the distinguished Senator from Alaska yield the Senator from Nevada 10 minutes? I believe I can do it in a shorter time.

Mr. BRYAN. I thank the Senator.

Mr. BRYAN. I say to the distinguished chairman of the Finance Committee, I would be happy to yield.

Mr. BRYAN. At most, 10 minutes.

Mr. BRYAN

Mr. BRYAN. Mr. President, as I have indicated, there is broad agreement within the industry that the mining law of 1872 needs to be updated. There is agreement in those areas that have been identified as: 5 percent net proceeds royalty; the fair market value of the surface estate; that a reverter provision be provided so that in the event the property is no longer used for mining purposes, the Secretary of the Interior would have the right to reclaim the land for public purposes; that there be a reclamation requirement and a permanent maintenance fee as part of that reclamation. So, there is a broad agreement that the mining law of 1872 needs to be reformed. In the context of this debate, the issue is not whether the mining law of 1872 should remain inviolate, unchanged and sacrosanct, it is a question of how it needs to be updated to reflect the realities of the latter part of the 20th century. In that respect, the mining industry has been engaged in a dialog, now, for the better part of the last decade. There is obviously disagreement as to the specifics. I am hopeful, before my colleague, the distinguished senior Senator from Arkansas, retires from this body, that we can indeed have an agreement on these issues and produce a piece of legislation that all of us can embrace. Let me speak specifically to the provisions that are contained in the proposal of the Senator from Arkansas. He would, in effect, repeal the percentage depletion allowance as it has existed in the code, in one form or another, since 1913. A percentage depletion allowance is not, as the senior Senator from Arkansas suggests, a giveaway to the mining industry. Rather, it is a longstanding tax policy that recognizes the unique nature of the mining industry. Congress has long recognized that the principal capital asset of a mineral producer is its mineral reserves, the ore body itself. These mineral reserves are classified as wasting assets. As the minerals are produced or sold, the mineral deposit from which they are taken is gradually exhausted. Indeed, that is the history of every mining exploration in the history of my own State. These ore bodies are not inexhaustible; they last for a finite period of time, and the tax law reflects the reality of those circumstances. That was first recognized in 1913, when the Congress allowed a portion of the value of these assets or reserves to be deducted from taxable income to allow producers to replace that ore body, their wasting asset. So depletion is similar to the depreciation allowance for the use of physical properties. It is an allowance that allows an investor in natural resources to recover his capital outlay in the mineral through a depletion allowance to producers to simply level the playing field between those classes of taxpayers. So, although it is unique, its underlying premise, its principle is the same: to recognize that the asset is not inexhaustible, that it has a finite lifespan, and the Tax Code reflects that circumstance. The capital investment necessary for modern mining is astronomical. It is not unusual to anticipate capital expenditures that will exceed $1 billion when opening a new mine. So the notion that somehow this land is turned over and immediately the next day the entrant is able to extract a large body of ore and make fantastic profits with no outlay, either in terms of ultimate tax liability or expenditures, simply is divorced from reality. Many explorations prove unsuccessful; that is, the quality of the reserves are simply unsustainable in terms of their economic feasibility. And that is a reality. Many claims turn out to be unsuccessful because the mineral is not identified and cannot be located for purposes other than exploration. So the risks here in a mining operation are enormous. The Bumpers amendment would repeal the percentage depletion allowance for only those minerals obtained from land granted under the 1872 mining law. I think therein lies the true nature of the Bumpers amendment. This has little or nothing to do with tax reform. It seeks to punish the mining industry because Congress has been unable to reach an agreement on reforming the mining law of 1872. And that is patently unfair. We recognize that reform needs to occur. The dialog continues. As I have indicated, I am hopeful that in this Congress it will be possible for us to achieve an agreement with respect to that reform. Moreover, as the Senator from Alaska pointed out earlier, this industry is part, as other parts of our economy are, of a global competition. For us to remain competitive in America it will be very important for us not to impose a tax system that is viewed as so punitive as to discourage mineral exploration in its entirety. I speak with some personal knowledge of the situation because, in my own State, we have gone through a series of mining booms. The origin of Nevada's history--born, as it was, during the Civil War--is a result of the first great mineral discovery in our State, the Comstock Lode, in 1859. That discovery, which brought thousands of people into what is now Nevada, laid the predicate for Nevada's admission to statehood. The mining industry was such an important part of the early economy in Nevada that the first attempt at statehood failed because of the way the State Constitution, as then proposed, contemplated the imposition of the tax on mining. So our heritage is linked to this industry, and the taxable implications are something that all of us in Nevada are very mindful of. That mining boom lasted for a period of roughly 25 years. By the end of the century, the ore bodies having been depleted in the Comstock Lode, Nevada's mining industry was in a pronounced state of recession. It was resurrected ever so briefly during the period of World War I, and then declined at the end of that war. The modern period really began about 10 or 15 years ago, with the technology that makes it possible to recover microscopic particles of gold, so small, so minute that they are undetected by the human eye. So this is an industry which has had a series of cyclical ups and downs. The suggestion of recklessly imposing this new tax structure is something that apprehends great fear for all of us in Nevada because of the sensitive nature of the industry and its transitory nature, based upon market circumstances as well as the ability to continue to locate new bodies of ore. For Nevada and for America, it has been a good industry. It employs about 120,000 people in America. In my own State, it employs 15,000. And, as has been pointed out by the Senator from Alaska, if one looks at the pay scale of major industries in America, the average salary in mining is close to $46,000 a year, and in the context of the debate that we had earlier today about Medicare and Medicaid, and coverage of hospital and physician services, most mining companies provide a full range of insurance coverage for their employees and their dependents. So they have been good citizens with us in Nevada. And they have contributed immeasurably to the prosperity that we enjoy in Nevada. In point of fact, Nevada produces more in the way of gold than any other State in the country. Indeed, if we were a separate country, we would rank internationally somewhere among fourth, fifth and sixth in terms of production worldwide. So this is a major industry with enormous significance to my State, that pays good money to good people. We are not going to allow that industry to be devastated by an improvident, zealous attack on the industry and the failure to properly consider what the impact of this would be. Let me, by way of a concluding comment, indicate what kind of an administrative nightmare this provision would be. As I indicated a moment ago, this change would apply only with respect to those minerals that are recovered under public lands, under lands which were entered pursuant to the provision of the mining law of 1872. That suggests that a mining operation is finitely defined and that an operation that derives its origin from entry under the mining law of 1872 is a separate and distinct and discrete operation from that part of the operation in which the mining company may have acquired title to the property through private sale. Indeed, if you look at the mining operations that currently exist in my own State, and if you look at the source of title or occupancy of those lands, you will find as many as five or six different derivative sources for the occupation and/or title or patent to those claims. So it would be an administrative nightmare in allocating this new system of taxation to a single operator on a single mine who is mining bodies of ore through different areas within a fairly confined area of a few of those acres. So it is totally impractical. I hope my colleagues recognize that this is not the sort of thing we should do without giving due deliberation to the broader issue which will be discussed during this Congress and I hope will be resolved, and that is to deal with the update of the mining law of 1872. That is what this debate ought to be about, rather than a punitive approach which is taken in the proposed Bumpers amendment. I hope, at the appropriate time, my colleagues will join us in rejecting this proposal and allow us to continue the debate with respect to reform during the course of this Congress. I yield the floor. Mr. CRAIG addressed the Chair.

Mr. BRYAN

Mr. BRYAN. It is my understanding, Mr. President, that we are honored by the presence of dignitaries. I will yield the floor and simply ask unanimous consent that after their introduction, I might be recognized again for purposes of continuing my comments. If the Senate is agreeable to that, I will yield the floor.