[Senate Report 110-298]
[From the U.S. Government Publishing Office]
Calendar No. 650
110th Congress Report
SENATE
2d Session 110-298
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NORTH DAKOTA ENABLING ACT AND FIRST MORRILL ACT AMENDMENTS ACT OF 2007
_______
April 10, 2008.--Ordered to be printed
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Mr. Bingaman, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
[To accompany S. 1740]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 1740) to amend the Act of February 22,
1889, and the Act of July 2, 1862, to provide for the
management of public land trust funds in the State of North
Dakota, having considered the same, reports favorably thereon
without amendment and recommends that the bill do pass.
Purpose
The purpose of S. 1740 is to amend the Act of February 22,
1889, and the Act of July 2, 1862, to provide for the
management of public land trust funds in the State of North
Dakota.
Background and Need
The Federal government has generally provided a series of
benefits to new States as part of the statehood admission
process. For example, the North Dakota Statehood Act set aside
land in every township for the support of schools in the State
and also provided further land grants to support colleges and
universities (``the trust funds''). In total, the grant from
the Federal government to the State of North Dakota was
approximately 3.2 million acres.
Since statehood, much of the original grant land has been
sold. As of 2006, the trust funds consist of the following
assets:
714,000 surface acres (leased to ranchers and
farmers across the state);
2.5 million mineral acres (leased for oil, gas,
coal and gravel exploration and development); and
$807 million of financial assets (invested in a
diverse portfolio of stocks, bonds, farm loans and other
instruments).
Pursuant to the Morrill Act and the North Dakota Statehood
Act, the State can only spend funds derived from interest and
income from the trust funds (i.e., surface and mineral rentals,
loan income, and interest earnings) and may not expend funds
derived from permanent trust additions (i.e., mineral
royalties, mineral bonuses, and proceeds of land sales). The
North Dakota State Land Department, which administers the trust
funds, contends that this restriction creates unnecessary
fluctuations in distributions and creates incentives for
investment decisions that create short term income at the
expense of long term value.
As a result, the Land Department proposed an amendment to
the North Dakota Constitution to eliminate the restriction. The
amendment was endorsed by the state legislature in 2005 and
passed as a ballot measure in 2006. In order to take effect,
the change requires amendments to the North Dakota Statehood
Act and the Morrill Act.
Legislative History
S. 1740 was introduced by Senator Conrad and Senator Dorgan
on June 28, 2007. The Subcommittee on Public Lands held a
hearing on the bill on September 20, 2007 (S. Hrg. 110-216). At
its business meeting on January 30, 2008, the Committee on
Energy and Natural Resources ordered S. 1740 favorably reported
without amendment.
Committee Recommendation
The Committee on Energy and Natural Resources, in open
business session on January 30, 2008, by a voice vote of a
quorum present, recommends that the Senate pass S. 1740.
Section-by-Section Analysis
Section 1 provides the short title for the bill.
Section 2 amends the North Dakota Statehood Act (25 Stat.
676, chapter 180) by adding a new provision to effectuate the
changes approved by the State of North Dakota regarding
distributions from its educational trust funds. Specifically,
the new provision requires that all proceeds from sales of
public land be deposited into the trust funds and managed so as
to preserve the purchasing power of the fund and maintain
stable distributions to beneficiaries in accordance with North
Dakota's constitution, as amended by the 2006 ballot measure.
Section 3 amends the Morrill Act (7 U.S.C. 301 et seq.) by
adding a new provision to effectuate the changes approved by
the State of North Dakota regarding distributions from its
educational trust funds. Specifically, the new provision
requires that all proceeds from sales of public land be
deposited into the trust funds and managed so as to preserve
the purchasing power of the fund and maintain stable
distributions to beneficiaries in accordance with North
Dakota's constitution, as amended by the 2006 ballot measure.
Section 4 states that, effective July 1, 2009, Congress
consents to the amendments to the Constitution of North Dakota
proposed by House Concurrent Resolution No. 3037 of the 59th
Legislature of the State of North Dakota and approved by the
voters of the State of North Dakota on November 7, 2006.
Cost and Budgetary Considerations
The following estimate of costs of this measure has been
provided by the Congressional Budget Office:
S. 1740--North Dakota Enabling Act and First Morrill Act Amendments of
2007
S. 1740 would amend provisions of federal law that regulate
how North Dakota may invest and spend proceeds from the sale
and management of certain public lands. CBO estimates that
enacting S. 1740 would have no effect on the federal budget and
would not affect direct spending or revenues.
S. 1740 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act. The
bill would make federal law consistent with an amendment to the
state's constitution and provide Congressional consent to that
amendment. The change in federal law and the amendment to the
state constitution would allow the state to make distributions
from state-held trust funds based on a rolling valuation of
assets rather than on current income. Those distributions are
currently limited by federal law that went into effect when
North Dakota became a state.
The CBO staff contact for this estimate is Melissa Merrell.
The estimate was approved by Theresa Gullo, Deputy Assistant
Director of the Budget Analysis Division.
Regulatory Impact Evaluation
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee makes the following
evaluation of the regulatory impact which would be incurred in
carrying out S. 1740. The bill is not a regulatory measure in
the sense of imposing Government-established standards or
significant economic responsibilities on private individuals
and businesses.
No personal information would be collected in administering
the program. Therefore, there would be no impact on personal
privacy.
Little, if any, additional paperwork would result from the
enactment of S. 1740, as ordered reported.
Congressionally Directed Spending
S. 1740, as reported, does not contain any congressionally
directed spending items, limited tax benefits, or limited
tariff benefits as defined in rule XLIV of the Standing Rules
of the Senate.
Executive Communications
Statement of Michael Nedd, Assistant Director, Mineral, Realty &
Resource Protection, Bureau of Land Management
Mr. Chairman and members of the Subcommittee, thank you for
the opportunity to testify on S. 1740, the North Dakota
Enabling Act and First Morrill Act Amendments Act of 2007.
S. 1740 would amend the Act of February 22, 1889 and the
Act of July 2, 1862 to provide for changes to the management
and distribution of North Dakota trust funds into which
proceeds from the sale of public land are deposited. It also
includes language providing for Congress's consent to
amendments to the Constitution of North Dakota proposed by
House Concurrent Resolution No. 3037 of the 59th Legislature of
the State of North Dakota and approved by the voters on
November 7, 2006. This resolution requires permanent trust
funds to be managed to preserve their purchasing power, to
provide stable distributions to fund beneficiaries and to
benefit fund beneficiaries.
The Office of Legal Counsel of the Department of Justice
has advised us that Congress may amend State enabling acts. As
S. 1740 relates to North Dakota's use of its trust funds, the
Administration has no comments on or objections to the bill.
Thank you for the opportunity to testify.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the bill S. 1740 as ordered reported, are shown as follows
(existing law proposed to be omitted is enclosed in black
brackets, new matter is printed in italic, existing law in
which no change is proposed is shown in roman):
ACT OF FEBRUARY 22, 1889 (25 STAT. 676, CHAPTER 180)
CHAP. 180.--An Act to provide for the division of Dakota
into two States and to enable the people of North Dakota, South
Dakota, Montana, and Washington to form constitutions and State
governments and to be admitted into the Union on an equal
footing with the original States, and to make donations of
public lands to such States.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled, That the
inhabitants of all that part of the area of the United States
now constituting the Territories of Dakota, Montana, and
Washington, as a present described, may become the States of
North Dakota, South Dakota, Montana, and Washington,
respectively, as hereinafter provided.
* * * * * * *
SEC. 26. NORTH DAKOTA TRUST FUNDS.
(a) Disposition.--Notwithstanding section 11, the State of
North Dakota shall, with respect to any trust fund in which
proceeds from the sale of public land are deposited under this
Act (referred to in this section as the `trust fund')--
(1) deposit all revenues earned by a trust fund into
the trust fund;
(2) deduct the costs of administering a trust fund
from each trust fund; and
(3) manage each trust fund to--
(A) preserve the purchasing power of the
trust fund; and
(B) maintain stable distributions to trust
fund beneficiaries.
(b) Distributions.--Notwithstanding section 11, any
distributions from trust funds in the State of North Dakota
shall be made in accordance with section 2 of article IX of the
Constitution of the State of North Dakota.
(c) Management of Proceeds.--Notwithstanding section 13,
the State of North Dakota shall manage the proceeds referred to
in that section in accordance with subsections (a) and (b).
(d) Management of Land and Proceeds.--Notwithstanding
sections 14 and 16, the State of North Dakota shall manage the
land granted under that section, including any proceeds from
the land, and make distributions in accordance with subsections
(a) and (b).
* * * * * * *
ACT OF JULY 2, 1862 (12 STAT. 503, CHAPTER 30)
AN ACT donating Public Lands to the several States and Territories
which may provide Colleges for the Benefit of Agriculture and the
Mechanic Arts
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled, That there
be granted to the several States, for the purposes of
hereinafter mentioned, an amount of public land, to be
apportioned to eachState a quantity equal to thirty thousand
acres for each senator and representative in Congress to which the
States are respectively entitled by the apportionment under the census
of eighteen hundred and sixty: Provided, That no mineral lands shall be
selected or purchased under this Act.
* * * * * * *
SEC. 9. LAND GRANTS IN THE STATE OF NORTH DAKOTA.
(a) Expenses.--Notwithstanding section 3, the State of
North Dakota shall manage the land granted to the State under
the first section, including any proceeds from the land, in
accordance with this section.
(b) Disposition of Proceeds.--Notwithstanding section 4,
the State of North Dakota shall, with respect to any trust fund
in which proceeds from the sale of land under this Act are
deposited (referred to in this section as the `trust fund')--
(1) deposit all revenues earned by a trust fund into
the trust fund;
(2) deduct the costs of administering a trust fund
from each trust fund; and
(3) manage each trust fund to--
(A) preserve the purchasing power of the
trust fund; and
(B) maintain stable distributions to trust
fund beneficiaries.
(c) Distributions.--Notwithstanding section 4, any
distributions from trust funds in the State of North Dakota
shall be made in accordance with section 2 of article IX of the
Constitution of the State of North Dakota.
(d) Management.--Notwithstanding section 5, the State of
North Dakota shall manage the land granted under the first
section, including any proceeds from the land, in accordance
with this section.
* * * * * * *