[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
  JOINT HEARING ON THE MANAGEMENT OF THE UNITED STATES FOREST SERVICE

=======================================================================

                             JOINT HEARING

                               before the

                         COMMITTEE ON RESOURCES

                                  and

                        COMMITTEE ON THE BUDGET

                                  and

                        SUBCOMMITTEE ON INTERIOR

                                 of the

                      COMMITTEE ON APPROPRIATIONS

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             SECOND SESSION

                               __________

                     MARCH 26, 1998, WASHINGTON, DC

                               __________

                           Serial No. 105-82

                               __________

Printed for the use of the Committee on Resources, Committee on Budget, 
  and the Subcommittee on Interior of the Committee on Appropriations

                              -------------

                    U.S. GOVERNMENT PRINTING OFFICE
48-275 cc                   WASHINGTON : 1998



                         COMMITTEE ON RESOURCES

                      DON YOUNG, Alaska, Chairman
W.J. (BILLY) TAUZIN, Louisiana       GEORGE MILLER, California
JAMES V. HANSEN, Utah                EDWARD J. MARKEY, Massachusetts
JIM SAXTON, New Jersey               NICK J. RAHALL II, West Virginia
ELTON GALLEGLY, California           BRUCE F. VENTO, Minnesota
JOHN J. DUNCAN, Jr., Tennessee       DALE E. KILDEE, Michigan
JOEL HEFLEY, Colorado                PETER A. DeFAZIO, Oregon
JOHN T. DOOLITTLE, California        ENI F.H. FALEOMAVAEGA, American 
WAYNE T. GILCHREST, Maryland             Samoa
KEN CALVERT, California              NEIL ABERCROMBIE, Hawaii
RICHARD W. POMBO, California         SOLOMON P. ORTIZ, Texas
BARBARA CUBIN, Wyoming               OWEN B. PICKETT, Virginia
HELEN CHENOWETH, Idaho               FRANK PALLONE, Jr., New Jersey
LINDA SMITH, Washington              CALVIN M. DOOLEY, California
GEORGE P. RADANOVICH, California     CARLOS A. ROMERO-BARCELO, Puerto 
WALTER B. JONES, Jr., North              Rico
    Carolina                         MAURICE D. HINCHEY, New York
WILLIAM M. (MAC) THORNBERRY, Texas   ROBERT A. UNDERWOOD, Guam
JOHN SHADEGG, Arizona                SAM FARR, California
JOHN E. ENSIGN, Nevada               PATRICK J. KENNEDY, Rhode Island
ROBERT F. SMITH, Oregon              ADAM SMITH, Washington
CHRIS CANNON, Utah                   WILLIAM D. DELAHUNT, Massachusetts
KEVIN BRADY, Texas                   CHRIS JOHN, Louisiana
JOHN PETERSON, Pennsylvania          DONNA CHRISTIAN-GREEN, Virgin 
RICK HILL, Montana                       Islands
BOB SCHAFFER, Colorado               RON KIND, Wisconsin
JIM GIBBONS, Nevada                  LLOYD DOGGETT, Texas
MICHAEL D. CRAPO, Idaho

                     Lloyd A. Jones, Chief of Staff
                   Elizabeth Megginson, Chief Counsel
              Christine Kennedy, Chief Clerk/Administrator
                John Lawrence, Democratic Staff Director
                        COMMITTEE ON THE BUDGET

                     JOHN R. KASICH, Ohio, Chairman
DAVID L. HOBSON, Ohio,               JOHN M. SPRATT, Jr., South 
  Speaker's Designee                     Carolina,
CHRISTOPHER SHAYS, Connecticut         Ranking Minority Member
WALLY HERGER, California             JIM McDERMOTT, Washington,
JIM BUNNING, Kentucky                  Leadership Designee
LAMAR S. SMITH, Texas                ALAN B. MOLLOHAN, West Virginia
DAN MILLER, Florida                  JERRY F. COSTELLO, Illinois
BOB FRANKS, New Jersey               PATSY T. MINK, Hawaii
NICK SMITH, Michigan                 EARL POMEROY, North Dakota
BOB INGLIS, South Carolina           LYNN C. WOOLSEY, California
JIM NUSSLE, Iowa                     LUCILLE ROYBAL-ALLARD, California
PETER HOEKSTRA, Michigan             LYNN N. RIVERS, Michigan
JOHN SHADEGG, Arizona                LLOYD DOGGETT, Texas
GEORGE P. RADANOVICH, California     BENNIE G. THOMPSON, Mississippi
CHARLES F. BASS, New Hampshire       BENJAMIN L. CARDIN, Maryland
MARK W. NEUMANN, Wisconsin           DAVID MINGE, Minnesota
MIKE PARKER, Mississippi             SCOTTY BAESLER, Kentucky
BOB EHRLICH, Maryland                KEN BENTSEN, Texas
GIL GUTKNECHT, Minnesota             JIM DAVIS, Florida
VAN HILLEARY, Tennessee              ROBERT A. WEYGAND, Rhode Island
KAY GRANGER, Texas                   EVA M. CLAYTON, North Carolina
JOHN E. SUNUNU, New Hampshire        DAVID E. PRICE, North Carolina
JOSEPH PITTS, Pennsylvania

                           Professional Staff

                    Wayne T. Struble, Staff Director
       Thomas S. Kahn, Minority Staff Director and Chief Counsel
                      COMMITTEE ON APPROPRIATIONS

                  BOB LIVINGSTON, Louisiana, Chairman
JOSEPH M. McDADE, Pennsylvania       DAVID R. OBEY, Wisconsin
C. W. BILL YOUNG, Florida            SIDNEY R. YATES, Illinois
RALPH REGULA, Ohio                   LOUIS STOKES, Ohio
JERRY LEWIS, California              JOHN P. MURTHA, Pennsylvania
JOHN EDWARD PORTER, Illinois         NORMAN D. DICKS, Washington
HAROLD ROGERS, Kentucky              MARTIN OLAV SABO, Minnesota
JOE SKEEN, New Mexico                JULIAN C. DIXON, California
FRANK R. WOLF, Virginia              VIC FAZIO, California
TOM DeLAY, Texas                     W. G. (BILL) HEFNER, North 
JIM KOLBE, Arizona                       Carolina
RON PACKARD, California              STENY H. HOYER, Maryland
SONNY CALLAHAN, Alabama              ALAN B. MOLLOHAN, West Virginia
JAMES T. WALSH, New York             MARCY KAPTUR, Ohio
CHARLES H. TAYLOR, North Carolina    DAVID E. SKAGGS, Colorado
DAVID L. HOBSON, Ohio                NANCY PELOSI, California
ERNEST J. ISTOOK, Jr., Oklahoma      PETER J. VISCLOSKY, Indiana
HENRY BONILLA, Texas                 ESTEBAN EDWARD TORRES, California
JOE KNOLLENBERG, Michigan            NITA M. LOWEY, New York
DAN MILLER, Florida                  JOSE E. SERRANO, New York
JAY DICKEY, Arkansas                 ROSA L. DeLAURO, Connecticut
JACK KINGSTON, Georgia               JAMES P. MORAN, Virginia
MIKE PARKER, Mississippi             JOHN W. OLVER, Massachusetts
RODNEY P. FRELINGHUYSEN, New Jersey  ED PASTOR, Arizona
ROGER F. WICKER, Mississippi         CARRIE P. MEEK, Florida
MICHAEL P. FORBES, New York          DAVID E. PRICE, North Carolina
GEORGE R. NETHERCUTT, Jr.,           CHET EDWARDS, Texas
    Washington                       ROBERT E. (BUD) CRAMER, Jr., 
MARK W. NEUMANN, Wisconsin               Alabama
RANDY ``DUKE'' CUNNINGHAM, 
    California
TODD TIAHRT, Kansas
ZACH WAMP, Tennessee
TOM LATHAM, Iowa
ANNE M. NORTHUP, Kentucky
ROBERT B. ADERHOLT, Alabama
                James W. Dyer, Clerk and Staff Director
                                 ------                                

  SUBCOMMITTEE ON THE DEPARTMENT OF THE INTERIOR AND RELATED AGENCIES

                      RALPH REGULA, Ohio, Chairman
JOSEPH M. McDADE, Pennsylvania       SIDNEY R. YATES, Illinois
JIM KOLBE, Arizona                   JOHN P. MURTHA, Pennsylvania
JOE SKEEN, New Mexico                NORMAN D. DICKS, Washington
CHARLES H. TAYLOR, North Carolina    DAVID E. SKAGGS, Colorado
GEORGE R. NETHERCUTT, Jr.,           JAMES P. MORAN, Virginia
    Washington
DAN MILLER, Florida
ZACH WAMP, Tennessee
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held March 26, 1998......................................     1

Statement of Members:
    Chenoweth, Hon. Helen, a Representative in Congress from the 
      State of Idaho.............................................     6
    Costello, Hon. Jerry F., a Representative in Congress from 
      the State of Illinois, prepared statement of...............     1
    Dicks, Hon. Norman D., a Representative in Congress from the 
      State of Washington........................................    10
    Herger, Hon. Wally, a Representative in Congress from the 
      State of California........................................     8
    Hinchey, Hon. Maurice D., a Representative in Congress from 
      the State of New York......................................     7
    Miller, Hon. George, a Representative in Congress from the 
      State of California........................................     3
    Regula, Hon. Ralph, a Representative in Congress from the 
      State of Ohio..............................................     4
        Prepared statement of....................................     5
    Schaffer, Hon. Bob, a Representative in Congress from the 
      State of Colorado, prepared statement of...................    29
    Young, Hon. Don, a Representative in Congress from the State 
      of Alaska..................................................     1
        Letter to James F. Hinchman, Acting Comptroller of the 
          United States, GAC.....................................   146
        Letter to Dan Glickman, Secretary, United States 
          Department of Agriculture..............................   147

Statement of Witnesses:
    Dombeck, Michael, Chief, United States Forest Service, United 
      States Department of Agriculture, Washington, DC...........    44
        Prepared statement of....................................   121
        Response to questions from Mrs. Chenoweth................   152
    Hill, Barry, Associate Director, Energy, Resources and 
      Science Issues, Resources, Community and Economic 
      Development Division, General Accounting Office, 
      Washington, DC, accompanied by Charlie Cotton and McCoy 
      Williams, General Accounting Office, Washington, DC........    12
        Prepared statement of Mr. Hill...........................    86
    Lewis, Robert T., Jr., Acting Associate Chief, Department of 
      Agriculture, Washington, DC, response to questions from Mr. 
      DeFazio and Mr. Nethercutt.................................   148
        Reponse to questions from Mr. Herger.....................   181
    Viadero, Roger C., Inspector General, U.S. Department of 
      Agriculture, Washington, DC, accompanied by Robert Young, 
      Deputy Assistant Inspector General for Audit, U.S. 
      Department of Agriculture, Washington, DC..................    37
        Prepared statement of....................................   107

Additional material supplied:
    Henderson-Bramlette, Diane, letter to Mike Dombeck, Chief, 
      U.S. Forest Service........................................    72

Communications submitted:
    Department of Agriculture, USFS, ``Modernizing Financial 
      Management at the Forest Service''.........................   131


OVERSIGHT HEARING ON THE MANAGEMENT OF THE UNITED STATES FOREST SERVICE

                              ----------                              


                        THURSDAY, MARCH 26, 1998

        House of Representatives, Committee on Resources, 
            Committee on Budget, Subcommittee on Interior, 
            and Committee on Appropriations, Washington, 
            DC.
    The Committees met jointly, pursuant to notice, at 11 a.m., 
Hon. Don Young, chairman of the Committee on Resources, 
presiding.

STATEMENT OF HON. DON YOUNG, A REPRESENTATIVE IN CONGRESS FROM 
                      THE STATE OF ALASKA

    Chairman Young. The Resources Committee, the Budget 
Committee, the Interior Appropriations Subcommittee will come 
to order.
    I believe this is the first time the three different 
Committees have come together in hearings of this magnitude. 
Because of the size of the Committee today we have agreed to 
limit opening statements to the Chairman and Ranking Minority 
Members of the two full Committees and the three Subcommittees.
    This should allow us to hear from our witnesses sooner, and 
help members to keep their schedules. Therefore, if any other 
members have opening statements, they can be included in the 
hearing record by unanimous consent.
    [The information referred to follows:]

Statement of Hon. Jerry F. Costello, a Representative in Congress from 
                         the State of Illinois

    Mr. Chairmen, I thank you for calling this joint hearing. 
As is so often in the case with matters before this body, 
management of the United States Forest Service falls under the 
jurisdiction of several House committees, and I appreciate this 
unique opportunity for many of the concerned parties to examine 
this issue together.
    The U.S. Forest Service is responsible for managing more 
than 191 million acres of public lands located in 44 states, 
Puerto Rico, and the Virgin Islands. The Administration has 
requested $3.3 billion in the Presidents fiscal year 1999 
budget to fund the Forest Service in the next fiscal year.
    The Shawnee Forest, one of the 155 national forests 
overseen by the Forest Service, is located, in part, in my 
Congressional District. This beautiful area of 265,000 acres in 
Southern Illinois offers thousands of people each year the 
opportunity to observe bald eagles, witness annual snake 
migrations, and enjoy wonderful recreational opportunities.
    Because I know the value of this forest, I am concerned by 
reports that Forest Service inefficiency and waste are costing 
taxpayers millions of dollars each year. Mr. Chairmen, I look 
forward to learning more about the management of this agency. 
Thank you.

    Chairman Young. In my opening statement, I am going to sort 
of ramble through it as I usually do, but I would like to 
suggest one thing: that this is not about personalities. It is 
not about individuals. It is not about Chief Dombeck.
    I believe that our forests are in terrible, deplorable 
shape, and we must address the problem of forest health and 
where we are headed. We do know that there are some serious 
problems because of the GAO report, and that will be addressed 
today by the GAO. And contrary to what some people say, leave 
Chief Dombeck alone, this not Dombeck's problem, particularly, 
this is a problem of the Forest Service, collectively.
    I believe this is a terrible mess and has to be addressed 
by this Congress, and we must quit burying our heads in the 
sand. There are enough complaints going around from all walks 
of the Congress, different political philosophies and parties.
    But in reality, our forests today are in worse shape than 
they have been in in the last 55 years. Not from logging, but 
mismanagement. We have burned more trees in the last 10 years 
than we have cut for commercial use during the time that man 
arrived on these shores. And that is a loss to not only 
mankind, but it is a loss to the management of the forest.
    It may be natural, but it is not realistic, nor should it 
be allowed to take place.
    We are losing more to beetle kill and wind blows. All 
across this Nation this is occurring because there is no 
management of the forest. In an area the size of 178 million 
acres, we are now producing less timber than they are in a very 
small amount of privately held timber lands, of less quality, 
and less, in fact, availability. And being so we have left less 
timber for the future generations.
    We have to keep in mind, though, the Forest Service budget 
has increased dramatically, 11 times above inflation since 
1952. And I think that is another example of terrible 
mismanagement. The idea that we can have Forest Service 
employees painting rocks so they look old for the general 
public. They cannot account for $215 million. Do not know where 
it went. That is a hell of a vacation as far as I am concerned.
    They had a $500,000 alternative reality rally last year, 
paid for by the taxpayers. A loss of true foresters and 
retention of anthropologists and biologists. All the 
``ologists'' are all left, but no foresters are left.
    And, very frankly, what is brought to this head is this 
administration has deprived the Nation of not only the log 
resources, but for the first time the Forest Service has lost 
money, and doing so, now they have been exposed in their weak 
underside.
    And so our attempt today is to find out where we are going 
and where we are headed. I have talked to the people in the 
Forest Service to give us some ideas on solutions to the GAO 
report. If that does not occur, I suggest you come back here 
next year, and you will have, as I said before, less of a 
budget.
    There is no reason for the taxpayer to be paying for an 
agency that is in fact in shambles and is operated very 
foolishly, and is not really doing what is right for the 
general public.
    I think it is crucially important that we address this 
issue correctly, with enthusiasm and direction, and I expect to 
hear answers today.
    The gentleman from California.

 STATEMENT OF HON. GEORGE MILLER, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Miller. Thank you, Mr. Chairman, and I am happy to hear 
you state in your opening remarks that this is not about 
personalities. That would be a tragic mistake, if we assembled 
these three Committees to come together and decide that somehow 
this all falls on the shoulders of one person.
    Because the fact is that the problems pointed out by the 
GAO, and I think I see stacked on the table the history of 
reports done about the Forest Service, goes back many years 
through many chiefs of the Forest Service and through numerous 
administrations.
    The fact of the matter is that we do have some systemic 
problems within the Forest Service, but for someone to try to 
decide that this is the current chief's problems and his fault 
only, and he is to be held accountable for all of those past 
practices would be a mistake.
    First of all, it would be a mistake because this chief has 
the full support of the President, the Vice President, the 
Security of Agriculture in his efforts to broaden the mission 
of the Forest Service, in keeping with the outlook of the 
American people.
    We all understand on this Committee, as we have watched the 
transitions and the changes that have taken place in the 
perception of the American people, the desires of the American 
people, the needs and the uses of the American people, on our 
Federal lands.
    They are truly multiple use lands at this point, and while 
at one time this agency was simply governed by the notion of 
what yield it could provide on a yearly basis, and what kind of 
cut it could provide, that no longer is the single purpose 
mission of the Forest Service.
    It now has to manage competing interests, strong competing 
interests, as the West becomes more and more urban, and as 
Americans move more and more around the country and enjoy our 
public lands.
    So I am encouraged by your remarks. Let us not suggest that 
efforts have not been made to try to reform a number of the 
problems that will be addressed in the GAO report and in the 
Inspector General's report, but most of those have met with a 
lack of success on the floor of the House of Representatives or 
in the Appropriations Committee, or elsewhere, as we have tried 
to remedy one of the major problems outlined in the GAO report, 
and that is the failure of the Forest Service to get fair 
market value for the resources that it is managing, and for 
licensing those resources and renting those resources and 
leasing those resources.
    We have not allowed them to get that. Why? Because other 
special interests come before the Congress and overrule the 
notion of fair market value.
    We also know that there is a whole series of accounts, 
apparently, where the accounting is maybe non-existent. But we 
also know there have been efforts to try to bring those 
accounts on to budget, to exercise them to oversight by the 
Appropriations Committee, by this Committee, by the Agriculture 
Committee, and those efforts have failed because mainly the 
single purpose interests of timber harvesting are benefited by 
having those multiple small accounts held off of budget.
    So there is clearly enough blame to go around, but 
hopefully this hearing is the first in a series of hearings, as 
you have pointed out, as we review really what is a new mission 
under the mandate of the American public for this agency to 
take care of these resources, and to provide them for multiple 
use and multiple values.
    We are in the middle of that transition. It started with 
the train wrecks in the Northwest, where we saw the collapse of 
our forest, where we saw the inherent problems, where we saw 
the failure to consider other values. And that transition will 
continue.
    It will continue to gain support by a majority of the 
American people, and it is going to be a very difficult one for 
us to participate in, but it is necessary. And I look forward 
to these hearings, and I thank the various chairmen for 
agreeing to combine this hearing and make these joint efforts.
    Chairman Young. I was supposed to recognize Mr. Kasich, but 
he has not joined us at this time. So I will recognize our good 
chairman, Mr. Regula.

 STATEMENT OF HON. RALPH REGULA, A REPRESENTATIVE IN CONGRESS 
                     FROM THE STATE OF OHIO

    Mr. Regula. Thank you, Mr. Chairman. I think you and the 
Ranking Member have pretty well outlined the concerns that 
brought about this hearing. The forests are a national 
treasure. I think we should look from this day forward to how 
we can best manage this resource to serve people in a diverse 
number of ways.
    Obviously, historically there has been mismanagement. You 
need only to look at the GAO report. I quote, ``the agency's 
financial statements are unreliable. And expenditures of 
significant amounts cannot be accounted for.''
    Well, we do not want that to happen prospectively. And I am 
hopeful that out of this hearing there will be techniques and 
policies developed that will avoid this kind of problem in the 
future.
    The GAO report also focuses on internal control weaknesses, 
and finally I think the Forest Service's weak contracting 
practices have exposed appropriated dollars to an increase risk 
of fraud, waste and abuse.
    I think, frankly, the American public is somewhat 
ambivalent about what they expect out of the national forests. 
They obviously like to have wood fiber at a reasonable rate to 
build their homes, to achieve their dreams, in terms of 
housing.
    But they likewise also like the multiple use aspect of the 
Forest Service. I am always struck by the fact that in terms of 
visitor days, the Forest Service has twice as many as does the 
Park Service, and that is indicative of the fact that the 
public uses these lands extensively for their enjoyment.
    And as our population grows, as our society becomes more 
stressful, I think the value of multiple use in our forests 
will be a great resource for the enjoyment of the public.
    But, likewise, it is a great resource for the production of 
fiber, and it is a matter of managing this system in the most 
effective way on behalf of the owners, namely the American 
people.
    I hope that out of this hearing and out of the leadership 
in the Forest Service there will be policies developed that 
will address those concerns, that will focus on how best to 
manage this resource, and that in the future we will not have 
to have these kinds of hearings. The Forest Service will have 
responded to the GAO and the IG concerns about the way in which 
they have managed the resource.
    So out of this hearing today, we should be able to develop 
these ideas for the future, and I look forward to hearing from 
the managers of the Forest Service. It is easy to identify the 
problems, but what I am interested in is identifying the 
solutions.
    [The prepared statement of Mr. Regula follows:]

 Statement of Hon. Ralph Regula, a Representative in Congress from the 
                             State of Ohio

    I. The National Forests are a great treasure. They include 
nearly 200 million acres of some of the finest lands in the 
nation. These lands provide tremendous opportunities to all of 
our citizens; these natural resources and open space are of 
vital importance to this generation and to our children. It 
serves as the working man's country club. We need to take very 
good care of this special heritage.
    Multiple use has been the driving force behind the 
management of this land. This is a policy that must be 
continued. There are proud traditions in the Forest Service for 
professionalism and local independence, but these must not come 
before, or at the expense, of prudent management of natural 
resources and taxpayer resources.
    We all share a great concern for many the issues impacting 
the Forest Service, such as: forest health, providing a variety 
of recreational opportunities, managing a massive road system, 
and providing water, open space and habitat vital to our flora 
and fauna.
    We recognize that large and ongoing debates and crises have 
stressed the agency during the past decade and have distracted 
the agency from adequately managing its affairs.
    But today we say that it is time to get serious about 
managing the agency. This hearing will be focused on fiscal 
management issues.
    These problems have developed over many years, but they 
must be solved soon.
    The testimony will demonstrate that there have been many 
years of promises to clean up these kinds of problems, all to 
little or no avail.
    The Interior subcommittee and the Forest Service developed 
some budget reform in 1995, but already the Committee has had 
to once again tighten up reprogramming guidelines in an attempt 
to increase accountability.
    II. My Committee has recently had numerous oversight hearings 
dealing with Forest Service activities. In addition, I have held 
regular, annual hearings with the Chief and with Secretary of 
Agriculture, as well as special oversight hearings, including:

        1. the Interior Columbia River Basin project
        2. construction practices
        3. backlog maintenance and property inventories.
    Further, my Committee has required the Forest Service to closely 
examine major issues affecting our nation's forests, so much so, that 
the Administration complained in last year's Statement of 
Administration Policy that this was excessive Congressional 
micromanagement. We disagree, oversight is vital. We have required 
reports on diverse issues, including:

        financial system improvements and linkage to GPRA timber sales
        land management planning and budget linkages
        Recreational fee demonstration program
        transportation and road planning and inventory backlog 
        maintenance, and
        wildfire fuels management.
    III. My Committee has also demanded more and better explanation in 
the Forest Service's annual budget justification to more fully detail:
        ecoregion assessments
        forest planning workload
        wildland fire management planning
        overhead budget assessments for ``national commitments''
        funding equity by Regions, and adherence to the Government 
        Performance and Results Act.
    And, my Committee has initiated work by the GAO on the impact of 
the 1995 budget reform and work by committee investigators on funding 
accountability for forest planning, inventory and monitoring; the 
purchase of a major new computer system; and civil rights.
    IV. Today we will hear of substantial financial management problems 
in the Forest Service. This includes the agency's continued inability 
to take accounting seriously and get financial systems to work. The GAO 
says, and I quote:

        ``The agency's financial statements are unreliable, and 
        expenditures of significant amounts cannot be accounted for.''
    We will also hear of substantial problems with the major USDA 
financial systems. The IG for USDA wrote,
        ``Our reviews at the (USDA) National Finance Center have 
        disclosed continuing severe internal control weaknesses, 
        culminating most recently with an adverse opinion we rendered 
        on its overall control structure.''
    We will hear of other problems, such as the inability to capture 
revenue and the potential for serious contracting problems resulting 
from poor oversight and excessive delegating of authority to field and 
regional offices. The GAO writes,

        ``. . . the Forest Service's weak contracting practices have 
        exposed appropriated dollars to an increased risk of fraud, 
        waste and abuse. These and other findings have led us, 
        Agriculture's Inspector General, and Forest Service task forces 
        to make numerous recommendations to improve performance. The 
        agency has not acted on some, has studied and restudied others 
        without implementing them, and has left the implementation of 
        others to the discretion of its independent and autonomous 
        regional offices and forests with mixed results.''
    V. We will hear of a matter of great concern to the Interior 
Committee: the inability to properly track appropriations. We will hear 
that budget formulation is not based on local program needs and that 
furthermore, allocations of appropriations to the field is based on odd 
formulas and not on program needs or accomplishments. We will also hear 
that the agency charges excessive overhead which is used to support 
endless planning efforts and we will hear that there is an inadequate 
link between forest plans, financial systems and budgets. For instance, 
the IG writes,

        . . . ``there is very limited assurance that funds have been 
        expended consistent with the budget. . . . funding is subjected 
        to absorbing overhead charges as the appropriations are 
        reallocated down through the organizational framework of the 
        agency. As a result, the amount of funds appropriated for a 
        specific purpose or activity are significantly reduced before 
        they are available for that purpose.''
    VI. Based on all of this testimony, it is clear to everyone around 
that we need to have better management based on performance and 
results. The Government Performance and Results Act provides a 
framework to help solve some of these problems, but we will need better 
definitions of mission-critical goals and objectives.
    Our Nation needs and wants to continue the multiple use model. We 
expect to have production of goods and services in a way that does not 
harm the land or waters and which provides long-term public service.
    Where we focus on restoration, the Forest Service will need to have 
clear goals and benchmarks whereby the public can measure success.
    This is the direction we will need to go. I expect the Department 
of Agriculture and the U.S. Forest Service to redouble its efforts so 
the American people can once again have faith in how these tax dollars 
are used and how these precious lands and waters are cared for.

    Chairman Young. Mrs. Chenoweth, do you have an opening 
statement, as chairman of the Subcommittee?

STATEMENT OF HON. HELEN CHENOWETH, A REPRESENTATIVE IN CONGRESS 
                    FROM THE STATE OF IDAHO

    Mrs. Chenoweth. Thank you, Mr. Chairman. I do have a short 
statement. We do see a pile of reports there that have been 
accumulating, and unfortunately we look to the agency to 
correct their problems.
    But as the Ranking Member said, and I agree with him on 
this, this is not just the agency's problem. This is the 
Congress's problem too. Because without regard--I have said 
this before--without regard to which political party is in 
power, this system has grown worse and worse.
    We ask our managers, we ask our Chief to make his people 
accountable, and yet that is impossible under the systems that 
he has now, to require accountability. And it is up to the 
Congress to make those necessary changes in the laws that will 
allow him to do what we are requiring of him.
    I blanche at the thought that this is the only agency, the 
Forest Service, that is entrusted with billions and billions of 
assets, and the Forest Service has so poorly managed those 
assets, that this agency is now deep in the red.
    Now the Forest Service is coming back and asking for more 
money than they got last year, and they have had an increase 
every single year. And they are coming back to us with this 
poor track record, and asking for an increase over last year's 
budget.
    We do not like that. But we have got to be able to work in 
tandem to solve these problems, and get serious about it. The 
seriousness has to go beyond the politics of the day, and the 
personal whims of the day that we turn into public policy.
    We have to be able to require accountability from the 
Forest Service. And as Congressmen, we have to give them the 
power to require accountability from their managers.
    Thank you, Mr. Chairman.
    Chairman Young. Thank you, Mrs. Chenoweth.
    Mr. Hinchey?

   STATEMENT OF HON. MAURICE D. HINCHEY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEW YORK

    Mr. Hinchey. Thank you very much, Mr. Chairman. I want to 
make a very brief statement, which is largely in accord with 
what I have heard other members say just a few moments ago.
    And that is essentially that whatever problems are 
perceived here, by the members of this Committee and others in 
the Congress, with regard to the Forest Service and the way the 
forests are being operated, is a problem for which 
responsibility is shared equitably perhaps by both the Forest 
Service and the Congress.
    And to the extent that it is not shared equitably, I think 
a larger burden falls upon the Congress than falls upon the 
Forest Service. And that burden largely has to do with our 
responsibility and obligation to fund the maintenance and care 
of our resources.
    And it is quite clear to me that we have not done so, and 
that this failure is one that dates back over a very long 
period of time.
    We note that in the Forest Service, for example, the Forest 
Service is of course replete with roads--there are a great many 
roads through the Forest Service lands. We made the point a 
number of times that these roads now cover 373,000 miles--eight 
time as long as the Federal Interstate Highway System, and 
enough to circumnavigate the globe 16 times--and that there is 
within this road system a maintenanace backlog of $10.5 
billion.
    In other words, in order to maintain these roads and keep 
them up, there is a backlog of funding deficiencies to the tune 
of $10.5 billion.
    Now, that is a sad observation to make, because many of 
these roads are not just roads for forests. I have heard my 
friend, Mr. Hansen, talk about this, and I listen to him very 
carefully, because I am very respectful of his knowledge in 
this area.
    And he said yesterday at a hearing that during hunting 
season you almost need a traffic cop back up in some of these 
roads, because of all the traffic up there. And I firmly 
believe that.
    I come from a part of the country in the East where we have 
the Catskill Park and the Adirondack Park, and hunting is a 
major occupation--an occupation to take up spare time, at 
least.
    So I understand the traffic that must be on these roads, 
based upon what I am told by my colleagues in the West. I have 
seen a little bit of it myself, with my own eyes, as a result 
of being out there with Mr. Hansen and with Mrs. Chenoweth.
    So I understand that these roads have a great burden placed 
upon them, and that they cover traffic not just for hunters, 
but for people who just need to get from one place to another. 
And that includes people on school buses, going to schools, and 
things of that nature.
    If I am correct, I think I heard someone say that about 10 
percent, at least, of the bridges in this network are 
deficient.
    That tells me that we need to catch up to our 
responsibilities, and somehow we need to start making up that 
$10.5 billion. It is not going to be made up in one year, but 
it has got to be made up very quickly, and we need to get on to 
it very, very rapidly.
    Because unless we do, we are going to have a major accident 
out there, and we are going to see loss of life. I think it is 
almost inevitable, at the rate things are going.
    So I just want to say that this is a responsibility of the 
Congress. We need to fulfill this responsibility, and we have 
not done so. And that responsibility has to do with funding 
this operation properly.
    The same thing might be said for the National Park System. 
Anyone who has had an opportunity to be out in the National 
Park System, and I have had that opportunity recently, 
Yellowstone, Yosemite and places like that, you see that the 
places are almost literally falling apart before our eyes.
    The deterioration is clearly discernible, almost palpable. 
And we need to address that problem. We need to address it by 
providing the necessary funds, to maintain the road systems in 
the National Parks, and maintain the other infrastructure that 
makes these operations so important.
    So I think there is a lot to be said here, and perhaps this 
hearing is a very good thing, if it begins to open our eyes, 
the eyes of Members of the Congress, to our financial 
obligations to the resources owned by all of the people of the 
United States, and which have been entrusted to our care and 
the care of these Federal agencies.
    So, I hope that we begin to do that, because our failure to 
do so is only going to add to the burden, add to the 
responsibility, and make it more difficult to catch up at some 
point in the future.
    Chairman Young. I can only suggest one thing, before I 
recognize Mr. Herger, and then Mr. Dicks, and that is it. One 
suggestion, good funding does not cover bad management.
    Mr. Herger.

 STATEMENT OF HON. WALLY HERGER, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Herger. Thank you, Mr. Chairman. I would like to thank 
Mr. Hill, Mr. Viadero, Mr. Dombeck for being here today, and 
for testifying on the management and practices of the United 
States Forest Service.
    I personally have all of or parts of nine national forests 
in my Congressional District in Northern California. Management 
decisions have a great impact on the health of our forests. As 
a result, I have many grave concerns about the reports of 
chronic waste of both financial and natural resources, as well 
as the agency's inability to proactively manage the land under 
its jurisdiction.
    The Forest Service currently manages approximately 192 
million acres of land--close to 9 percent of the Nation's total 
surface--and yet, even by the agency's own admission, 40 
million acres are currently at a high risk for catastrophic 
fire.
    Instead of working to improve this situation, however the 
agency is plagued by what the GAO calls, quote, indecision and 
delay, end quote. Instead of proactively improving forest 
health, the agency recently proposed to place a moratorium on 
all road building activities on roadless areas of the National 
Forest System. Quite simply, if we cannot get to an area to 
fight the fires, the areas will burn.
    The purpose of this hearing is to explore the reasons 
behind the agency's management and problems which were summed 
up on a statement by former Northern California Modoc National 
Forest Supervisor Diane Henderson-Bramlett. In her January 1, 
1998, letter of resignation to Chief Mike Dombeck, Supervisor 
Bramlett said, quote, a secondary reason for my departure is my 
frustration and dismay of the ever increasing redundant and 
costly agency practices, policies and regulations, the lack of 
accountability, both with all employees and with agency 
management, and the lack of leadership and vision throughout 
all levels of the Forest Service.
    Continuing, I feel we are trying to be everything to 
everyone all the time. As a result, we deliver very little to 
anyone. End of quote.
    This lack of management referred to by Forest Supervisor 
Bramlett has produced situations ranging from an inability to 
account for $215 million to highly questionable programs such 
as a 1996 Forest Service sponsored leadership seminar featuring 
drums, improv theater, finger painting, chimes, singing, body 
movement and story-telling. One Forest Service employee stated 
that this seminar was more like a group therapy session than a 
leadership seminar.
    In November 1997, the Forest Service sponsored another 
employee event which press reports indicated cost at least a 
half million dollars. This event used taxpayer dollars to 
explore concepts such as ``everyone's truth is truth,'' and 
``alternative realities are OK.''
    In construction areas, the Forest Service has also engaged 
in painting rocks to make them look older. Cattle ranchers in 
my district were asked probing personal questions as a 
condition of receiving a Federal grazing permit. These ranchers 
were asked, among other things, whether they were, quote, a 
person having origins in any of the original peoples of the Far 
East, the Indian Subcontinent, or the Pacific Islands, end 
quote.
    They were also asked whether they had any disabilities. A 
Forest Service document then stated, quote, furnishing of this 
information is voluntary. However, individuals administering 
the permit will attempt to identify the needed information by 
visual perception if not provided by the permittee, end quote.
    What do these situations have to do with managing our 
national forests? They all have one fact in common: they are a 
waste of taxpayer dollars.
    Further, the GAO has observed, quote, according to a 
November 1995 internal Forest Service report, inefficiencies 
within the agency's decisionmaking process cost up to $100 
million a year at the individual project level alone. These 
costs are not borne by the Forest Service, but by the American 
taxpayer, since the agency accomplishes fewer objectives with 
its yearly appropriations, end of quote.
    This mismanagement is unconscionable, and must be corrected 
immediately. If not, we may well end up sacrificing the very 
health of our National Forest System. Thank you.
    Chairman Young. I thank the gentleman. Before I recognize 
my good friend from Washington, Norm Dicks, I would like to 
acknowledge that Senator Craig has joined us, and he is going 
to sit down just about where he was when he left.
    [Laughter.]
    Chairman Young. Welcome, Senator.
    Mr. Dicks from Washington State.

STATEMENT OF HON. NORMAN D. DICKS, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF WASHINGTON

    Mr. Dicks. Mr. Chairman, I appreciate your yielding. Chief, 
obviously the allegations of the General Accounting Office and 
the Department of Agriculture's Office of Inspector General are 
very condemning on the Forest Service's ability to effectively 
manage its finances and insure programmatic performance 
efficiency.
    Just pointing out a couple of things in the GAO report: 
according to a November 1995 Forest Service report, 
inefficiencies with the agency's decisionmaking process cost up 
to $100 million a year at the individual project level along. 
Another point: because it has not obtained needed information, 
Federal regulatory agencies and stakeholders continue to insist 
that it prepare increasingly time consuming and costly detailed 
environment analysis and documentation before making a 
decision, effectively front loading the process and 
perpetuating a cycle of inefficiency.
    Preliminary results in a soon to be issued GAO report to 
the chairman of the House Committee on Agriculture on the 
Forest Service contracting practices indicate that in fiscal 
year 1996 the agency's weak contracting practices made $443 
million in appropriated funds vulnerable to fraud, waste and 
abuse.
    For example, in reporting its fiscal year 1995 financial 
results, the Forest Service could not identify how it spent 
$215 million of its $3.4 billion operating funds and program 
funds. In addition, the $7.8 billion value reported for assets, 
including property, plant and equipment, was erroneous because 
records for these assets were not consistently prepared, 
regularly updated, or supported by adequate documentation.
    Because of these and other deficiencies, Agriculture's 
Inspector General concluded that the agency's financial 
statement for fiscal year 1995 was unreliable.
    And I understand that the remedy here is that we will just 
not do any more financial statements. Now, that does not cut 
it. And I think there is one thing that even those of us who 
have been strong supporters of the Forest Service throughout 
our careers simply cannot tolerate this kind of complete 
ignoring of what these reports have shown going back to 1980.
    And I think, frankly, if we needed a control board in the 
District of Columbia, we need a control board for the Forest 
Service. And I think just as we had to have an outside trustee 
appointed to take care of the problems in terms of the 
individual claims of tribes and individual members, because we 
just simply could never get the Interior Department to come up 
with an accounting system to follow it, we are going to have to 
do the same thing here.
    Now, I am just frankly appalled by the lack of commitment, 
and I think this is something that we are going to have to, in 
the Appropriations Committee, at least, and with the help of 
the other Committees here, take action on and insist that we 
get this thing straightened up, or we just have to appoint an 
outside trustee to come in and manage this thing, and put in 
the financial systems that are necessary.
    Thank you, Mr. Chairman.
    Chairman Young. I thank the gentleman. I deeply appreciate 
your comments.
    At this time I would like to call up the first panel. Mr. 
Barry Hill, Associate Director, Energy Resources and Science 
Issues, Resources, Community and Economic Development Division, 
General Accounting Office, Washington, DC.
    And I would ask that anybody who comments with you at the 
table, please identify yourself when you do so.
    At this time also I would like to have Mrs. Chenoweth chair 
the rest of the meeting, because she is the chairman of the 
Forest Health and Forests Subcommittee, and she will be 
chairing the rest of the meeting.
    I want to thank each one of the members that are not on 
this Committee for attending today, and hopefully, as I 
mentioned in my opening statement, this is supposed to be 
constructive, somewhat objective in the sense of those that are 
being questioned today, keep in mind, most of them have not 
been on the watch.
    This is not partisan, in the sense that this has been going 
on and getting worse every year. I just think it has 
accelerated in the last 3 or 4 years, and I hope that we can go 
on from this day on to try to get this Forest Service, as the 
gentleman from Washington mentioned, under a direct, good 
business management problem that serves the people of America.
    Mrs. Chenoweth.
    Mrs. Chenoweth. Before we continue, I would like to explain 
that I intend to place all witnesses under oath. This is a 
formality of the Committee that is meant to insure open and 
honest discussion, and should not affect the testimony given by 
the witnesses.
    I believe all of the witnesses were informed of this before 
appearing here today, and they have each been provided a copy 
of the Committee Rules.
    If you would, all three of you, stand and raise your right 
hand to the square.
    [Witnesses sworn.]
    Mrs. Chenoweth. The Chair recognizes testimony from Mr. 
Barry Hill, the Associate Director for Energy, Resources and 
Science Issues, Resources, Community and Economic Development 
Division, General Accounting Office, in Washington. Mr. Hill?

STATEMENT OF BARRY HILL, ASSOCIATE DIRECTOR, ENERGY, RESOURCES 
     AND SCIENCE ISSUES, RESOURCES, COMMUNITY AND ECONOMIC 
 DEVELOPMENT DIVISION, GENERAL ACCOUNTING OFFICE, WASHINGTON, 
 DC, ACCOMPANIED BY CHARLIE COTTON AND McCOY WILLIAMS, GENERAL 
               ACCOUNTING OFFICE, WASHINGTON, DC

    Mr. Hill. Thank you, Madam Chairman. And Messrs. Chairmen 
and members of the Committees, before I begin, allow me to 
introduce my colleagues. With me today on my right is Charlie 
Cotton, who has led much of our recent and ongoing work on the 
Forest Service's operational management; and on my left is 
McCoy Williams, who is leading our ongoing effort to monitor 
and periodically report on the agency's progress toward 
financial accountability.
    We are pleased to be here today to discuss the management 
of the Forest Service. And, if I may, I would like to briefly 
summarize my prepared statement and submit the full text of my 
statement for the record.
    Mrs. Chenoweth. Without objection, so ordered.
    Mr. Hill. In 1987, the Forest Service proposed a quid pro 
quo to the Congress. If the Congress would increase the 
agency's flexibility in fiscal decisionmaking, the Forest 
Service would improve its accountability and budget execution 
through better accounting for its expenditures and performance.
    During the intervening decade, the Congress has given the 
Forest Service virtually all the flexibility in fiscal 
decisionmaking that it requested. Specifically, the Congress 
has simplified the agency's budget structure, and significantly 
increased its spending flexibility to insure that funds are 
available when and where they are needed.
    However, the Forest Service has not improved its 
accountability as it promised. In a March, 1988 report, we 
stated that before the Forest Service could be held 
accountable, it would need to correct known financial and 
performance reporting deficiencies.
    The report noted that the Forest Service was at the time 
addressing all of these problems. However, today, 10 years 
later, these problems continue to persist.
    Madam Chairman, as many of you have already pointed out, 
this stack of reports I have here in front of me represents 
over 140 products that the General Accounting Office has issued 
since 1988 on the Forest Service--a list of which I would also 
like to introduce for the record.
    Mrs. Chenoweth. Without objection, so ordered.
    [The document may be found at end of hearing.]
    Mr. Hill. These products, reinforced by our ongoing work, 
have led us to observe that foregone revenue, inefficiency, and 
waste throughout the Forest Service's operations and 
organizations have cost taxpayers hundreds of millions of 
dollars.
    For example, the Forest Service has often not obtained fair 
market value for goods or recovered cost for services when 
authorized by the Congress. As a result, the agency forgoes at 
least $50 million in revenue annually.
    It also has not always acted to reduce or contain costs as 
requested by the Congress. For example, concerned with the 
escalating costs of the Forest Service's timber program, the 
Congress in Forest Service 1991 asked the agency to develop a 
multi-year program to reduce the costs of its timber program by 
not less than 5 percent per year.
    However, in April 1997, the Forest Service was preparing to 
undertake the third major examination of its timber program in 
the last 4 years. Meanwhile, the costs associated with 
preparing and administering timber sales remain higher than it 
was in fiscal year 1991 when the Congress first voiced its 
concern, and that is despite the fact that less timber is being 
sold and harvested.
    In addition, up to $100 million a year is wasted as a 
result of inefficiencies within the agency's decisionmaking 
process. Among its shortcomings, the agency has historically 
failed to live up to its own monitoring requirements, and to 
comply with environmental and planning requirements.
    Moreover, in fiscal year 1996, the agency's weak 
contracting practices exposed $443 million in appropriated 
funds to an increased risk of fraud, waste and abuse. Rather 
than require its field offices to comply with government-wide 
and Department of Agriculture-wide requirements intended to 
reduce costs or improve performance, some Forest Service 
managers merely trust that their contracting officers will 
perform competently and ethically.
    Furthermore, the agency's financial statements are totally 
unreliable, and expenditures of significant amounts of money 
cannot be accounted for. For example, in reporting its fiscal 
year 1995 financial results, the Forest Service could not 
identify how it spent $215 million of its $3.4 billion in 
operating and program funds.
    These and other findings have led us, Agriculture's 
Inspector General, and Forest Service task forces to make 
numerous recommendations over the years to improve the Forest 
Service's financial and operational performance and to obtain a 
better return on the American taxpayers's multi-billion dollar 
annual investment in the agency.
    The Forest Service has not acted on some, has studied and 
re-studied others without implementing them, and has left the 
implementation of others to the discretion of its independent 
and autonomous regional offices, and forests with mixed 
results.
    For instance, a February 1994 report by a Forest Service 
task force on accountability set forth a seven step process to 
strengthen accountability and made recommendations to help the 
agency change its behavior.
    The concepts in this task forces's report were adopted by 
the Forest Service's leadership team and distributed agency 
wide. However, the task force's recommendations were never 
implemented throughout the agency. And as a result, many of the 
agency's processes and programs remain broken and in need of 
repair.
    To improve its operational efficiency and effectiveness, 
the Forest Service must be accountable for its expenditures and 
performance. While the agency has in recent years made some 
progress, it is still years away from achieving financial 
accountability and possibly a decade or more from being 
accountable for its performance.
    Specifically, the Forest Service has identified the actions 
required to correct known accounting and financial reporting 
deficiencies, and has established a schedule to attain 
financial accountability by the end of fiscal year 1999.
    However, serious problems have been encountered in 
attempting to implement the agency's new financial accounting 
system; additional accounting problems continue to hamper its 
ability to produce reliable financial information; and the new 
financial accounting system is not Year 2000 compliant.
    According to several agency officials responsible for 
implementing the new financial accounting system or taking 
other corrective measures, the agency is unlikely to achieve 
its goal of financial accountability by the end of fiscal year 
1999.
    The agency has also taken an important first step toward 
becoming accountable for its performance by making clear that 
its overriding mission and funding priority, consistent with 
its existing legislative framework, has shifted from producing 
goods and services to maintaining and restoring the health of 
the lands entrusted to its care.
    However, it has not identified the actions required to 
correct decade old problems with its inventory data, 
accomplishment measures, and reporting system. It has not 
addressed new challenges resulting from its changed priorities, 
and it has not established a schedule to achieve accountability 
for its performance by a certain date.
    In particular, revenue and commodity outputs are now 
contingent on healthy aquatic, forested, and rangeland 
ecosystems. However, the agency does not know the condition of 
many of these ecosystems. In addition, it has not made a 
serious, systematic attempt to develop objective and 
independently verifiable measures or indicators of the health 
and trends in the condition of these ecosystems.
    As a result, it cannot predict with any reasonable degree 
of certainty what levels of goods and services the national 
forests can produce.
    In conclusion, we recognize that the Forest Service is not 
a private firm, in that its stewardship responsibilities and 
conservation mandates can strain its ability to generate 
revenues and provide goods and services.
    We also recognize that protecting public goods, like 
endangered and threatened species, and their habitats, 
increases management costs on the national forests.
    However, we believe that the agency is also responsible for 
spending taxpayers's dollars wisely and providing taxpayers 
with a complete and accurate accounting of how funds are spent, 
and what is accomplished with the money.
    Foregone revenue, inefficiency and waste, increased 
vulnerability to fraud and abuse, and lack of financial and 
performance accountability indicate to us that the American 
public is not receiving a fair return for its annual investment 
in the Forest Service.
    Unlike the management of national forests, compliance with 
the requirements for financial and performance accountability 
cannot be left to choice, and strong leadership within the 
agency, and sustained oversight by the Congress will be needed 
to insure corrective action.
    We believe that at a minimum, the agency must replace its 
decade-old promises to improve with firm scheduled to correct 
identified management deficiencies, and to achieve both 
financial and profitability accountability.
    Finally, we believe that future years funding should be 
based in part on the Forest Service's demonstrated progress 
toward developing and implementing these schedules.
    This concludes my prepared statement. I would be pleased to 
respond to any questions that you or other members of the 
Committees may have.
    [The prepared statement of Mr. Hill may be found at end of 
hearing.]
    Mrs. Chenoweth. Thank you, Mr. Hill.
    Before we get to the members, I wonder if you would like to 
just introduce for the record those people who are with you.
    Mr. Hill. OK. To my right is Charlie Cotton, who is 
responsible for much of the Forest Service operational 
management work that we have done over the years.
    To my left is McCoy Williams, who is responsible for 
auditing the financial accounting systems in the Forest 
Service.
    Mrs. Chenoweth. Thank you. The Chair would like to ask the 
Committee's indulgence and recognize first Senator Craig. He is 
very busy, and I am very pleased--I think we all are, that he 
has joined us here.
    So without objection, the Senator.
    Senator Craig. Thank you, Mr. Chairman. Thank you very much 
for that courtesy. I am here to listen. Obviously I have spent 
a good deal of time on this issue on the Senate side. I think 
we are now up to 13 or 14 comprehensive hearings on the 
management of the Forest Service.
    I have also had the privilege of working with Mr. Hill and 
his studies, and we have used those as templates from which to 
try to make some decisions and propose changes. So I am very 
interested in what you are all doing here in the House.
    We have got a marvelous old agency that has become terribly 
dysfunctional. We ought to try to get it back together and 
operating. I think this effort by the House is very positive. 
Thank you.
    Mrs. Chenoweth. Thank you, Senator, and welcome.
    The Chair recognizes Mr. Miller.
    Mr. Miller. Thank you, Madam Chairman. Thank you, Mr. Hill, 
for your report, and I think you have already seen the reaction 
that it has created. Let me ask you a couple of general 
questions on your testimony here.
    It seems to me that when you start outlining sort of what 
is dysfunctional in the various accounting systems, that the 
first effort, if this was a business, would be, you would say 
hold on here a second. If you just took over the Forest Service 
in a takeover--hopefully you would go through the books before 
you made that decision, but if you didn't, you would say hold 
on here a second, and I want to know what the various 
compartments are doing.
    As I understand corporate accounting, functions are broken 
down, and either there are profit centers or they are not 
profit centers; either they pay for themselves or they do not, 
or there are losses, and that may be acceptable. But you kind 
of know what is going on across the various functions.
    As I look at your report, we do not know that, because we 
have unreliable accounting systems. We have costs that are real 
costs, but not included in the cost as presented. In the case 
of road building, road surface is not included. It is not 
depreciated. An assumption is made that it will last forever. 
But we do depreciate culverts and bridges and other aspects of 
that.
    So that in itself is a problem, because you are making an 
assumption about your future cost to go back to that area. You 
pointed out in your report that road building is now going into 
more--or is anticipated to go into more difficult habitat, so 
the immediate cost of each of those miles goes up because it is 
going to be challenged, it is going to be litigated, more 
scientific evidence has to be provided, more homework has to be 
done to make the case affirmatively to do that.
    And in some cases even the terrain is more difficult, and 
yet those do not seem to be factored into anticipated road 
building in roadless areas or what have you.
    Obviously we have built a system of repayment here, or 
remuneration, I guess, back to the agency, and to local school 
districts and counties, based upon one aspect of the entire 
service, and that is timber harvest.
    But as the timber harvests come down from 12 billion to, 
what is it now? Three, almost 4 billion, nation-wide, no 
adjustments in payments, allocations, percentages or projects 
has really been made.
    And so we are sort of standing a larger and larger agency 
on the head of an inverted pyramid here. And those timber 
sales, harvests and cuts are calculated to provide a huge 
amount of resources to this agency, but, in fact, it is getting 
more and more difficult to do that.
    It sounds to me like that has violated almost every common 
sense accounting process you might want to invoke. And at the 
same time, we are adding additional burdens to this Service, in 
terms of the increased use for recreation, all of the fish and 
wildlife protections that are incumbent in modern forest plans 
and development plans and all the rest of that.
    And yet those are not really factored in as part of the 
cost other than that. I guess maybe you hear some of this in 
the Appropriations Committee, but appropriations have been 
fairly level here, and yet we are conducting smaller 
activities, but more costly, and we are not accurately 
accounting for them.
    How do we compartmentalize the activities, whether it is 
recreation, whether it is fish and wildlife protection, 
ecosystem protection, timber cuts--how do we really get a 
realistic picture of what are our profit centers, what are 
centers that are simply paying for themselves, and what our 
loss centers?
    And I include in that the whole question of what are the 
things we are doing below cost, that we are subsidizing 
activities at the risk to the agency.
    Mr. Hill. I am going to let Mr. Williams and Mr. Cotton 
chime in after I have said a few words here, with their 
different perspectives on this. But I think that your 
summarization and explanation of what is and what has evolved 
is right on target. That is exactly right.
    The basic problem with their financial information is you 
really cannot identify and concentrate cost along certain 
activities or performance areas that they are trying to 
achieve, their objectives.
    A lot of their cost is based on activities, like 
recreation, or timber, as you correctly pointed out, as opposed 
to ecosystem management or forest health, or whatever 
activities, or watershed analysis, whatever activities that you 
want to measure.
    And unless you can identify costs and put them into a 
particular activity that you are trying to achieve, it is 
impossible to have accountability, because you cannot identify 
just what the true cost of any given activity is.
    Mr. Cotton. I would just like to add an example. For fiscal 
year 1999, only 29 percent of the Forest Service's timber 
volume is going toward saw timber, green timber. Another 32 
percent is salvage. Another 34 percent is vegetation 
management, and 5 percent is fuel wood.
    Now, if you were a private industry, you would look at your 
saw timber green program, and I think you would expect that to 
make a profit, that that should cover its costs. But the 
salvage program, the vegetation management program, it may be 
that they are working toward stewardship objectives, making the 
land healthier, and the primary objective of them is not to 
turn a profit.
    And I think it would be very important for the agency, just 
like a private company, to separate saw timber from salvage 
timber, because salvage timber, you never set out to make a 
profit to begin with. And they have not done that, and that to 
me fuels this whole argument over below cost timber sales.
    Mr. Miller. If I might, and I do not want to prolong the 
point, but also in terms of the appropriators, or those of us 
on the authorizing committee, we would then know the real cost 
of each of the programs. We could decide whether or not that is 
where we want to put the public's money or not.
    Mr. Cotton. Absolutely.
    Mr. Miller. And the public could decide if that is a real 
value they have, or it is only a value when it was kind of 
hidden and subsidized.
    Mr. Cotton. Absolutely.
    Mr. Miller. So, I mean, in terms of our decisionmaking 
process about what we are funding or not, these sort of 
shuffled costs do not allow us to know where we are investing 
the public's money.
    Mr. Cotton. That is correct. And could I add just one more 
thing? With those percentages, only 29 percent of saw timber, 
and yet the allocation criteria that the Forest Service has 
used to distribute, their timber sales management funds that 
you give them are based 100 percent on green timber sales. A 
total disconnect between the allocation criteria and what they 
are asking the money for, and what they plan to do with it.
    Mr. Miller. Thank you.
    Mrs. Chenoweth. Thank you. The Chair recognizes Mr. Herger.
    Mr. Herger. Thank you, Madam Chair.
    Mr. Hill, in your testimony you stated that your review of 
the Forest Service financial procedures have revealed that 
appropriated dollars are exposed to an increased risk of fraud, 
waste and abuse. As a result, the GAO, the Agriculture 
Inspector General, and the Forest Service task forces have made 
numerous recommendations to the Service to improve its 
performances.
    Could you please explain to us what these exposed 
shortcomings are?
    Mr. Hill. The exposed shortcomings in terms of the 
potential for fraud, waste and abuse?
    Mr. Herger. Yes.
    Mr. Hill. That information is based on some ongoing work 
that we have right now for the House Agriculture Committee that 
should be coming out shortly. And basically what they are 
finding is that in a highly decentralized organization, such as 
the Forest Service is, you have to have effective internal 
controls over expenditures of money that go toward contracting.
    And in this case we are talking about $443 million in 
fiscal year 1996. Certain things like providing routine 
supervision of contractors' work, monitoring and overseeing the 
work to make sure they are performing properly, internal 
controls that limit certain spending authority--thresholds, 
basically.
    These are all effective controls and measures that you have 
to have over the contracting process in order to insure that 
the money that you are providing the contractors is being used 
efficiently and effectively and that there is no misuse or 
waste or fraud that is going on.
    What we are finding is that there is a real, inconsistent 
application of the way these controls are being implemented 
within the Forest Service. If you look out at the local level, 
it is not being done in a consistent basis, and a lot of the 
managers, forest managers, are using what they term trust. They 
trust their contracting officers, they are professional, they 
are educated, they know their business, and we trust them to do 
an ethical and a competent job.
    Mr. Herger. Now have you in the past, when you have given 
recommendations to the Forest Service--let me rephrase that.
    You have been discovering problems for some time, is that 
not correct?
    Mr. Hill. That is correct.
    Mr. Herger. And you have been making recommendations to the 
Forest Service for some time?
    Mr. Hill. That is correct.
    Mr. Herger. Could you tell me what were some of these 
recommendations?
    Mr. Hill. Well, as you can see by these reports--I will not 
go through all of them--but some of the key ones I think have 
already been mentioned. When you look at what they are 
receiving for goods and services that they are providing, they 
are not getting fair market value for special use permits, and 
uses of the forest lands for commercial and non-commercial 
purposes.
    The Forest Service has traditionally not been getting fair 
market value, and in some cases we found that they are only 
getting maybe 10 percent of what the fair market value could be 
for some of these uses. That one we could quantify.
    We estimate that the Forest Service is forgoing about $50 
million annually, alone, in that one. And then of course, 
internally, the Forest Service themselves have identified 
another $100 million annually that is being wasted in terms of 
inefficiencies that are within the organization.
    Some that cannot be quantified, I think, are just as 
important, and the example I used deals with the maintenance 
backlog. The agency estimates that there is a $7-$8 billion 
maintenance backlog, and I know that has been a concern of the 
Congress, not only with the Forest Service, but with the Park 
Service and the other Federal land management agencies. And you 
have provided a lot of funding to handle this maintenance 
backlog situation.
    Yet we are finding that the estimate is not really based on 
reliable information. They really do not have a good handle for 
what that backlog is, and whenever you are providing them 
money, they really cannot give you any assurance that they are 
spending those moneys on the proper projects, and that they are 
addressing the highest priority needs in terms of maintenance 
needs.
    That is just as wasteful an example as some of the others 
that we have given.
    Mr. Herger. Now, these recommendations that you have been 
giving for some years, would you say that the Forest Service 
has been following up on them?
    Mr. Hill. May I say there is a pattern here. And the 
pattern is they always agree with the problems we point out and 
with the recommendations we make, and they always promise 
corrective action. But that is as far as it goes.
    We really do not see over the long run where they have 
really taken substantive action on a lot of the recommendations 
that we have made and that they agree to do.
    Mr. Herger. Thank you, Madam Chair.
    Mrs. Chenoweth. Thank you, Mr. Herger. The Chair recognizes 
Mr. Dicks.
    Mr. Dicks. Thank you, Madam Chair.
    Another one of your examples is, in reporting its fiscal 
year 1995 financial results, the Forest Service could not 
identify how it spent $215 million of its $3.4 billion in 
operating and program funds.
    In addition, the $7.8 billion value report for assets, 
including property, plant and equipment, was erroneous because 
the records for these assets were not consistently prepared, 
regularly updated, or supported by adequate documentation.
    Now, let us go to the $215 million first. Were there just 
no documentation whatsoever for how the $215 million was spent?
    Mr. Williams. As far as the $215 million, it was identified 
in the Forest Service annual report as unidentified. Based on 
that, we do not know----
    Mr. Dicks. Unidentified?
    Mr. Williams. Unidentified.
    Mr. Dicks. Has this been a practice over the years, of 
having a certain amount of money just unidentified?
    Mr. Williams. That is the first time I have seen it in 
financial statements. Listing it as unidentified, you have 
various categories. For example----
    Mr. Dicks. Did you ask them what unidentified meant?
    Mr. Williams. No, we did not ask what unidentified meant. 
Basically we knew that they had not--they could not identify if 
those amounts were spent for personnel, if it was spent for 
rent, and the various categories on your financial statements 
that you use to identify how you spent your money.
    But there was this one category that was listed as 
unidentified, and that is why we reported that for fiscal year 
1995, there was $215 million that the Forest Service had 
reported as unidentified.
    Mr. Dicks. In terms of how it was spent.
    Mr. Williams. That is right.
    Mr. Dicks. And out of that you then determined that their 
financial statement was completely unreliable. Is that correct?
    Mr. Williams. Well, it was the OIG's audit that determined 
that the financial statements were unreliable.
    Mr. Dicks. This is the Office of Inspector General of the 
Agriculture Department.
    Mr. Williams. That is correct. And we just reviewed the 
financial statements to try to put in lay terms exactly what 
does it mean to receive an adverse opinion on the financial 
statements. And we went through the various categories that the 
Office of the Inspector General identified in reaching the 
conclusion that the financial statements were not correct.
    Mr. Dicks. And since 1995, they have not prepared any more 
financial statements. Is that not correct?
    Mr. Williams. Financial statements were not prepared for 
fiscal year 1996. I believe they have statements for 1997, and 
the OIG is in the process of looking at those statements now.
    Mr. Dicks. Now, because time is limited, and we have a lot 
of members here, a lot of interest, let me ask you this bottom 
line question. Either this is arrogance, or it is incompetence. 
And how do you characterize it? Or is it a combination of both?
    Mr. Hill. We would just characterize it as major problem. 
This is a major problem.
    [Laughter.]
    Mr. Dicks. OK. Now, let us go to the Dicks proposal. Should 
we bring in somebody from the outside to try to put in order 
the financial house of the Forest Service at this juncture, 
based on this, what 17 years of these reports, and the fact 
that nothing has happened?
    Would bringing in an outside trustee at this point to try 
to put together a program and a plan be something the Congress 
should give serious consideration to?
    Mr. Cotton. I think if history is any indicator, the Forest 
Service has had a difficult time correcting these problems 
themselves. And, in fact, as far as their financial 
accountability, they have brought in an accounting firm to try 
to help them in their implementation of the financial 
accounting system, and now with a more recent contract to help 
them with other financial deficiencies and shortcomings as 
well.
    So they went out at least on the financial side and sought 
outside help because of the difficulties they were having 
delivering it themselves.
    Mr. Dicks. But do you think bringing in a trustee of some 
sort be an option that Congress should give consideration to?
    Mr. Cotton. We most certainly have talked about a control 
board internally. The GAO, has, for a number of years.
    Mr. Dicks. So the President would appoint a number of 
people, and they would manage the financial part of the agency. 
The policy, the ecosystem protection, all the other good policy 
things, but would bring in some people who could give us the 
data, the information, the accounting, all the financial side 
so we could track and see how the public money is being spent?
    Mr. Cotton. Well, Mr. Dicks, if you think they are having 
problems on the financial side, you have not seen anything yet 
until you get over to the performance side. Because I would 
think as appropriators you not only want to know where they are 
spending that money, but what they are accomplishing with it.
    So in the end you are going to have to link that financial 
system with some type of promised accomplishments on their 
part, and to know that if you give them money to perform a 
certain activity or certain function, they are doing that, and 
they are accomplishing what they set out to do.
    I think a very good observation that has been made in the 
past on the part of the Forest Service is that they are 
rewarded just as much for failure as they are for success.
    Mr. Dicks. Thank you, Madam Chairman.
    Mrs. Chenoweth. Thank you, Mr. Dicks. The Chair recognizes 
Mr. Nethercutt.
    Mr. Nethercutt. Thank you, Madam Chairman.
    Welcome, Mr. Hill and gentlemen. I had an interesting 
meeting with Mr. Dombeck this week, and had a chance to meet 
Mr. Pandolfi, who has been brought in to look very carefully at 
the financial operations of the Forest Service.
    And I was told that there are literally millions of 
transactions that go on in the Forest Service annually, and 
over a multi-year period there are multi-million transactions.
    Is that what you found as well, that there are numerous 
transactions that go on all over the country under the auspices 
of the Forest Service, and the operations of the Forest 
Service, relative to timber sales and all kinds of other things 
that they do. Is that what you found?
    Mr. Hill. There is no question. It is a large organization. 
You are talking 36,000 people, 155 forests across the Nation. 
It is a huge organization. And they have tremendous amounts of 
responsibilities and there are a lot of activities going on out 
there.
    They also have a tremendously high visitation rate in terms 
of the number of people that visit the forests. So there are 
lots of things that they are dealing with.
    Mr. Nethercutt. You know, your report is a clear indictment 
of the past and the status quo. My hope is that this business 
approach that is being undertaken in the Forest Service is 
going to be beneficial. That is my greatest hope.
    And certainly with the benefits of yours and Mr. Viadero's 
reports, I think we are hopefully going to add some benefit to 
the way the Forest Service does business.
    Having said that, and having reviewed your report, and all 
the, again, indictments essentially in Mr. Viadero's, of the 
problems that exist in the agency and apparently have existed 
for years, I think it is understandable in some respects with 
the change in people, the leadership and the number of 
employees and so on.
    We in Congress have a--I will not say a short attention 
span, but a desire for fast results. I am wondering if you can, 
for the record here, identify three things that you would 
recommend that the Forest Service undertake immediately in 
order to accomplish a certain defined objective within the next 
year.
    Let us say by the end of the next fiscal year. By the end 
of fiscal year 1999. What can you tell this Committee, this 
group of members, that the Forest Service could do, based on 
your knowledge, that would improve their system, whatever it 
might be, and that would be a definable objective result, that 
would be acceptable to us.
    Mr. Cotton. I think what you will hear from the Chief of 
the Forest Service today is that it will, as you just observed, 
take a number of years to fix what is broken. And we agree with 
that. It is not going to be fixed overnight.
    And so it is going to require a sustained oversight by the 
Congress and long term attention by the agency.
    And what we have asked and suggested, and I think the No. 1 
thing that they can do, is to establish a very clear schedule 
of what it is that needs to be done and when they are going to 
do it, when they are going to provide you with deliverables.
    Then you at least have a schedule to hold them accountable 
for ultimately being accountable. And I think that the most you 
can hope for is what progress are you going to make in the next 
year, so at least this time next year we can all come back and 
say, yes, they are on schedule, or no, they are not, and here 
is why.
    Mr. Nethercutt. I am in agreement with you, sir. I am 
wondering if someone else has as followup answer. If you do not 
or if you do, please include in your answer what specific 
things you think are subject to that accountability that we can 
make judgments on in the next year.
    Mr. Cotton. First of all, they have identified what is 
broken in the way of their financial accounting system and 
their other financial shortcomings, and have established a 
schedule to meet them. They need to do the same thing on the 
performance side.
    And what we believe is the starting point of that is their 
strategic plan and its stated goals and objectives. But right 
now the budget is not linked to those goals and objectives. 
Their allocation criteria are not linked to their goals and 
objectives, nor are their outcome measures, which are primarily 
outputs and not outcomes.
    So what we would see is progress in the next year in 
clearly identifying what people agree on as being appropriate 
performance measures so they can come up and tell you we did or 
we did not accomplish this goal with the money you gave us this 
year.
    Mr. Nethercutt. Any other comments?
    Mr. Williams. I would like to add on the financial 
management side, one of the keys to attaining financial 
accountability will be to implement the new accounting system 
that the agency is in the process of implementing.
    To meet that goal of implementing that system successfully, 
I think that the Forest Service, along with the Office of the 
Chief Financial Officer, should follow recommendations made by 
the Office of the Inspector General last summer, and that is to 
make sure that the new system that was piloted in the three 
units this fiscal year is properly tested, and all coding is 
taken care of.
    I guess overall, it is important from a timeliness 
standpoint, but it is also more important that it is done 
correctly. So I think they should take those considerations, 
recommendations identified in the OIG's report, and that would 
go a long way in helping the agency attain financial 
accountability.
    Mr. Nethercutt. Thank you. Thank you, Madam Chairman.
    Mrs. Chenoweth. Thank you. Mr. Farr?
    Mr. Farr. Thank you, Madam Chair.
    Well, welcome to the first bicameral, tri-committee 
hearing, and this room is packed, and there is 100 percent 
agreement in this room that we all love forests. The difficulty 
is that 50 percent of them love it vertical and 50 percent of 
them love them horizontal.
    [Laughter.]
    Mr. Farr. And I think you can see from the testimony in 
this room that we are not all going in the same direction. What 
I thought was very curious, and has been overlooked, is that if 
you in your summary that you gave us, the first word you lead 
with is ``foregone revenue.''
    You also say, for example, we have previously reported the 
Forest Service has often not obtained fair market value for 
goods or recovered costs for services when authorized by 
Congress. And then you go on to describe in the next few pages, 
as I read it, a protection of this government of special 
interests in the forest.
    It does not obtain fair market fees for commercial 
activities on national forests, including resort lodges, 
marinas, guide services for special non-commercial uses, such 
as private recreational cabins, special group events, or 
recovered costs incurred in reviewing and processing 
applications for special use permits.
    The Forest Service also has, No. 1, not charged fair market 
value for rights of way for oil and gas pipelines, for power 
lines, for communications lines on its lands, and has, No. 2, 
not used sealed bids for certain timber sales, relying instead 
on oral bids which generate lower revenue.
    As a result, the agency forgoes at least $50 million 
annually in revenue. It also does not suggest, which the 
question gets into, I happen to represent one of the largest 
national forests in California, Las Padres. In the northern 
part of it we do not have any commercial sales. We have a 
little bit, maybe, of grazing lands.
    But it is a recreational forest. And it is a remarkable 
draw for the local economy. And that is not in the formula. 
What value is that? What value is there in leaving old growth 
redwoods that have been historically difficult to get to 
because they are in roadless areas remaining roadless, and 
remaining old growth, and remaining of value to this country.
    I mean I think one of the difficulties in this debate up 
here is that some people see the forest as, if you mine it, 
drill it, dam it, cut it there is revenue in there. And the 
other part of the Committee realizes that as a public, national 
forest, there are private lands, there are State lands which 
have different revenue extractions, and different laws for 
them.
    But these are the national forests, and in some purposes, 
these national forests have value in being left as is. And in a 
business sense it is more cost effective.
    Some of the biggest resorts in America have set aside most 
of the land for non-commercial uses. It draws people. They play 
golf on it, maybe. But they do not develop it.
    And I am suggesting that there is a value, a land use 
management value in management of these forests in some cases 
in some places just leaving them as they are. Could you respond 
to that, and could you respond to why these special interests 
do not pay fair market value?
    Mr. Hill. Well, that is quite a question you posed. Let me 
see if I can attack it a little at a time here. I think there 
is a central policy question that all of your comments focus 
on, and that is to what extent do we want the Forest Service to 
cover its costs or to cover at least a larger portion of its 
costs than it is currently covering?
    Clearly, as we say in our statement, there are uses of the 
national forests that are not intended to generate revenue--
wildlife protection, recreation use and things like that.
    There are other uses that by law they are required to get 
fair market value for providing those goods and services, which 
are the ones that you have already mentioned.
    I think it is a question, though, of incentives here, and 
policy in terms of just what you want the Forest Service to do, 
to what extent do we want the taxpayers to have free or low 
cost use of recreation, water sports in the national forests, 
picnicking areas, camping grounds, or to what extent do we want 
the users of those services to pay a portion of the cost, or at 
least cover a portion, if not all the costs, so that these 
forests can be more self-sustaining.
    In that regard, we have recently done some work where we 
have looked at various entities that are similar to the Forest 
Service out in the States and in the private sector to see from 
their standpoint how they are covering their costs, and the 
techniques they are using.
    And a lot of it deals with what their basic purpose is and 
what their policy is.
    Mr. Farr. As you pointed out, these are commercial 
activities that are not capturing fair market value. These are 
not passive activities. These are commercial activities.
    Mr. Hill. Yes. And in those cases, the law is pretty clear, 
that the Forest Service must obtain fair market value for those 
services.
    Mr. Farr. Why do they not?
    Mr. Hill. We do not know.
    Mr. Cotton. They could argue the fact, or one of the 
arguments is that they do not get to keep the revenue that they 
generate. The other thing is that the Congress has really never 
held them accountable for collecting the revenue that they 
should.
    They have had authority since 1952 to cover their costs of 
issuing special use permits, and they have never issued the 
regulations.
    Mrs. Chenoweth. Thank you very much. The Chair recognizes 
Mr. Peterson.
    Mr. Peterson. Thank you very much, Madam Chairman.
    I want to congratulate the committees for doing this 
jointly. I think it is outstanding. We should be doing this a 
little more often.
    I am new here. I do not know very much about Washington, so 
I will share a few thoughts with you and then have your 
reaction.
    I want to say that I do not know that the Forest Service is 
as bad as it is being painted here. That may surprise a few. 
When we look at the Federal Government overall, when we have 
HCFA, the agency that deals with health care, and there is 
nothing more important than that, reports by their own 
Inspector General indicate the agency spent $23 billion last 
year that they did know whether it should have been spent or 
not.
    We look at the Treasury and the IRS, and 21 percent of the 
earned income tax credits they feel are fraudulent, and that is 
worth about $10 billion. And we could go on and on with a long 
list.
    Now, we have a lot of problems in the Forest Service, but 
let us keep them in perspective. I come here from a 26 year 
business background, and a 20 year State government background, 
with no Federal experience. I came here with the concept that 
Washington does not work. We are too big. We are too diverse.
    When you look at the Tongass National Forest in Alaska, the 
Boise National Forest in Idaho, the Allegheny National Forest 
in Pennsylvania, in my district, the Green Mountain National 
Forest in New England, and the Routt National Forest in 
Colorado, they do not have much in common.
    They are very different. Yet we are trying to manage them 
from the national perspective.
    Now, you as an agency have to deal with issues like last 
year in the budget process and the year before. Two 
Congressmen, one from Illinois and one from Massachussetts, 
came within one vote of taking away your road budget, 
destroying it, just wiping it out.
    Neither of those Congressmen have a national forest in 
their district, and I would debate them that neither one of 
them know very much about our national forests. But their 
concept almost took away your road budget. So how can you 
manage?
    Now, in the corporate world, the business world, 
bureaucracies are a problem everywhere. When they get too big, 
and they lose their focus and their mission, in business the 
company goes bankrupt. Somebody takes their place, or the board 
in time brings in a new leader, but they have the ability to 
lead.
    I do not think you have the ability to lead, because we 
have Congressmen from all over this country, we have interest 
groups from all over this country with their narrow special 
interests who want very different things out of our public 
lands.
    I guess I would like you to react to a concept of where we 
have a national Forest Service which sets goals and objectives, 
but we have regional national forests that are managed 
regionally, with boards appointed by Governors, the counties in 
which they are located, conservation agencies, forestry 
schools--I mean, good folks, that are from that part of the 
country, where we cannot have national Congressmen destroying a 
part of your budget, or having far too much influence on a part 
of this country that they know very little about.
    So I do not think it works in those other agencies. I do 
not think it will work in your agency until we go to a regional 
approach where we have people managing that know what they are 
managing.
    Would you respond?
    Mr. Hill. Yes. If I could respond to that, being with the 
General Accounting Office, we do have the benefit, I guess, of 
visiting a lot of the different forests, seeing different 
regions of the country, being exposed to the different cultures 
and uniqueness that these forests and regions have, and I have 
a couple of thoughts on that.
    One, like a business, you want people who are engaged in 
what they are doing and believe in what they are doing. And let 
me say unequivocally, no matter what forests we have gone to, 
no matter what region of the country we have been in, we have 
always been impressed with the quality of the Forest Service 
employees.
    Their expertise, their dedication, their aggressiveness, 
they are hard working individuals that really care about their 
forests, and we really believe they are doing the best they 
can.
    Because of that, and because of the uniquenesses out there 
in the regions, we do not question the need to have a 
decentralized organization like the Forest Service has. But 
with any decentralized organization, you need to have policy 
direction and leadership and goals and objectives that everyone 
agrees to and is working toward.
    It is like putting eight people in a boat, a row boat, and 
giving them each an oar, and having them in the row boat rowing 
as fast as they can. Well, if they are all rowing in different 
directions, that boat is going to go no where fast. And in some 
sense, that is what the Forest Service is doing right now.
    At the forest level, these employees are working very hard, 
but they are not all going in the same direction. We have got 
to get them focused basically on the same objectives and 
mission, and have a clear understanding of what their 
expectations are, and then they have to be accountable.
    We have to go in there and look at what they are doing, and 
seeing how they are performing to make sure we are still on 
course as that boat goes down the river.
    Mr. Peterson. But can we, as diverse are our forests are, 
can we have a one size fits all in the top management?
    Mr. Cotton. Absolutely not.
    Mr. Peterson. But we do.
    Mr. Cotton. Where we make the distinction is we fully agree 
with you, and with the Forest Service that the management of 
the lands and the resources must be tailored to the region and 
to the locale that the forest is in.
    And one forest may be a pure recreational forest, and 
another forest may be primarily still for timber production. It 
varies by forest. It varies not only by ecological needs, but 
by socio-economic needs.
    And so we strongly support the fact that a one size fits 
all approach to managing the lands and the resources is not 
appropriate. But in return for that flexibility, for that 
discretion in decisionmaking that is critical for this agency 
to operate efficiently and effectively, we think you deserve 
accountability on their part on where they have spent this 
money and what they have accomplished with it.
    So we separate management of the land, which has to be 
decentralized, and has to be tailored to a certain locale from 
the Federal requirements of being accountable to the Congress, 
to the American taxpayer of where you spent the money and what 
you accomplished with it.
    And that is where we are looking for consistency, at that 
level. Not at the management level.
    Mr. Peterson. You think we should look at, maybe, a 
regional management approach.
    Mr. Cotton. It is a regional management approach now. It is 
a forest by forest approach.
    Mr. Peterson. Not governing. We are governed by Washington. 
Washington governs. I mean regional boards of people who are 
helping to manage each regional forest, that are somewhere from 
that part of the country that understand that forest.
    We have far too much pressure from vice presidents and 
presidents, and interest groups who have very single purposes--
on both sides--who have very single purposes in mind for our 
public lands.
    And you should not let anybody run the ship. We have a 
Forest Service who spends more time in lawsuits because there 
are interest groups who use the lawsuit to stop whatever they 
do not want to stop and to make their job impossible.
    I mean, the legal system in this country we all know is out 
of control, but the Forest Service, they have been fighting 
lawsuits by the score. So the costs of managing a forest when 
you are dealing with all of those lawsuits, I mean I just think 
in my view, if we keep it as it is, with national management 
over all the forests with a lot of similarity, we will be here 
in 10 years with another pile of books like that, and 
everything will be the same.
    Mr. Cotton. Mr. Peterson, if I could add one thing, the 
problem I think that you have here is that they are national 
forests. They are not regional forests or State forests. They 
are national forests. So I think everybody feels that they have 
an equal vote in how those forests are managed.
    Mr. Peterson. Thank you, Mr. Chairman.
    Mr. Herger. [presiding] Thank you, Mr. Peterson. Mrs. Smith 
will inquire.
    Mrs. Linda Smith. Thank you, Mr. Chairman. I thank you 
gentlemen. You have been very patient with us. I think you are 
feeling a lot of the frustration. We are picking up your 
frustration.
    I was just re-reading some of your testimony that I was not 
privileged to hear at the beginning because I was a little 
late. And I want to go over quickly, because there are sections 
of it that lead me to believe that we are at a point of 
decision. I do not want to have this hearing again next year, 
that next year we have lost a lot between now and then.
    It starts with while the agency has in recent years made 
some progress, it is still years away from achieving financial 
accountability and possibly a decade or more away from being 
accountable for its performance.
    And then it goes on and says the Forest Service has said 
that in, maybe, the next few years they might--might--attain 
financial accountability. Then it goes down to say, however, it 
has not identified the actions required to correct decades old 
problems with its system. And then it goes on.
    I cannot imagine sitting before a judge with one of the 
corporations that is in trouble and saying, I will tell you 
what, maybe in 10 years I will be accountable, and I might be 
able to get the books straightened out in a few years, and 
having that judge not look at me and say, we are going to put 
you into someone else's hands for stability.
    As I have just gone through both your report and the 
Inspector General's report, this would not be acceptable 
anywhere else but in government. Now, I have heard that it is 
complex, and that we have gone into the debate over whether it 
should be managed on a regional or national basis.
    Management is really important, but you can figure out the 
goal. The goal is legislative. It is already in law. We are to 
manage the health and productivity of the forests, and, yes, in 
a lot of different varieties. But it should be able to be done.
    I guess where I am at right now is asking you a very blunt 
question. If you were to make the choice today of leaving it in 
the hands of the people that it is in, or giving it to another 
entity, whether that be a group of experts or whatever, would 
you risk changing for hope of some progress forward? Are you 
willing to wait for 10 years?
    Mr. Hill, or whichever of you want to respond may begin.
    Mr. Cotton. Well, for those of us who have been doing this 
for more than 10 years, we have already waited 10 years for 
improvement, and it has not happened. And like I said earlier, 
I think that the Forest Service, at least on the financial 
side, has realized that they could not do it alone, and has 
brought in outside help.
    And I would have to imagine that if you wanted more 
assurance, and a quicker delivery date on the performance 
accountability side, that they are going to have outside help 
as well.
    Mrs. Linda Smith. So you would say now it not too soon?
    Mr. Cotton. I think it is 10 years overdue.
    Mrs. Linda Smith. Because I would agree with the statement 
of the local personnel and their expertise, and also their 
dedication to what they do. But I can also share with you their 
total frustration in what they will tell you about the 
management over them with no clear direction, like a boat 
without a rudder, I think someone said earlier, going in a 
circle.
    And nothing can be worse to good people than to have no 
direction, and feel like they have nowhere to go.
    What we are seeing, too, is people saying I just want to 
get out of this. You get your best people wanting to retire and 
then you have a bigger problem.
    Mr. Hill, do you agree with that?
    Mr. Hill. Yes, I agree with that. If I could add, the 
problem is a little more complex than that. There will be no 
quick fixes here, regardless of whether it is done inside, or 
if you bring an outside group in.
    There is a lot that needs to be done. There is a lot that 
is overdue. And I will give you an example. If you go out there 
and you establish a clear objective, if you say your objective 
is improved forest health, so there is improvement in the 
sustainability of the resource, there is no data on the 
forest's health.
    And as far back as 1980 we were recommending that they 
needed to establish an inventory of data of forest resources, a 
baseline data that you could use to measure performance.
    How can you determine if you are meeting a goal of 
improving forest health when you do not even know what 
resources are in the forest? You have no baseline to work on, 
much less what condition they are in.
    So even if they get this clear vision, and even if they all 
agree on what the objectives should be in individual forests, 
they do not have the data and the reporting systems and the 
accounting systems in place to really make a difference in the 
short term.
    It is going to be a huge undertaking on their part.
    Mrs. Linda Smith. Thank you, Mr. Hill. I guess in 
conclusion what I want to say, though, is I have seen 
reasonable people in a short time work miracles when they 
wanted to work together, and you remove the bureaucracy from 
the decisionmaking.
    So I think somehow we have to find somebody who can make 
the decisions and move forward within the Congressional 
mandate.
    And, no, it is not just trees down or trees standing. We 
can manage the forests for both, and we can have a beautiful 
resource without the trees down burning up the trees standing, 
when we have the forest fires because we have not managed those 
forests.
    So I thank you for coming and putting up with all of us. We 
hope to see you again with a good report next year on how we 
have progressed.
    Mr. Hill. We would like that, too.
    Mrs. Linda Smith. Thank you.
    Mrs. Chenoweth. [presiding] Thank you, Mrs. Smith. Mr. 
Schaffer.
    Mr. Schaffer. Thank you, Madam Chairman.
    I would ask the Committee's permission to enter some 
introductory remarks for the record, so I can get right to the 
questioning.
    Mrs. Chenoweth. Without objection, so ordered.
    [The prepared statement of Mr. Schaffer follows:]

 Statement of Hon. Bob Schaffer, a Representative in Congress from the 
                           State of Colorado

    Thank you Mr. Chairman. I am grateful for this opportunity 
to examine the U.S. Forest Service, an agency in need of 
repair. This hearing into the workings and management of the 
U.S. Forest Service should be an impetus for positive reform in 
an agency that has lost sight of its mission, its 
accountability and its management. For years, Congress has 
pressed for positive reform only to be assured time and time 
again that ``steps were being taken'' or that the Forest 
Service is ``implementing changes'' or ``adopting new 
policies.'' Those assurances have rung hollow for long enough.
    I am dismayed at the General Accounting Office (GAO) 
reports on the Forest Service. Poor accounting; the inability 
to track costs and revenues. We are not talking about a decimal 
point here and there. We are talking about billions of dollars! 
Allow me to cite some examples from the GAO's findings. The 
Forest Service lost track of $215 million. They don't know how 
that money was spent. They do know that they allocated $500,000 
on a conference to explore ``diversity and alternative 
realities.'' Yet our forests are dying and are at risk of 
catastrophic fires. The Forest Service complains of losing 
money on timber sales while the Forest Service has been 
drastically reducing the timber put up for sale. They 
underestimated accounts payable by $38 billion! Yet, as 
justification for blocking access for management to at the very 
least 34 million acres, the Forest Service cites a $10 billion 
road maintenance backlog. How are we to believe anything the 
Forest Service says?
    I have seen recreation statistics from the Routt National 
Forest in Colorado. If we are to believe those statistics on 
recreation, then the entire population of Routt County, plus 
four thousand people are up recreating on the Routt every day! 
If we are to believe the Forest Service, then the streets, the 
highways and the businesses of Routt County should be empty 
today and every day because people are up recreating in the 
National Forest! If we are to believe Forest Service 
statistics, every one of those people is putting $125 every day 
into the economy for recreation alone. How are we to believe 
anything the Forest Service tells us?
    Any good company is accountable to its board of directors 
and to the public. I think its time we consider the Forest 
Service a company with a job to do. We will not stand for 
inefficiency and waste at the expense of the health of our 
national forests. As Members of Congress we will no longer 
accept the Forest Service's word. Only real reform is 
acceptable. We demand good management of our resources. Good 
management means management for multiple uses. We demand 
accountability, and most importantly, we demand public input. 
Thank you Mr. Chairman. I look forward to this opportunity to 
work towards those goals.

    Mr. Schaffer. Let me ask a couple of questions. Mr. Hill, 
in your testimony you indicated the agency has not responded to 
some of your recommendations. What is the most significant 
recommendations the agency has not acted which has a budgetary 
impact?
    Mr. Hill. I think the one that we have been able to 
quantify the best would be the one dealing with obtaining fair 
market value for special use permits from commercial and not-
commercial interests.
    That certainly was one that we were able to quantify, but 
there are lots of others that are not as easy to quantify that 
are just as significant.
    Mr. Schaffer. In terms of easy to quantify, why don't you 
do that for us now. What would you estimate the expense of that 
one failure to be?
    Mr. Hill. Well, for these special use permits, it is $50 
million each year.
    Mr. Schaffer. Could you make any recommendations to us now 
in how we might go about addressing that particular or problem? 
Or have you made recommendations to the agency itself?
    Mr. Hill. We have made numerous recommendations. We have 
done numerous reports in this area dealing with commercial 
special use permits, non-commercial special use permits, right 
of ways for transmission lines and things like that.
    We have talked about, in some of those areas they are using 
a payment schedule fee system as opposed to getting appraised 
value for some of the goods and services that they are 
providing.
    And we made a host of recommendations.
    Mr. Schaffer. How many times and over how many years has 
that recommendation been made?
    Mr. Hill. Well, I know we have done at least three reports 
in the last 5 years, I believe, that have talked about various 
aspects of the special use permit program.
    Mr. Schaffer. Has there been any rationale put forward by 
the agency in resisting your recommendations and suggestions?
    Mr. Hill. The agency usually agrees with those 
recommendations, and in all fairness the agency has tried, in 
some cases, to raise the special use permit fees that they have 
charged, and they have met resistance upon occasion.
    Mr. Schaffer. The notion that the agency continuously 
acknowledges the many problems that it has is nothing new. It 
is almost as long as the history of the agency itself.
    I guess I just want to ask a general question, as one of my 
constituents might ask it, and that is can the agency be fixed 
at all in your opinion, and do you see any real cause for 
optimism?
    Mr. Hill. Well, we definitely think it can be fixed. It is 
going to take a lot of work. Whether we are optimistic, based 
upon all the work we have done over all the years and all these 
reports, I would have to say we are not on the optimistic side 
of the fence.
    Mr. Schaffer. In response to Mrs. Smith's questions, you 
referred to the financial management progress reports. That 
because inventories are incomplete, the Congress be assured 
that requests are fully warranted.
    In light of that statement, why should roads and buildings 
be funded at all in fiscal year 1999?
    Mr. Cotton. There is not a question that they not only have 
a significant backlog in their infrastructure, their facilities 
out there, including the roads, but they also have a 
significant backlog, as has already been discussed here, as far 
as their backlog in treating their natural resources, their 
forest health problems, dead and dying trees.
    So being the Congress, you would want to give them money to 
fix their infrastructure, and to fix the resource. Now, you 
cannot in any reasonable scenario give them enough money to fix 
everything.
    The problem that you have and they have is they cannot tell 
you how big a problem they have, where it is, and where they 
have prioritized--if you give us this much money we will spend 
it here and accomplish this, and if you give us this much more, 
we can do these many more things.
    They cannot tell you the size of their backlog. They cannot 
even tell you if the money that you would give them for 
infrastructure would be spent on maintenance and repair or on 
building a new facility.
    And that is the type of information you need if you are 
going to fund them.
    Mr. Schaffer. Right. Well, for some in Congress, that level 
of confusion is a compelling cause for more funding, not for 
many people here, I would submit.
    How optimistic are you that the new financial system will 
be implemented in the way the Forest Service has indicated it 
will be?
    Mr. Williams. At this time, as we reported on two 
occasions, there is a lot of work that still remains to be 
done. They have taken some steps to improve the financial, 
reporting, but unless those issues that we identified earlier 
as far as properly testing the system, making sure the coding 
is correct, and all of those things that you need to do before 
you bring the system up, if those things are not done, then it 
is highly unlikely that implementation of the new system will 
be successful.
    In addition to that, it is really a two part process the 
way I see it. No. 1, you have to have this new system to 
account for your activity, but in addition to that, you have to 
have good information that you are transferring over from your 
old system.
    So there is a lot of work that still must be done in that 
area also. So unless the agency is able to clean up the old 
data that is in the old system, as well as properly test and 
make sure the new system is operating properly, it is going to 
be very difficult to achieve financial accountability.
    Mr. Schaffer. Getting back to my original question, though, 
I am interested in your opinions. Are you optimistic or not 
about the Forest Service actually following through as they 
indicate they will?
    Mr. Williams. I am not that optimistic at this particular 
point in time. Things could change down the road, but based on 
what I have seen so far, I have reservations.
    Mr. Schaffer. Do your colleagues concur?
    Mr. Hill. What I wanted to say is I think the success could 
be increased if the Congress maintains close oversight and not 
wait until the end to see if they have done it or not.
    I think you have to have them come to you with a pretty 
specific schedule of events that need to unfold if they are 
going to get to there--either on the financial side or the 
performance side, and then you need to keep visiting that 
schedule, and when these various milestones come due, you need 
to talk to them and find out were you successful at reaching 
this milestone, if not, why not, and make sure there is no 
slippage.
    So I think if the oversight were increased, you would be 
improving the chances for success. We are certainly going to be 
on the job.
    Mr. Schaffer. Thank you, Madam Chair.
    Mrs. Chenoweth. Thank you, Mr. Schaffer.
    Mrs. Cubin?
    Mrs. Cubin. Madam Chairman, since I came in late, so I will 
not repeat other questions, I do not have any questions of this 
panel.
    Mrs. Chenoweth. Thank you.
    Mr. Hill, I have some questions for you. Mrs. Smith asked 
about the inventory, and why there was not better control of 
the inventory, and you said somehow they did not have the data. 
What did you mean by that?
    What happened? Why do they not have the data?
    Mr. Hill. I think there are two types of inventories we 
have talked about today. One dealt with the problems they have 
had in their financial statements in terms of accounting for 
the inventory.
    And the other inventory that I think I was referring to 
with Mrs. Smith dealt with forest resources, and a 
recommendation we made back as far as 1980 to collect and 
obtain data in terms of what were the forest resources that 
were out there, what are the condition of those resources, to 
use as a baseline from which you can measure performance or 
success.
    Mrs. Chenoweth. That is what I was referring to 
specifically. Why is not the data there?
    Mr. Cotton. They have, over the years, given a very low 
priority not only to inventory, but to monitoring. And 
monitoring would tell you whether or not this inventory is 
getting better or getting worse.
    And the Forest Service, in their 1995 proposed revisions to 
their planning regulations, said that they did not have good 
data when they did their first set of plans, they are getting 
ready to revise and amend those plans 10 years later, and they 
still do not have good data.
    They have not done their job as far as inventorying their 
resource, and monitoring the outcomes of their decisions, so 
they do not know.
    Mrs. Chenoweth. Can you tell me also about the assessments 
and valuations on the financial statement with regard to fixed 
assets, plant, property and equipment? How has that been 
handled, and how would you recommend it be improved?
    Mr. Williams. On the fixed asset side, you are talking 
about assets that in some cases were acquired many years ago, 
and over the years the supporting documentation, as far as how 
much was paid for an item, has been misplaced, or that 
information is just not available.
    What you need to do in a situation like that is you need to 
go out and you need to count your inventory, to identify what 
you actually own. My understanding is that the Forest Service 
is in the process of performing these inventories now, and 
according to the Forest Service schedule, they should be 
completed by this summer.
    Once you get that inventory count completed, then you have 
to go through a process to make sure you put a proper value on 
that particular asset. I think that this is a task that we are 
talking about that should be completed in a few months.
    So I think we will be monitoring that really closely, and 
we should be able to say exactly what has been done in that 
particular area.
    To carry that a step further, it is very important that 
those inventories are completed from the standpoint of when you 
are looking at areas such as deferred maintenance, you need to 
know how many assets you own, where those assets are, and what 
condition those assets are in.
    And unless you have a good handle on that inventory, you 
probably do not have a good handle on what your overall 
deferred maintenance is for the organization.
    Mrs. Chenoweth. Thank you. Mr. Hill, I want to ask you, do 
you believe that the new expanded ecosystem assessments and 
eco-region plans are accomplishing any of the following:

    Are they accomplishing being able to provide improved and 
usable data?
    Mr. Cotton. Could I comment on that?
    Mrs. Chenoweth. Yes, please.
    Mr. Cotton. We are in the process now of looking at the 
implementation of the President's Northwest Plan in development 
of the interior Columbia River Basin record of decision.
    And we are looking at not only the ecological information 
that they are using to reach decisions, as far as what to do 
and how to do it, but also at the socio-economic information as 
well.
    Right now that work is ongoing. We have promised the 
requesters a report sometime toward the end of the summer, and 
we would be in a position at that time to better address these 
questions.
    Mrs. Chenoweth. What we will need to, and if you want--I 
will be putting it in writing--we need to have you analyze that 
with regards to the usable data; the reduced planning costs--if 
this will really be achieved; more efficient decisionmaking; 
improved accountability; reduced controversy; improved legal 
defensibility; and the achievement of the agency's goals.
    I listened with great interest, gentlemen, and what I am 
hearing, too, even from our GAO auditors is unlike what we see 
in business, that there should be a definable time with certain 
goals set to reach these objectives, that we are all here 
together to try to reach, we are not quite in tune yet. We are 
not seeing it happen.
    And so we take the responsibility also of having built up 
over the years a system that has made it difficult to meet 
those goals and reach those objectives.
    But I also ask the GAO to think crisply and to think 
precisely about timeliness as we would in business. I 
appreciate your reports. I have plowed through, personally, an 
awful lot of them, and appreciate the good work that you have 
done.
    But there has to be a whole paradigm shift, not only with 
us and you and the agencies, but even with the American people, 
because they are getting frustrated out there, and we have to 
begin to operate as a business would.
    We are at critical mass, so to speak, with this agency, 
that we are responsible for, and the American people are 
running out of patience.
    I thank you gentleman. This has been a long session, and I 
thank you for your patience. Mr. Miller.
    Mr. Miller. Thank you, Madam Chairman. I have a couple of 
questions if I might.
    An interesting GAO report would also be list all the times 
that the agency has recommended changes to recover more 
revenues and the Congress has stopped them from doing that.
    That would be a very interesting report because time and 
again we see the agency in the 20 years, 25 years I have been 
here, the agency has tried to change directions, tried to make 
improvements, and they just do not go down well in the Congress 
of the United States.
    We keep saying we want this to be like a business, and we 
want those timeframes, but we are reminded that it took Jack 
Welch about 10 years to turn GE around to what is now 
considered one of the great worldwide corporations. Sears took 
something like 5 to 7 years to turn itself around.
    Union Pacific, we are hoping they will turn themselves 
around in the next decade. Chrysler, of course, took almost a 
decade to turn itself around, with substantial public help.
    We could go the route of Scott Paper. We could just get rid 
of those things that we do not like and then reach out and grab 
a profitable company and marry them. But that is not allowed 
under this system.
    Or we could be like Sunbeam, and just get rid of those 
things that do not make money any more. Simply get rid of them 
at a fire sale.
    The problem would be all of those would run into a 
political buzz saw here. A simple moratorium to try to get a 
handle on the road issue has now spawned a bill that requires 
120 different hearings.
    This is a program that everybody agrees, the IG, the GAO, 
the Forest Service, everybody agrees is losing money. When you 
try to figure out how it's losing money, Congress says do not 
do that, just do not do that.
    So you do not get to operate like a business here. I mean, 
part of the mystery, if it is a mystery for this Committee and 
the Budget Committee and the Appropriations Committee--Mr. 
Pandolfi was up here, the gentlewoman from Idaho had the 
hearing, and he said, look, it does not make any difference to 
the Congress. If we do our job or we do not do our job, you 
give us $2.8 billion.
    So there is something wrong with this side of the board of 
directors. We do not want to hear about those things that are 
losing money because they are popular. We have more and more 
obligations dependent upon green cuts, but we have never 
thought, are all of these communities that are getting money 
from us from the timber cut, are they enjoying additional 
benefits because of their recreational days and the development 
and the infrastructure and all that is put in the forest.
    Could we rejigger how maybe we share that revenue? It is 
like the old days when we had revenue sharing here. We are 
sharing revenue we do not have. We are running a deficit to 
share revenue with local communities.
    Now, maybe we ought to analyze what are the benefits of 
recreation and all these other concessions and things that are 
going on, and maybe we could reconfigure. Maybe that is better 
for the local communities, if they got a share of that pie, as 
opposed to a declining share of a timber cut.
    But I bet you Congress will not let you look at that one 
either. And it goes on and on and on. And, you know, the fact 
that Congress, looking at the CRS report, talks about 23 
different accounts that provide 30 percent of the Forest 
Service funds every year, that range from $100,000 to $300 
million and they are off budget and nobody is paying attention 
to them from the Congress of the United States.
    Why? Because that is the way they used to like it in the 
Forest Service with its constituents. Now we are yelling you 
are not accountable. Well, I think it is about time for the 
Congress to grow up and think about accountability.
    But I tell you what you have to do. You have to put each 
one of these special accounts on the table, and ask a question: 
is this the most efficient use of this money? Is this 
consistent with the national mandate on national forests? Is 
this consistent with generating revenues? Is this consistent 
with the environment?
    I bet you that is not what they want to do around here, 
because each forest has a client that is dipping into that 
$100,000 account, that $300 million account. Relationships have 
built up over the years. Communities come to rely on that.
    So we really do not get to reinvent this Service. We will 
have more reports like this unless Congress faces up to the 
fact, the Appropriations Committee takes back these accounts, 
we take back our oversight, and we do not hammer this agency 
every time they say we think we have a better idea, or we think 
there is another way to do this.
    Because again, Mr. Pandolfi, who comes from the private 
sector, he does not come from the Forest Service, he does not 
come from government, he says the Forest Service takes an 
enormous price in decentralization.
    And that is because not only do we decentralize what you 
are talking about--the local running of the forests, to make 
them consistent with what people in California or Pennsylvania 
think, but we have decentralized the accounting and the 
financial aspects so far beyond even that that nobody can tell 
us what they do.
    Even the Congress, where we found ourselves, I think, when 
the Republicans took over, with about 8,000 more desks than we 
had people or something. Even we in the day of bar codes can 
tell you where every one of our pieces of office equipment is, 
and when we purchased it, and at what rate it is being 
appreciated. Even the Congress can do this. But I am not sure 
we want to do that for the Forest Service.
    So there has to be a political gut check here, on whether 
we really want this to operate like a business. Because that is 
what our constituents always ask us. Why do not you operate it 
like a business. The minute we try, or we try, the politics 
overwhelms the business sense.
    Mrs. Chenoweth. The gentleman's time is up. Thank you, Mr. 
Miller.
    Mr. Miller. Thank you, Madam Chairman, it has been a 
pleasure. I think there is a question there, but we will get a 
response in writing.
    [The information referred to may be found at end of 
hearing.]
    Mrs. Chenoweth. I just love his enthusiasm.
    Mr. Miller, I do have to say I love your enthusiasm. I just 
wish we could have seen the enthusiasm directed this way 10 
years ago.
    Mr. Miller. I have been there, Madam Chairman. Losing to 
your side on these votes day in and day out on the floor of the 
House and everywhere else.
    Mrs. Chenoweth. Thank you, Mr. Miller.
    Mr. Hill, gentlemen, thank you very much for your time. The 
Chair now recognizes now Mr. Roger Viadero, Inspector General, 
U.S. Department of Agriculture in Washington, DC.
    Mr. Viadero, I wonder if you might introduce the gentleman 
who will be with you.
    Mr. Viadero. Yes, Madam Chairman. This is Mr. Robert Young. 
He is the Deputy Assistant Inspector General for Audits.
    Mrs. Chenoweth. I wonder if both of you might rise and take 
the oath. If you will stand and raise your right arm to the 
square.
    [The witnesses were sworn.]
    Mrs. Chenoweth. Mr. Viadero, we welcome your testimony.

    STATEMENT OF ROGER C. VIADERO, INSPECTOR GENERAL, U.S. 
   DEPARTMENT OF AGRICULTURE, WASHINGTON, DC, ACCOMPANIED BY 
  ROBERT YOUNG, DEPUTY ASSISTANT INSPECTOR GENERAL FOR AUDIT, 
         U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, DC

    Mr. Viadero. Thank you, Madam Chairman, and members of this 
Committee.
    I am pleased to be here to provide testimony about the 
Forest Service's financial management. With me today is Mr. 
Robert Young, Deputy Assistant Inspector General for Audit.
    I would like to submit my statement for the record, and 
present some highlights to you at this time.
    Mrs. Chenoweth. That would be fine. Please proceed.
    Mr. Viadero. Thank you.
    Reliable financial data is essential to provide the basis 
for informed decisionmaking and program assessment. The United 
States Department of Agriculture has made significant strides 
in improving its financial management systems since the advent 
of the Chief Financial Officers Act in 1990.
    But much remains to be done, particularly with the Forest 
Service. The Forest Service's financial statements are not 
reliable. Reliability is defined by the Financial Accounting 
Standards Board as the quality of information that assures that 
information is reasonably free from error and faithfully 
represents what it purports to represent.
    Our annual financial statement audits, which we have 
performed since 1991, have only disclosed a limited correlation 
between the Forest Service's accounting numbers they report and 
the resources or events those numbers are to represent.
    The weaknesses in the agency's financial management system 
are longstanding, and very, very significant. The deficiencies 
are prevalent throughout the accounting process, from the 
rudimentary recording of accounting transactions through to 
material internal control weaknesses at the National Finance 
Center.
    I will briefly describe these problems to provide you with 
a sense of the lack of reliability of the financial data, and 
the pervasiveness of these problems. I will try to avoid a lot 
of accounting jargon and detail. I know the subject of 
accounting is one which generally does not trigger the release 
of endorphins.
    Let us start with accounting at the field level. The lack 
of accountability which besets the Forest Service's financial 
data stems from the data entry level. Transactions historically 
have not been adequately documented, and supporting records 
have not been maintained.
    A prime example of this rudimentary problem is the 
property, plant and equipment account, commonly called PP&E. 
The most recent Forest Service financial statement in 1995 
disclosed that the agency had property, plant and equipment 
with a book, meaning depreciated value, of almost $8 billion. 
The Forest Service does not, however, have any support for the 
values reported, and the property records in the field do not 
agree with the accounting system.
    In addition, inventories of real property have not been 
routinely performed. As a result, no reasonable determination 
can be made as to what the real property balance should be.
    I would now like to discuss the agency's use of management 
codes. At the crux of the Forest Service's accounting process 
is the use of management codes to account for expenditures. 
Management codes are established as pre-structured budgets. An 
operating plan is developed at the beginning of the year which 
sets forth the prospective distribution of expenditures. The 
methodology used to develop these allocations is based on 
empirical data and generally is not adequately documented.
    The Forest Service uses about 100,000 management codes, 
which can contain up to 99 lines of accounting each. Though 
some codes are centrally prescribed, the vast preponderance are 
locally developed and are unique to each venue.
    The accounting distribution for each management code 
contains several fields. For example, one field is called the 
fund code, which equates to an expanded budget line item. 
Another is the work activity code. There are hundreds of work 
activity codes from which to choose, spanning program areas 
such as wildlife, to functional areas, such as planning, to 
administrative areas, such as human resources.
    All semblance of accountability is greatly impaired, 
however, through modifications of the management codes that may 
occur at any time during the year. This process, referred to as 
retroactive redistribution, provides the capability to change, 
for example, the predetermined percentages of expense 
allocation or even the appropriation account.
    When the retroactive redistribution occurs, all 
transactions are reversed and reposted according to the revised 
criteria. It is difficult to identify where changes occurred 
and all record of prior activity can be potentially retrieved 
only after arduous reconstruction.
    Our reviews have disclosed the vulnerabilities associated 
with the management code process. For example, a recent audit 
we performed on the Wildlife and Fisheries Habitat Management 
program found an incurred cost was shifted from Wildlife to 
another program to avoid overspending Wildlife funds.
    We concluded that the process provides the latitude to 
charge costs to fund codes based upon the availability of 
funding, rather than where they were actually expended.
    Another key issue is the problems at the National Finance 
Center. The Forest Service utilizes the National Finance 
Center's Central Accounting System, commonly called CAS. Even 
if the agency's financial systems were adequate, the CAS is 
not.
    Our reviews at the National Finance Center have disclosed 
continuing severe internal control weaknesses, culminating most 
recently with an adverse opinion we rendered on its overall 
control structure.
    These weaknesses impair and hinder the Forest Service's 
financial management as well as other user agencies. As an 
example, the National Finance Center relies on numerous 
automated and manual reconciliation routines. Reconciliations, 
however, are frequently achieved through plugs, or by simply 
denoting unidentified differences.
    For example, in 1997, the National Finance Center adjusted 
its cash account by increasing disbursements by a net of about 
$1 billion, and increasing deposits by a net of $174 million in 
order to agree with Treasury records. The reasons for these 
differences were not identified.
    Let's talk about budgeted versus the actual expenses. Of 
concern to Congress, we know, is the reliability of the data 
presented in the agency's budget, and assurance that funds have 
been expended in accordance with the budget.
    Although the Office of Management and Budget initially 
required an annual financial statement entitled Budget and 
Actual Expenses, the statement was eliminated with the passage 
of the Government Management Reform Act of 1994.
    As a result, we do not audit this process. It does appear, 
however, based upon the weaknesses I have just described, that 
there is no assurance that the funds have been expended 
consistent with the budget.
    The requirement to audit the reconciliation of budget to 
financial has been reinstated, however, for 1998.
    The Department decided in 1993 to develop a new accounting 
system, known as the Foundation Financial Information System, 
to replace the General Ledger in the Central Accounting System.
    The FFIS, as it is called, is supposed to serve the 
Department as a single integrated financial management system, 
and bring USDA in compliance with Treasury, OMB and the Federal 
Accounting Standards Advisory Board requirements.
    FFIS, which was originally proposed to be fully functional 
by October 1st, 1998, has been plagued by numerous problems, 
and schedules have slipped.
    The central segment, or core of the system, is a commercial 
off the shelf product purchased from an outside vendor. The 
Office of the Chief Financial Officer, in consultation with the 
user agencies, opted to retain the legacy or feeder systems at 
the National Finance Center, and interface them with the core 
package.
    Mrs. Chenoweth. Mr. Viadero, I am sorry to interrupt you, 
but I wonder if you could wrap up your testimony.
    Mr. Viadero. Well, let us go to the good news, then.
    Mrs. Chenoweth. All right.
    Mr. Viadero. All is not lost, however, and improvements are 
under way. The Forest Service, the Office of Inspector General, 
and the Chief Financial Officer have worked together since mid-
fiscal 1996 to plan and implement changes to strengthen the 
agency's financial accounting processes.
    Forest Service management has emphasized the importance of 
financial health to its line managers, and developed core 
financial competencies training for managers, financial staff 
and others.
    Most staff have now received some training geared toward 
improving financial accountability. The Forest Service issued a 
financial health desk guide designed as a reference source for 
all staff to use in properly recording financial transactions.
    The guide provides uniform accounting instructions for 
accounts receivable, accounts payable, real and personal 
property and other transactions.
    In conclusion, the Forest Service's financial management 
has been materially deficient for many years. With the efforts 
under way to achieve financial health and implement a new 
accounting system, the road to recovery has been laid, and the 
Department is headed in the right direction.
    However, the corrective action remains a long term venture, 
and continued emphasis and discipline will be needed to stay 
the course.
    Thank you, Madam Chairman, and I would be pleased to answer 
any questions you or other members may have.
    [The prepared statement of Mr. Viadero may be found at end 
of hearing.]
    Mr. Herger. [presiding] Thank you, Mr. Viadero. Any 
questions?
    Mr. Nethercutt. Roger, you always do good work, and I think 
I will submit questions for the record, if you do not mind, and 
ask that they be answered in due course, and we will move 
forward.
    Chairman Young. Yes, sir. Thank you.
    [The information referred to may be found at end of 
hearing.]
    Mr. Herger. Mr. Miller.
    Mr. Miller. Thank you, Mr. Chairman.
    Thank you for your testimony. I think it is depressingly 
straight forward. Let me ask you, on page 7, in the middle of 
the large paragraph there. You say timber sales, for example, 
are accounted for in an automated timber sales accounting 
system, which due to the timing problems, does not adequately 
reflect accrued sales.
    Can you decipher that for me?
    Mr. Viadero. I am going to ask Mr. Young to do that for 
you.
    Mr. Young. Not all sales are properly handled on the 
accrual basis. In other words, if sales were made and the money 
had not been received, then it oftentimes would not be counted 
in that year's transactions.
    Mr. Miller. Let me ask you: what is the general practice? 
Why would there be a delay, or why would different sales be 
different?
    Mr. Young. Essentially what they are doing is that at year 
end they are not recognizing all sales activity.
    At the end of the year, if there is a timber cut for which 
they have not yet received the money, then, not all of those 
accruals are included in their sales numbers.
    Mr. Miller. So they are not counting money they have 
received. But they are not counting money they have not 
received.
    Mr. Young. Right. They are not counting money on all sales 
that have been consummated, but the cash has not been received. 
In other words, the sales have taken place, but they have not 
received the funds in hand yet, nonetheless, the sales should 
be counted.
    Mr. Miller. Why would you do that?
    Mr. Young. Well, it gives you a true picture of what you 
are earning each year. In other words, if you had so many 
timber sales throughout the year, you would want to show the 
value of that timber which was sold.
    If you wait and do not record it until a subsequent period, 
you do not give a true picture of what your operation earned in 
relation to sales expenses.
    Mr. Miller. I guess I am still not clear.
    Mr. Viadero. Mr. Miller, if I can, what we end up here is--
--
    Mr. Miller. Is this an acceptable practice that you point 
out here, or is this something that should be changed?
    Mr. Viadero. No, it is not. What you want to do in 
accounting to make financial information useful is to show the 
actual cost and the actual revenues each year.
    Mr. Miller. OK.
    Mr. Viadero. What you are doing is in some years is giving 
a false impression, showing that you received more money than 
you actually did.
    Mr. Miller. We theoretically could have expenses to produce 
a sale in one year, and three years later we could be getting 
revenues from that sale. And so that does not accurately 
reflect on a fiscal year basis what really transpired.
    Mr. Viadero. There is no matching here. If you are 
operating a business, you want to match your expenses against 
your revenues----
    Mr. Miller. Right.
    Mr. Viadero. [continuing] what we find here is they are 
taking the expenses all in one year, and there were no 
expenses, let us say, three years later to offset the revenue. 
So it is an accounting issue. It is a timing difference. 
Accounting principles require matching of revenue and expense. 
Again we get back to that endorphin statement.
    Mr. Miller. If we were to look at that, we would not 
necessarily get an accurate picture of what took place on the 
ground in each fiscal year.
    Mr. Viadero. That is correct. You have to match your 
revenues with the expenses in the individual accounting period. 
That is all we are stating.
    Mr. Miller. Is that a recommendation of yours to change 
that, to do that?
    Mr. Viadero. Yes, sir. We would like the Forest Service to 
adhere to the fundamental Federal Accounting Advisory Board 
Standards.
    Mr. Miller. Thank you. One quick question: what about the 
issue, is there any method by which we can properly assess what 
is generically referred to as timber thefts?
    I mean, is there any mechanism here within the Service to 
determine what they are losing off of the forest? It has been 
alleged from time to time that this is substantial, but other 
people have said it is not much. What do we know about it?
    Are they set up to look at it?
    Mr. Viadero. Let me backtrack, if I may, sir. This past 
summer myself and the Deputy Under Secretary for Natural 
Resources, Mr. Brian Burke, went out to Region 6 in Oregon, and 
visited the Ochoco National Forest, to see what was going on.
    I am from the South Bronx. A big forest to me is three 
trees.
    We went out there, and we observed the entire sales process 
from the time that the sales are issued. We met with the 
manager of the sale, we visited the cutting site, we followed 
it to the mill, we watched it be sample graded at the mill, and 
we watched the logs leave.
    My prior career was with the Federal Bureau of 
Investigation, and I have identified at least six separate ways 
you can get timber theft into the system. And that was my first 
day on a national forest.
    I think by nature, the cutting and transporting of these 
large timbers out lends itself to the possibility of some 
abuse. We have worked with the Forest Service enforcement side 
on many occasions in large timber theft sales.
    To give you a more definitive answer as to the exact dollar 
amount, the only thing I would feel safe saying is it is a lot. 
It is a lot. That is all I can say, because I really have not 
had the opportunity----
    Mr. Miller. So your vision of the system is that a lot of 
timber can seep through the current system of checks and 
balances.
    Mr. Viadero. Yes, sir. As when we do the Food Stamp 
reviews, a lot of the food stamps seem to go out.
    Mr. Miller. OK. We will pursue that later. Thank you very 
much.
    Mr. Viadero. Yes, sir.
    Mr. Herger. Thank you, Mr. Miller. I thank you very much, 
Mr. Viadero. We will recess and then come back.
    Mr. Dicks. Mr. Chairman, we have 10 minutes before we have 
to leave.
    Mr. Herger. OK. Would you like to go ahead?
    Mr. Dicks. We are going back and forth.
    Mr. Herger. That will be fine.
    Mr. Dicks. OK. And then we can walk over together.
    Let us go back to, the Forest Service uses about 100,000 
management codes which can contain up to 99 lines of accounting 
each. Though some codes are essentially prescribed, the 
preponderance are locally developed and are unique to each 
venue.
    Is that system still in place?
    Mr. Viadero. Yes, sir.
    Mr. Dicks. I mean, if you do not straighten that out, you 
do not have a prayer.
    Mr. Viadero. We have made recommendations, sir----
    Mr. Dicks. You can bring in Price Waterhouse or anybody 
else, but if you do not change that basic system, you do not 
have a chance of getting this turned around.
    Mr. Viadero. That is correct, sir.
    Mr. Dicks. Is there any plan to do that?
    Mr. Viadero. We have made recommendations that the Forest 
Service follow basically the same outline as the Natural 
Resource Conservation Service, in so far as a time utilization 
record keeping, for lack of a better term, and back these codes 
out on a time basis, and then you can make your budget 
reconciliation at the end of the year on a separate system, not 
the financial management system.
    Mr. Dicks. Are they doing that?
    Mr. Viadero. No, sir.
    Mr. Dicks. Second question. You mentioned this little 
change they did because of the Treasury. Let me see if I can 
find that one. You said NFC relies on numerous automated and 
manual reconciliation routines. These reconciliations, however, 
are frequently achieved through the use of plugs or by simply 
by denoting the unidentified differences.
    For example, in 1997, the NFC adjusted its cash account by 
increasing disbursements by a net of about $1 billion, and 
increasing deposits by a net of $174 million in order to agree 
with Treasury records.
    And there is no identification on this whatsoever?
    Mr. Viadero. No, sir.
    Mr. Dicks. I mean, that is pretty hard to do. I mean, a 
billion dollars, they just created it out of thin air?
    Mr. Viadero. That is at the National Finance Center, sir, 
not by the Forest Service.
    Mr. Dicks. And so how did the National Finance Center 
justify this?
    Mr. Viadero. That is why we gave them an adverse opinion 
this week, sir.
    Mr. Dicks. And we still do not have any documentation or 
information for these amounts?
    Mr. Viadero. I would ask Mr. Young to give me a hand here.
    Mr. Young. The accounting system at NFC does not provide 
for reconciliations, period. They take the amounts that the 
Treasury shows and they do not match with the amounts that they 
show on their books.
    So as a result, they say we will adjust our books to match 
with Treasury because they assume Treasury would be correct.
    Mr. Dicks. But without any basis for doing that.
    Mr. Young. The only basis for doing that is they are out of 
balance, and they have to balance with Treasury. So they do not 
go behind to find out why there is a difference. So it is made 
essentially to equal the numbers. That's the adjustments that 
are made.
    Mr. Dicks. Now, you mentioned, you said they hired an 
accounting firm, and they are doing this and that. But if you 
do not put enough money into this, if you do not take out of 
your budget and say we are going to have to have X millions of 
dollars to get the outside help, and to buy the financial 
systems and the accounting and all the other things that go 
into putting together a financial management system, they are 
not going to get there.
    I mean, it is fine to say we are going to hire an 
accounting firm to help us. But if you do not put the resources 
behind that, you are not going to get there, is not that 
correct?
    Mr. Viadero. Sir, we do have the commitment. And, again----
    Mr. Dicks. Commitment, verbally, we have heard does not 
work very well. What about resources? What about budget?
    Mr. Viadero. We are working. We are working. I have got on 
average about 20 people working with the Forest Service at the 
data entry level--at the data entry level on their financial 
health plan.
    Where additional issues arise is at the National Finance 
Center, with the Foundation Financial Information System.
    Mr. Dicks. Where in the hell is the National Financial 
Center? Where is that?
    Mr. Viadero. That is in New Orleans, sir.
    Mr. Dicks. Is it a part of the Department of Agriculture?
    Mr. Viadero. It certainly is, sir.
    Mr. Dicks. This was created to bring fiscal integrity to 
the process?
    Mr. Young. The National Finance Center has been in business 
for years, and it was established at a time when the Department 
wanted to consolidate all the payment functions of the USDA 
into one center, so they would have the economy of 
centralization.
    So the National Finance Center not only handles the 
Department of Agriculture, but numerous other government 
agencies, as far as payroll personnel, and the accounting 
functions.
    Mr. Dicks. And you are saying it is broke?
    Mr. Viadero. We are saying, sir, with the new system that 
they went off the shelf with, and they opted to stay with the 
legacy systems which basically take other software, let's say, 
that the Forest Service has in place, and integrates it to this 
off the shelf package.
    That is where the problems are. They are known as feeders. 
Those feeders are really messed up. The Forest Service 
attempted on October 1st of 1997, in conjunction with the 
Office of the Chief Financial Officer, and against the 
recommendations of this office, the Office of Inspector 
General, to put that system on line October 1st as if it were 
going to be a magical panacea to all accounting woes.
    We said test it, test it thoroughly, test each feeder one 
at a time. And as those feeders came on line, sir, they failed. 
And that is why we are in the condition we are in right now.
    Now, people want us to think that NFC can bring on seven 
additional Forest Service regions October 1st, 1998 and have 
those regions flip the switch and it will magically work.
    We cannot reconcile the closing balance of 1997 to an 
actual balance and beginning balance, and the new year moneys 
in fiscal 1998. So we are less than cautiously optimistic that 
this system will be ready by October 1st of 1999.
    Mr. Dicks. Thank you, Mr. Chairman.
    Mr. Herger. Thank you, Mr. Dicks. Thank you, Mr. Viadero, 
for your testimony. We will recess for a half an hour, and then 
return with the Forest Service, with the next panel.
    Thank you.
    [Recess.]
    Mr. Herger. We will reconvene the hearing, and call our 
next witness, Chief Dombeck of the Forest Service.
    Chief Dombeck, if you could first raise your right arm to 
be sworn.
    [Witness sworn.]
    Mr. Herger. Please proceed.

   STATEMENT OF MICHAEL DOMBECK, CHIEF, UNITED STATES FOREST 
 SERVICE, UNITED STATES DEPARTMENT OF AGRICULTURE, WASHINGTON, 
                               DC

    Mr. Dombeck. Thank you, Mr. Chairman. I appreciate the 
opportunity to appear before this extraordinary joint committee 
hearing.
    For someone from Northern Wisconsin who grew up on a 
national forest, this really is an extraordinary event for me. 
I know we all care very, very deeply about the Forest Service, 
and the resources it manages, and I thank you for the hearing 
today.
    I acknowledge the issues put forth by both the GAO and the 
IG, and they indeed have identified many issues that the Forest 
Service needs to deal with, and I stand here ready to work with 
Congress, the Secretary and others to move forward on these 
problems.
    I want you to know that I am strongly committed to 
addressing the issues of accountability, of financial 
management, of performance within the Forest Service. I also 
want you to know that while I was acting director of BLM, BLM 
received its first unqualified audit, in 1995, and has received 
unqualified audits since that time.
    The process was not that complicated to achieve that. First 
of all, we stressed and pursued working relationships with the 
Inspector General to create an atmosphere of positive working 
environment. We placed high priority and a management 
commitment to sound financial management, as well as 
stewardship of resources.
    We insured that managers recognized and were accountable 
for insuring and applying sound financial practices and project 
planning in meeting stewardship responsibilities. And we placed 
a very high priority on data integrity and accuracy and also 
brought in a very highly qualified Chief Financial Officer.
    Now, it is important to understand that this comparison 
that I have just made with the Bureau of Land Management, the 
BLM has much simpler procedures. And it is also important to 
note that the problems that we are talking about here 
associated with the financial system and accountability within 
the Forest Service evolved over time.
    I sort of view it as an accretion of things that developed 
over time, and I want to say, No. 1, it is the complexity that 
we have to cut through. It is the complexity that is killing us 
in achieving what we need to do.
    The cumulative effect over time of the many things, a 
decentralized culture that is important for natural resource 
management. But a credit and a debit is the same, whether we 
are in Alaska, in Florida or in your State of California.
    Essentially over time, and I have said this at many, many 
hearings, that we have essentially moved the resource manager 
out of the field and into the office. And I think the thing 
that we want to achieve is to move the resource manager back 
out into the field, to simply the processes that we work in.
    And, most importantly, that our financial and accounting 
systems have to be integrated to get the best resource 
management decisions.
    The question was asked, can it be fixed, and the answer is 
yes, it can be fixed, but it will take time, and it will take 
commitment. And I want to say that from my very first day on 
the job, I stressed accountability, financial management. We 
have made some progress, but we have a long way to go, and I 
want to stress, a long way to go. But we can show progress on 
an annual basis.
    Well, what is needed? First of all, we need general 
agreement on resource priorities. We need the properly trained 
people, and to really focus on business management skills that 
have eroded over time, through downsizing and other efforts.
    We need accurate and current information. We need to 
operate in partnership with our constituencies, with Congress, 
the IG, the GAO and others. And we need time. We need time. As 
was mentioned earlier in this hearing, it took Jack Welch 10 
years to get GE where it is today.
    The Forest Service is a large organization. It is 
equivalent to a Fortune 500 company, and we need to apply the 
best management practices to that agency.
    In the 14 or 15 months that I have been on the job, I just 
want to highlight some of the things that have moved forward. I 
brought in Francis Pandolfi from the private sector, a highly 
successful CEO, very familiar with running large businesses.
    I have made leadership changes, and have more to go. And I 
am most importantly interested in leadership, committed to 
change, committed to moving the Forest Service into the 21st 
century.
    We initiated the Coopers & Lybrand study, which I know the 
Committee has a copy of. And this study basically lays out many 
of the solutions that we can move forward with, and begin 
moving forward with fairly quickly, and are prepared to do 
that.
    We have reduced the number of direct reports to the Chief. 
When I came on the job, I had 30 employees reporting directly 
to me. We have reduced that. We have moved the decisionmaking 
levels down in the organization to where the experts are.
    We have begun the implementation of land-based performance 
measures, that are going to be tied to the Government 
Performance and Results Act. I have initiated the Chief's 
Reviews to begin moving forward, and identifying issues, and to 
move management into a proactive mode, sort of looking ahead of 
the headlights, to help move the Forest Service out of the 
reactive atmosphere it has been in.
    We have begun to implement the Foundation Financial 
Information System that was mentioned earlier today. We have 
focused on accountability, and I have issued a Natural 
Resources Agenda, to bring clarity to the mission.
    And I want to emphasize that this is a multiple-use agenda. 
It is an agenda designed to protect and restore watersheds, to 
move forward with sustainable forest management, to deal with 
Forest Service roads issues, and to focus on an increasing 
recreation workload.
    I want to acknowledge the many, many Forest Service 
employees, for decades, for the good work that they have done, 
and I want to emphasize that those employees did what was 
expected of them. They did what Congress directed and what the 
leadership of the Forest Service directed.
    The lists of accomplishments are many, and I want to just 
highlight a few from 1996. We had over 66,000 acres of 
watershed improvements; 357,000 acres reforested; 258,000 acres 
of timber stand improvements; 117 abandoned mine sites 
reclaimed.
    We assisted in tree planting on 760,000 acres of private 
lands. We reconstructed 2,800 miles of roads. We exchanged 
65,000 acres of land. We located 65,000 miles of boundaries. We 
sold 4 billion board feet of timber. And the list goes on and 
on of the many accomplishments of the employees that I am proud 
of.
    And I have got to say that the best resource managers in 
the world work for this agency, the best wild land fire 
fighters, the best silviculturalists. And I believe you know 
many of them in your State of California, as Madam Chairman, 
you know in the State of Idaho.
    I stand ready to work with Congress, the GAO, the IG, the 
Secretary, to move a retooled and revitalized Forest Service 
into the 21st century. And the benefactors will be the 
resources and the individuals and the owners of the national 
forests in the United States.
    And I think I share with you a common goal that our 
objective is to have a Forest Service that will work better and 
that will be a better place to work.
    Thank you, and I ask that my statement be entered into the 
record, and I would also like to acknowledge Under Secretary 
Jim Lyons, who is here; Deputy Chief of the National Forest 
System Bob Joslin; and I also have all of the deputy chiefs of 
the Forest Service with me here today should additional 
expertise be needed to answer any questions you might have.
    Thank you.
    [The prepared statement of Mr. Dombeck may be found at end 
of hearing.]
    Mr. Herger. Thank you very much, Chief Dombeck. I want to 
concur with you on your statement on the quality and dedication 
of the Forest Service employees that we have. As you are aware 
I have all of or parts of nine national forests within the 
district that I represent, and certainly some of the most 
dedicated and hardworking individuals that I have ever known 
are your employees.
    I really believe that the challenges that we have and seem 
to be recognizing in this hearing, the purpose of this hearing, 
really is not the quality of the people we have working on the 
grounds in these forests. It is more directed toward the policy 
of lack thereof and the management that seems to be coming down 
that seems to be the overwhelming problem.
    As a matter of fact, maybe I will just start in that line. 
There is a Forest Service manager who retired back about a year 
ago, and she wrote a letter of resignation to you, Mrs. 
Henderson-Bramlett. And in that letter that she wrote, she 
spoke of ever increasing redundant and costly agency practices, 
polices and regulations, the lack of accountability both with 
all employees and with agency management, and the lack of 
leadership and vision throughout all levels of the Forest 
Service.
    Now, that was a quote from her letter of concerns that she 
has. She went on in the letter saying that the Forest Service 
makes vague commitments in attempting to please all parties and 
be politically correct. I could go on and on about the concerns 
that she stated in the letter to you.
    Some of the main concerns that I have had have really 
almost all come from Forest Service employees, and that is 
really the nature of our concern.
    Maybe with that in mind, Chief Dombeck, there has been much 
that has been said about the problems with the financial and 
management accountability. There seems to be no shortage of 
agreement from the Forest Service, and I thank you for that, 
when it comes to the statement that there are financial and 
management accountability problems.
    What there is a shortage of is action. This morning we 
heard from both witnesses that the GAO and OIG continue to 
point out to the Forest Service the problems associated with 
their financial and management systems, and in addition have 
provided solutions to those problems.
    Yet the Forest Service has not implemented these solutions. 
My question is do you realize that any success the Forest 
Service believes it is making will be scrutinized because there 
is no accurate financial data to qualify your results?
    Mr. Dombeck. Yes. We understand that. In fact, from the 
standpoint of solutions, the Coopers & Lybrand report that I 
mentioned begins to layout solutions. In fact, the top five 
recommendations that they make in this report, and that is to 
establish a Chief Financial Officer, and a strengthened 
organization to lead the entire effort; to increase the 
leverage of the Foundation Financial Information System to 
better support the production of financial information; to 
simplify--and I want to underline that word, simplify--the 
budget and accounting structure to generate more useful 
corporate data; to provide a financial operating plan at the 
beginning of fiscal year 1999; to instill a sense of 
discipline.
    And there are many, many suggestions like that that we are 
prepared to move on, and many suggestions also from within the 
organization and recommendations of both the IG and the GAO.
    As the IG mentioned, we have a financial health team in 
partnership with the IG, and I believe that we need to work 
together on these systems, and then we will begin to achieve 
success. And I want you to know that I am committed to do that, 
and that is why I have got Mr. Pandolfi here, to bring an 
outside perspective, and some private sector expertise to the 
organization.
    Mr. Herger. Thank you. Mr. Miller?
    Mr. Miller. I will pass for the moment.
    Mr. Herger. Mrs. Chenoweth.
    Mrs. Chenoweth. Thank you, Mr. Herger. Chief Dombeck, in 
your recent State of the Forest Address, it was a very 
interesting speech, but it lacked your expression with regard 
to the fiscal concerns.
    I would like to know, Chief Dombeck, on how you plan on 
raising revenues within the forest, from the forest, 
activities, and how are you going to significantly cut costs?
    Mr. Dombeck. The Natural Resources Agenda that you 
mentioned, the objective of it was to focus on the four primary 
objectives of moving forward with recreation, the forest roads 
issue, moving forward with sustainable forest management, and 
the watershed health and restoration.
    The most important thing we lack from the standpoint of the 
items you mentioned is good data, and then the systems to 
process that data in a simple, meaningful way. And I might ask 
Francis to further elaborate on some ideas and some of the 
conclusions.
    Mrs. Chenoweth. I welcome hearing from you, but to focus, 
exactly what I need to know is how you are going to raise 
revenues. It would appear that that is a reason why the Forest 
Service ran into the red. So how are we going to raise revenues 
and significantly cut costs?
    Mr. Dombeck. There are many revenue generators in the 
Forest Service. Of course, as you know, the harvest of timber, 
various permitting fees, but it is also important to keep in 
mind that objective of the Forest Service and the national 
forest was not to run a profit. The objective was to protect 
the land, to provide good watershed conditions, and a 
sustainable supply of timber for the Nation.
    Now, I do not want to leave you with a false impression 
that revenue generation is not important. It is very, very 
important to offset costs every place that we can, and we are 
using things like the recreation fee demonstration pilot 
project as you know, and many others, and I would be happy to 
provide any detail on any specific that you might be interested 
in discussing.
    Mrs. Chenoweth. You know, Chief Dombeck, with all due 
respect, and I have a lot of respect for you, the fact is this 
is an agency that was set up in order to generate revenues. And 
also to be able to generate revenues for those counties that 
were impacted with large blocks of Federal land.
    And so I think that if we try to depend on fees, and cut 
out our timber harvest activities, that we are missing the 
point here.
    I recognize and have done so publicly the encumbrances that 
we as a Congress over the last few decades have placed on 
managers like you, the top manager. But the fact is that we 
have really got to get serious about generating revenues again, 
and at the same time cleaning up the health of our forests.
    I guess I want to hear you say that there really will be an 
aggressive but sustainable timber harvest program. It was the 
vision of Teddy Roosevelt and Gifford Pinchot that we do begin 
to meet the market demand of the Nation for wood supply, and 
that is being shifted, Chief Dombeck, to the Eastern States. 
And they are meeting most of the market demand, while the 
Western forests seem to be degenerating.
    That is of great concern to me. So I really would like to 
ask you again, other than fees, how do you plan on raising 
revenues, and how do you plan on cutting costs?
    Mr. Dombeck. Well, as I mentioned earlier, we can cut costs 
through increasing efficiency, through better data systems. 
What we are talking about from the standpoint of data systems 
and business management will actually free managers up from the 
many, many hours they spend dealing with a data system that may 
be cumbersome and maybe inaccurate.
    In fact, one of my managers told me just recently that we 
could probably save in excess of $100 million in NEPA costs and 
planning costs using the newer technologies that we have and we 
are moving forward as aggressively as we can with those 
projects.
    Mrs. Chenoweth. Other than fees, how do you plan on raising 
revenues? How do you plan on sustaining a steady flow of 
receipts for the Forest Service?
    Mr. Dombeck. Timber harvests will continue to be an 
important tool, and an important activity on national forests. 
But I think part of the debate that we are in today is we need 
to continually move toward more extensive and active management 
to deal with the urban/wild land interface, to deal with the 
forest health issues, to deal with the threat of fire, to deal 
with the mosaic, the appropriate mosaic on the landscape that 
promote forest health.
    And when we do that, the products will flow. The fiber will 
flow, the water will flow, the mosaic of wildlife habitats, the 
recreational opportunities, and this is the overall direction 
that I see the Forest Service going in. And I think it is 
something that we can work on together.
    Mrs. Chenoweth. Thank you, Mr. Chairman.
    Mr. Herger. Mr. Nethercutt to inquire.
    Mr. Nethercutt. Thank you, Mr. Chairman. Welcome, 
gentlemen.
    Mr. Dombeck, it seems that in listening to the testimony 
this morning that there is additional burden being placed upon 
you. Mr. Miller talked about it in terms of Congressional 
requirements or lack of Congressional strictness.
    The accounting system is in a mess, there are a lot of 
business functions that are lacking in your agency. And I know 
you are relatively new to it, and I feel as though your heart 
is in improving the agency and getting good results.
    Perhaps you heard my question this morning in terms of what 
identifiable outcomes can be reached in the near term, rather 
than the long term. You may or may not be there in the next 5 
years.
    Even coming from the White House and the highest levels of 
environmental policy decisions, it seems that you and other 
land management agencies, other national resource agencies are 
being faced with additional burdens.
    For example, the issue of the Interior Columbia Basin 
Management Project that is one that I have weighed in heavily 
on with you, and I think you know my feelings, and I think the 
other agencies do as well.
    I sense clearly that that directive by the White House is 
going to cause your agency a lot of effort and expenditure of 
funds when you are worrying about how you are going to spend 
your money. I just think you are facing a huge obligation there 
in terms of your budget in the future. It is going to put 
additional pressure on you.
    I have tried to say this for the last few years, that 
science collection is a good thing, but in terms of all the 
studies that your agency is going to be required to do, the 
sub-basin studies and the watershed studies, and all of those 
things that relate to the Endangered Species Act, I think you 
are facing a huge budget crunch.
    So I would be interested, sir, in trying to get some sense 
of how you plan to do all that you are mandated to do, or that 
others expect you to do, when you are facing not only financial 
problems, but accounting problems as well as other problems 
that plague the agency that have been mentioned by the IG and 
the GAO, not the least of which is this determination by the IG 
that there is little assurance that funds have been expended 
consistent with the budget.
    The IG says that funding is subjected to absorbing overhead 
charges, that the appropriations are reallocated down through 
the organizational framework of the agency. As a result, the 
amount of funds appropriated for a specific purpose or activity 
are significantly reduced before they are available for that 
purpose.
    You have a daunting task, it seems to me, especially in 
trying to take on new initiatives like the Interior Columbia 
Basin Project. So I would be happy to have some assurance that 
you think you can get there, but also what can you do in the 
near term that can assure the Committee that you are on the 
right track?
    Mr. Dombeck. The information that we have on the Columbia 
Basin is likely the best science and the best information that 
we have in any area that the Forest Service manages, and this 
encompasses about 24 percent of the National Forest System 
lands, in the Columbia Basin.
    That information will be used to update, I believe it is 72 
plans, both Forest Service and BLM plans. And what we will have 
is we will have the best information base we have ever had as 
we update these plans.
    From the standpoint of the overall costs, what we need to 
get from that is a significant savings, given the information 
base that we have, better decisions. And also there is an 
important aspect from the entire Columbia Basin effort that I 
know I hear when I talk to county commissioners, whether it is 
in Idaho or in Oregon or Washington, is the concern.
    But the simple fact is that because of that effort, there 
are many, many projects that are moving forward that would 
likely be enjoined on a project by project basis today. And we 
are all looking for the best solution, and that is not an easy 
task, and it will not be an easy task, but it is the best 
approach that we know of at this time.
    Mr. Nethercutt. We will get back to that, and we can carry 
that debate further. My time has expired. I will ask more 
questions during the next round.
    Mr. Herger. Thank you, Mr. Nethercutt. Mr. DeFazio.
    Mr. DeFazio. Thank you, Mr. Chairman.
    Chief Dombeck, I want to followup on the answer and the 
direction that Mrs. Chenoweth started on in terms of your 
revenues. I have raised some concern about your parking, trail 
access permits, and I will not go into that again here.
    But while we are aiming at the public, individuals with low 
impact use, I am concerned that things of much higher impact on 
the forests are not carrying their load.
    What sort of fee do we assess for like microwave towers, 
radio-TV towers on the forests?
    Mr. Dombeck. Let me ask Bob Joslin if he has that 
information.
    Mr. Joslin. Congressman, the Forest Service and the BLM 
have developed an interagency schedule of fee rates for 
communications uses on lands administered by each agency. The 
scheduled fee rates are based upon the particular type of 
communication use being exercised, and the population of the 
community served by the site on which the use is located. For 
facilities having more than one use colocated in them, the base 
fee for such a facility is the type of use occurring in it 
which has the highest valued rate on our fee schedule, with an 
additional fee of 25 percent of the scheduled rate for all 
other commercial uses within that facility. The Forest Service 
and BLM update their fee schedule rates annually using the 
Consumer Price Index-Urban rate maintained by the Department of 
Commerce.
    Mr. DeFazio. So, fair market value. So if they come in, you 
have to harvest the timber in that area to build the tower, and 
the Forest Service gets the revenue from harvesting the timber, 
I assume.
    And then they pay rent? Is that it?
    Mr. Joslin. Yes, sir. That is correct.
    Mr. DeFazio. What happens on private lands?
    Mr. Joslin. Pardon?
    Mr. DeFazio. On private lands? I mean, how would your fees 
compare to rents they pay on private lands or State lands?
    Mr. Joslin. I really cannot answer that. I am not sure of 
that. We can get that information for you, though.
    Mr. DeFazio. Yes. I would be interested in a comparison, 
because I believe the Forest Service fees are much lower.
    [The information referred to may be found at end of 
hearing.]
    Mr. DeFazio. You are also engaged in an effort to raise the 
fees on vacation homes, as I understand in a number of forests.
    Mr. Joslin. Yes, sir.
    Mr. DeFazio. Has there been some problem with Congress on 
that issue, I think?
    Mr. Joslin. The areas that we have gone in and done the 
same thing as I described before, to update those fees, and 
certainly there is a concern.
    Some of those sometimes increase quite substantially, and 
there has been a concern with some of that work that has been 
done.
    Mr. DeFazio. I thought Congress took some action to delay 
the implementation of the higher rents.
    Mr. Joslin. That is correct.
    Mr. Miller. Would the gentleman yield?
    How often is that reassessment made?
    Mr. DeFazio. Five years.
    Mr. Miller. That has been done every 5 years?
    Mr. Joslin. Vacation homes or, as we call them, recreation 
residence lots, are appraised once every 20 years. For each 
year in between appraisals, the annual rental fee is adjusted 
based on the Implicit Price Deflator-Gross National Product 
(IPD-GNP) index maintained by the Department of Commerce.
    Mr. Joslin. It is on a 5-year cycle now.
    Mr. Miller. How long has it been since the last one.
    Mr. Joslin. The fees now being assessed to nearly all of 
our 15,200 recreation residence permit holders are based on an 
appraisal that was last conducted sometime during the 5-year 
window between 1978 and 1982. So the 20-year anniversary of 
those last appraisals is coming due over the course of the next 
5 years, 1998 through 2002. In 1997, we started a 5-year effort 
to appraise all recreation residence tracts and lots to 
establish a new base fee for the next 20-year billing period.
    Mr. DeFazio. But to reclaim my time, there is some sort of 
limit you have self-imposed, because my understanding is we are 
seeing dramatic increases to go to market now. So you were 
limited in terms of your past adjustments every 5 years.
    You were not allowed to go and reassess it at market value. 
You were just allowed an inflation adjustment, or something 
like that. Is that correct? I mean, as I understand it you are 
way under market.
    Mr. Miller. If the gentleman would yield, my understanding 
was, in our hearing, that in some of these cases it has been 20 
years since these have been updated.
    Mr. Dombeck. Yes. The information that I have, as I recall, 
we were instructed by a GAO audit to go ahead and move forward 
more quickly on the reappraisals. We did that, and we basically 
Congress got involved. I believe we delayed it, is it one year? 
We are moving into a 3-year phase in.
    But there was, yes, there was involvement of Congress in 
that.
    Mr. DeFazio. OK. And that was intervention by Congress, who 
at that point was not concerned about market value or 
maximizing revenues. I think I could go on in some other areas 
than that. But let me get to something else, and I do not know 
if this is general or specific. But this would be the most 
outrageous example to me.
    There is a proposed mining claim in an area of critical 
environment concern in the Siskiyou National Forest by an 
individual, it is a nickel mine operating under the name Nicor.
    It is not patented, and apparently the individual does not 
intend to take it to patent at this time, and instead wants to 
operate the claim within the Forest Service. And since it is 
such a fragile area in the drainage, the Forest Service has put 
in very significant demands in terms of an EIS before the 
person gets an operating permit.
    But the Forest Service is paying for the EIS. Now, can you 
explain that to me? So not only are we not charging like any 
other land owner--and I know you are constrained by law--a 
royalty fee or some substantial fee for the use of these lands, 
we are paying for their environment impact statements?
    Is that a general policy, or is that specific to this one 
particular claim? I mean, that is incredible to me. If you want 
to talk about subsidies and not running like a business, here 
we are subsidizing for profit activities on the public lands.
    I know you may not know that individual claim, but is that 
a general policy, if people are not going forward to patent, we 
just generally pay for EIS's for private, for profit activities 
on public lands?
    Mr. Dombeck. Yes, that is correct. In fact, we did in the 
neighborhood of 20,000 decisions. We do about 20,000 decisions 
a year in the Forest Service that are made up of EIS's, EA's, 
and categorical exclusions. The largest number being the 
categorical exclusions.
    Mr. DeFazio. But I mean, for private, for profit 
activities, we pay for the EIS's, when someone is going to come 
in and utilize the public resource, paying virtually no rent, 
no royalty.
    We then actually pay to develop the EIS instead of 
requiring them to develop the EIS?
    Mr. Dombeck. I believe that is correct.
    Mr. DeFazio. Is that a policy? Is that statutory? What 
brings us to that point? If I could just get an answer to this, 
Mr. Chairman, I would appreciate it.
    Mr. Dombeck. I am not sure if it is statutory, but there 
are instances where the proponent does pay.
    Mr. DeFazio. OK. I guess I would like know, what are the 
instances where they pay and where they do not pay, and how are 
those decisions made? And I would very much like to have an 
answer on that, and particularly on this one case, because it 
is a place where we should not be mining, someone is going to 
mine, and to add insult to injury, the public is paying to 
enable that person to mine in an area where we should not be 
mining.
    Mr. Dombeck. We will get that specific case looked at and 
provide you that for the record.
    [The information referred to may be found at end of 
hearing.]
    Mr. DeFazio. Thank you, Chief. Thank you, Mr. Chairman.
    Mr. Herger. Thank you, Mr. DeFazio. Mr. Schaffer to 
inquire.
    Mr. Schaffer. Thank you, Mr. Chairman.
    In June, last year, out in Colorado in the Denver Post, 
there was an article that stated that Mr. Pandolfi, the former 
president and CEO of Times-Mirror Magazines, was hired by the 
Forest Service as chief of staff to create brand equity for 
Forest Service lands.
    What does that mean, brand equity?
    Mr. Dombeck. I will let Mr. Pandolfi talk about brand 
equity.
    Mr. Pandolfi. I will tell you what brand equity means. I 
never read the article, Mr. Congressman, but brand equity means 
that you try to take a brand, like Tide or Pampers, let us say, 
and give it value, so the people understand that when they buy 
that product they get a good product.
    That is brand equity.
    Mr. Schaffer. So with respect to Forest Service lands, they 
quoted you, and it says you wanted to create brand equity for 
Forest Service lands.
    Mr. Pandolfi. We want people to understand the value of 
Forest Service lands.
    Mr. Schaffer. The article said, the quote was, we want the 
Forest Service to be the Proctor & Gamble of outdoor 
recreation. Could you elaborate on that a little bit, too?
    Mr. Pandolfi. Sure, I would be happy to.
    The Forest Service has probably the most outstanding, in my 
view, recreation brands, outdoor recreation brands in the 
world. Forest Service skiing, Forest Service hiking, Forest 
Service fishing, Forest Service camping, and the like.
    It is important to have both our constituents, the people 
of this Nation, who use the lands for those purposes, and our 
employees to realize the values we create in those various 
activities. That is what I meant by that statement.
    Mr. Schaffer. I dug up the Proctor & Gamble annual report, 
which goes to its corporate board members and others who are 
interested in the corporation as well. The information supplied 
as to the exact value, product value of investments and so on 
is laid out very clearly.
    The Forest Service is a long way from achieving, becoming 
the Proctor & Gamble of outdoor recreation. To Chief Dombeck, I 
wanted to ask in a general way, how are we going to break the 
mold? I think you heard my questions to the previous panel, Mr. 
Hill, about whether there is any hope or optimism from his 
professional perspective on whether we are going to be able to 
see the Forest Service move from a hamstrung bureaucratic model 
to what approximates a business model.
    How do we become the Proctor & Gamble of outdoor 
recreation?
    Mr. Dombeck. The answer to that is we have to, and we can 
only achieve it by doing it together. Working with the IG, the 
GAO, the Forest Service adopting modern business management 
practices as quickly as is possible. And we propose to do is to 
set up a framework that involves the points that I mentioned in 
my initial testimony.
    We need a general agreement on resource priorities. We need 
properly trained people, with the right disciplines, 
particularly in the business management side of what we do. As 
we went through the downsizing of the last several years, the 
largest percentage of employees that left the agency were those 
in the administrative areas, the areas that we need to move 
forward in with business management and accountability and the 
such.
    And we need accurate information. We need the partnership, 
and then of course the appropriate amount of time. And I am not 
sure you were here when it was mentioned, Congressman Miller 
mentioned that it took Jack Welch 10 years at GE.
    This is not a problem that is going to be fixed quickly. 
But I believe that with the appropriate milestones, with the 
appropriate framework, with the appropriate oversight that we 
can achieve this.
    It is interesting that it was not until 1990, I believe, 
that the Chief Financial Officer Act was passed by the 
Congress. And as we look at previous decades, the focus of what 
was expected of the Forest Service was different. And we need 
to readapt, we need to retool, and we have got the message.
    Mr. Schaffer. Let me try to beat this light here with one 
more question. And that is leadership is a big component of 
making Forest Service the Proctor & Gamble of recreation, 
outdoor recreation as well. I want to ask a specific question 
because there was a contradiction in two different bits of 
testimony that this Committee--or a portion of this Committee--
received recently.
    When you were here last time in front of Chairman 
Chenoweth's Committee I asked about the moratorium, and whether 
the Council on Environmental Quality had played any role in 
developing the policy and pushing it forward, and you said no, 
that you had not had any input or feedback from them.
    Ms. McGinty, head of the Council on Environmental Quality, 
was here last week, and the same question was put to her, and 
she said that they had, the Council on Environmental Quality 
had a tremendous amount of influence and direction in pushing 
the moratorium forward.
    Now that you are here again, I would like to ask you one 
more time whether the Council on Environmental Quality played a 
significant role, or to what extent they played a role in 
developing the plans and leadership with respect to the 
roadless moratorium.
    Mr. Dombeck. They played no role in the development of the 
policy. I am not sure of the date that the President signed the 
appropriations bill, but because of the controversy associated 
with the roads issue, there was a statement that accompanied 
the Interior appropriations bill that basically charged the 
Forest Service with developing new roads policy based upon 
science.
    And from the standpoint of needing to do, face this issue, 
there was that dialog. I had a similar dialog with the 
Secretary. The Forest Service took the policies, developed 
them. In fact, Deputy Chief Joslin, as well as Tom Mills from 
our Portland office, took the lead in developing the policies, 
looking at the alternatives.
    Sometime around Christmas we briefed the Under Secretary's 
Office, we briefed the Secretary's Office. We briefed CEQ, and 
then the Forest Service went ahead and laid out the proposals 
as you see them today.
    Mr. Schaffer. Just for clarity you maintain that the 
Council on Environmental Quality did not propose the moratorium 
or pressure the Department in any way to implement it.
    Mr. Dombeck. That is correct.
    Mr. Schaffer. Thank you, Mr. Chairman.
    Mr. Herger. Thank you. Chief Dombeck, we heard some pretty 
alarming testimony earlier from the General Accounting Office, 
from the Inspector General, concerning the management or their 
concern of very dramatic mismanagement of the Forest Service.
    Another concern I have is that this mismanagement is not 
only in the area of finances, but also is in the area of 
personnel. I alluded to, earlier, a quote from a letter from a 
constituent of mine who was the forest supervisor of the Modoc 
National Forest, Mrs. Henderson-Bramlett.
    Are you aware of the letter that she sent you on the 1st of 
January?
    Mr. Dombeck. Yes, I am.
    Mr. Herger. Within that letter, just to quote parts of 
this, and quoting from her letter now, I am 38 years old, and 
have been the forest supervisor of the Modoc in Region Five for 
almost 6 years. Going on to another part, she goes on to state 
what high quality people she works with there, as we both 
stated earlier.
    But then she goes on again to quote, a secondary reason for 
my departure is my frustration and dismay over the ever 
increasing redundant and costly agency practices, policies and 
regulations, the lack of accountability, both with all 
employees and with agency management, and the lack of 
leadership and vision throughout all levels of the Forest 
Service.
    Again, going to another part of her letter, and again 
quoting, I feel we are trying to be everything to everyone all 
the time. As a result, we deliver very little to anyone. This 
causes distrust within the agency and with the public, since we 
make vague commitments in an attempt to please all parties and 
be politically correct.
    Again this only increases the distrust as we continue with 
bureaucratic rhetoric, which the public does not understand, 
nor want.
    Continuing on a little later in her letter, yet we are 
fearful to make any decisions, to take any action that may 
result in litigation, an appeal or public uproar, especially if 
that leads to political or administration involvement. The end 
result to the agency is a state of paralysis that produces 
costly and ineffective or poor decisions.
    Then continuing on a little bit later, we will continue to 
make non-decisions and muddle through the next crisis, wasting 
taxpayers' money and employees time and energy, and lowering 
morale.
    It has been difficult and frustrating to lead a forest into 
the 21st century when I have had little or no idea of the 
future of this agency, nor its direction. Leaving that decision 
to each forest is setting this agency up for continued and 
increased chaos, dysfunction, and ultimately the agency's 
demise.
    And you are familiar with this letter, Mr. Dombeck?
    Mr. Dombeck. Yes, I recall reading the letter.
    Mr. Miller. Mr. Chairman, could we have the letter in its 
entirety put into the record?
    Mr. Herger. Yes, without objection.
    [The information referred to may be found at end of 
hearing.]
    Mr. Herger. Chief Dombeck, are you concerned that a forest 
supervisor would resign based in part on the frustration of 
dealing with these types of problems? And now let me quote from 
this part of her letter: ever increasing redundant and costly 
agency practices, policies and regulations, the lack of 
accountability, both with all employees and with agency 
management, and the lack of leadership and vision throughout 
all levels of the Forest Service.
    Are you concerned that forest supervisor would resign based 
in part on this?
    Mr. Dombeck. Yes, I am very much concerned. In fact, I have 
other letters similar to that from people at all levels of the 
organization. And I think it is important to note that this 
amplifies the need to bring about the change that we have been 
discussing here, to simplify the organization, and streamline 
it.
    I also want to point out, from the standpoint of lawsuits, 
I have never had a job where I am sued so much as this one, and 
the level of controversy that we deal with. And I also want to 
mention that some of the areas that we go into are 
controversial.
    And one of the reasons that I came forward with a temporary 
suspension of road building in roadless areas was for a large 
part not only a science based decision, but also an economic 
based decision, because these roadless areas are the most 
expensive areas for us to go into.
    The reason they are roadless is because the easy stuff is 
gone, from the standpoint of timber. It is tough terrain and it 
is sometimes low value wood. And these areas were repeatedly 
litigated and appealed, and from the standpoint of business 
management decisions we would be much better off directing our 
resources to areas to work that are less controversial.
    There are many areas in the forest that need work that can 
also produce fiber and all the other values that we associated 
with the variety of timber management practices, thinnings and 
all those kinds of things.
    Mr. Herger. Well, Chief Dombeck, again, to be specific to 
this letter, and you mentioned you know of other letter like 
this. I can tell you, I know of many Forest Service employees 
who have expressed the same concern.
    But could you outline what steps you are taking in response 
to these concerns that were expressed by this former forest 
supervisor regarding redundancy, cost, lack of leadership, lack 
of accountability and agency paralysis?
    Mr. Dombeck. Well, I believe the Natural Resources Agenda, 
clarifying the vision, is the first step. In fact, I recently 
received a letter from forest supervisors that I would be happy 
to send to you, of strong support of the agenda.
    The focus on the core values, the core values of working 
within the limits of the land that sustained generation after 
generation of not only fiber production but all of the values, 
the water values, the recreation values, the values that are 
out on the national forests.
    Mr. Herger. Thank you, Chief Dombeck. Mr. Miller will 
inquire.
    Mr. Miller. Thank you, Mr. Chairman.
    We have done a lot of comparison, and I think that is quite 
proper because it is driving a lot of our thinking, between the 
private sector and the public sector here. And, Mr. Pandolfi, I 
think your appointment is truly one of the creative ideas in 
the Forest Service here, to try to get control of this.
    I am thinking of the chairman of General Electric, or 
Proctor & Gamble has been brought up here, and I wonder how 
well those CEOs would do their job if every time they made a 
decision they had a subpoena on their desk, or a letter with 50 
or 60 questions about how they arrived at that decision, and 
what were their motives and who did they talk to, and who did 
they discuss it with.
    And it would seem to me that when I look at most of the 
people in the private sector who are going through downsizing 
and reorganizations, and especially if people are brought in 
for that purpose, one of the things they want is the authority 
to make changes, recognizing that changes bring about some 
pain, change in direction, change in culture, in thinking, in 
outcome.
    We keep saying we want the change, but I look here, Mr. 
Craig, March 4th of this year sends to Mr. Dombeck, speaking of 
letter, some 60 questions about why three people were changed 
and retired or resigned from the Service. And this goes on and 
on and on.
    We see now land managers being hit with subpoenas from this 
Committee who are trying to make a decision out there on the 
land, and, bang. A subpoena tends to focus the mind to think 
about what you will be able to leave your children and what 
your annual costs are going to be, and are you going to pay for 
litigation, is everything going to be OK.
    Yet somehow we want people to make change. I just wondered 
if you knew whether there was anything comparable to that in 
the private sector?
    Mr. Pandolfi. You are asking me?
    Mr. Miller. Yes, I am asking you, Mr. Pandolfi.
    Mr. Pandolfi. No.
    Mr. Miller. Do you know anybody who would operate a 
corporation with those infringements?
    Mr. Pandolfi. No. No one operates this way in the private 
sector. In the private sector, you are exactly right. If this 
were a corporation--first of all I would tell you that if this 
were a corporation, the Forest Service, it would be one of the 
best leveraged buy out opportunities in the world.
    We could come here and bring in a management team, as we 
have right here, an excellent management team that the Chief 
has assembled, and if we were allowed the incentives that the 
private sector offers its employees, we would spend far less, 
far, far less in this agency, and we would find answers to the 
questions that are bothering us so intensely.
    But it is not possible to hire, to change people in their 
jobs, or to incentivize people the way we do in the private 
sector.
    Therefore, I must tell you that a challenge to me has been 
to try to find ways that the things that I have learned over 
the years can be applied here. It has been very frustrating.
    Mr. Miller. I hope that we do not discourage you, because 
you are the breath of fresh air that for 10 years the GAO and 
others have been telling us we ought to seek, and this 
administration of the current Forest Service had enough courage 
to bring you in.
    Usually we bring someone in who is sort of part of the 
family, to kind of give us an assessment. This is the first 
time we have had some fresh thinking. I am reading the 
testimony that you gave back in July of last year.
    And we do not get a lot of testimony like that. We do not 
get people telling the Congress that maybe we are part of the 
problem, and maybe the fact that we do not have standards for 
performance, that we give you the money whether you do it right 
or wrong.
    That is not very often that we get offered that kind of 
testimony. The question is whether we will react to it.
    I was also taken, because it is kind of interesting, you 
were asked by, I think, Mrs. Chenoweth, or Mr. Hill, I am not 
sure, Mr. Hill, how you would rate the Service. This was back 
in July. On a one to ten. And you said it is a one.
    And they said, where do you think you will be in the year 
2000, and you said my guess is we certainly will have made 
improvements, but we will be no General Electric.
    One of your ardent critics, for a number of years the 
Inspector General's Office, told us before we went off to vote, 
that in conclusion the Forest Service's financial management 
has been materially deficient for many years. With efforts 
under way to achieve financial health and implement new 
accounting systems, the road to recovery has been laid and the 
Department is heading in the right direction.
    We asked a question a year ago. We are back here a year 
later. We asked the question of an independent review, and the 
say they are headed in the right direction, and what we want to 
do is hit you with a lot of subpoenas and 50 page questions.
    I don't get it. Maybe we cannot stand success because you 
would have to deliver some real bad news about some very tough 
ingrained constituencies within the jurisdiction of the Forest 
Service.
    But again, I do not get how that is consistent with what I 
see going on in base closures, what I see going on in corporate 
reorganizations, and mergers and acquisitions and buy outs and 
downsizing. We just do not want to hear the bad news. We do not 
want to hear that one of our friends got transferred across the 
mountain, or to another town or different State.
    Geez, I don't know, I am living in a town full of people 
that have been transferred between corporations and 
subsidiaries, and their offices have been taken out from 
underneath them, and they are still working for people, but 
they believe it is part of the endeavor to get the effort right 
side up in a tough, competitive world.
    And we want to just continue to run loss leaders. We are 
like a store. We are like Cosco where we say we will sell 
everything at a loss, but we will make it up on volume. Just 
cut more trees, but we are all going to do it at a loss.
    I don't get it. I mean, we keep saying we want business, we 
want business, but you cannot transfer anybody in this 
operation, you cannot take anybody because they are not 
competent or not on the team and suggest that they might be 
better off working somewhere else, when all you get from 
Congress is a long list of subpoenas.
    And I do not mind subpoenaing you guys. You are big guys. 
You can take it. But we are second guessing, now, with 
subpoenas people on the ground in the BLM and the Forest 
Service. These are people who are getting shot at, getting 
threats of violence and everything else. And here are your 
champions in the Congress.
    Thank you.
    Mr. Herger. Thank you, Mr. Miller. Mrs. Chenoweth will 
inquire.
    Mrs. Chenoweth. Thank you, Mr. Chairman.
    I am familiar with that subpoena, Mr. Pandolfi, and I would 
think that you would know that anyone in business who exercised 
authority without the basis and cover of law would get one 
whale of a lot more than a subpoena to explain their actions.
    They would get a pink slip but fast. The fact is that 
Tucson Rod and Gun Club is employing gun control laws, and 
there is not a law that allows them to do that. There is not 
even a written policy that allows them to do that.
    Mr. Miller. If the Chairwoman would yield?
    Mrs. Chenoweth. No. The lady will not yield.
    I think a subpoena to ask people to come before this 
Committee is the least that we can do, and ask them to explain 
their actions.
    Another thing. The gentleman from Oregon made some comments 
with regards to the National Environmental Policy Act, and the 
requirement of government to do an environmental impact 
statement for certain uses on the land.
    And for the record, I think it is quite simple. NEPA is a 
requirement of the Federal Government, not of the private 
sector, not of the users. NEPA, it is stated in Supreme Court 
decisions, starting with National Helium v. Morton, followed by 
Sierra Club v. Morton, and various other Supreme Court 
decisions have consistently said it is up to the Federal 
Government to do the NEPA requirement.
    Furthermore, Mr. Pandolfi, while I appreciate the fact that 
together we have to approach the problems we are facing today 
in a business like manner, I am worried that Mr. Dombeck is 
putting too much on himself by trying to say--or let me just 
ask you, Mr. Dombeck, trying to say that we need to establish 
the new vision, new policy and new goals.
    I submit that has already been established by the Congress. 
The policies and goals have even been codified with the 
National Forest Management Act.
    And for you to try to expand out beyond that makes your job 
even more difficult. And I resent the pressures that are put on 
you to do that. I think that if you were allowed politically 
just to keep the focus on what the law is, and I think you 
should be, and it would sure lessen a lot of the lawsuits, your 
job would be one whale of a lot easier.
    And, finally, before we go to vote, I would like to say 
that we have got to remember, these Forest Service lands are 
not owned by the Forest Service. I mean, it is not like the 
Forest Service is a big Fortune 500 company. These lands really 
are the public's lands, or the resources on the lands are the 
public's lands.
    And the Forest Service is the manager, and we expect you to 
be efficient managers. But if we lose focus on that, I and my 
colleagues will be even crankier than we are today. If we try 
to start running the Forest Service as a business, by running 
up more fees, and making it more costly for people to get on 
the land, and to use the resources, whether it is skiing or 
recreation, or horseback riding or whatever it might be.
    Mr. Chairman, I do have a series of questions that I do 
want to ask. But I see that we do have a vote. Will we be able 
to ask another round of questions?
    Mr. Herger. Yes. We will recess for 20 minutes and come 
back for more questions. Thank you.
    [Recess.]
    Mrs. Chenoweth. [presiding] The Committee will come to 
order, and the Chair will recognize Mr. Nethercutt.
    Mr. Nethercutt. Thank you, Madam Chairman.
    Mr. Dombeck, would you agree that a substantial amount of 
administrative work and cost associated with timber sales is 
directly attributable to either appeals or preparing to resist 
appeals?
    Mr. Dombeck. Yes. In some of the most controversial areas 
that we work in, those costs exceed 50 percent, the office 
costs. The additional expenses associated with those has to do 
with dealing with law enforcement issues, protests, those kinds 
of things. It is very labor intensive. The whole process is 
labor intensive.
    Mr. Nethercutt. Could you put a number on the cost of it 
for the Committee?
    Mr. Dombeck. I am not sure I could. It is highly variable 
from situation to situation. Do you want to venture a guess, 
Bob?
    Mr. Nethercutt. In terms of the amount of money you spend 
on personnel and people working on the ground and so on, is it 
50 percent of your time, 75 percent of your time, 25 percent of 
your time? Maybe an outside figure.
    Mr. Joslin. Could I give you some information, Congressman?
    Mr. Nethercutt. Sure.
    Mr. Joslin. On appeals, 5 year average cost is just over $5 
million. And the same 5 year average cost for lawsuits is just 
under $5 million. So it is right at $10 million for that 5 year 
average cost.
    Mr. Nethercutt. Would it be helpful in the administration 
of a sound forest policy if there were restrictions or 
limitations on appeals, and some limitations perhaps on the 
length of appeals and the time for determining appeals from an 
administration standpoint? Would that be helpful to you?
    Mr. Dombeck. I know this is an issue that has been around 
for some time, and the thing that we continually hear from 
people is that people want the ability to question government, 
they want the ability to question decisions. The more we can do 
to build support, to build trust, to expend energy in areas 
that are not controversial, the more efficient it is.
    Mr. Nethercutt. Would it be helpful to you in the 
administration of your program to have a limitation, as I have 
described it?
    Mr. Dombeck. From the financial standpoint, I think the----
    Mr. Nethercutt. From the standpoint of financial, the 
standpoint of administrative operations, efficiency of the 
Forest Service, implementation of your policies. Would that be 
a helpful step?
    Mr. Dombeck. Well, certainly from the standpoint of cost. 
It would reduce the cost. However, people litigate, and choose 
to litigate, as you know much better than I, in the United 
States, and what sort of insulation could be built around that, 
I am sure you have a better understanding than I.
    Mr. Nethercutt. I take it, in all honesty it would be 
helpful to you, would it not? It would make your life a little 
easier? Whether it is constitutional or not, or whether it is 
going to happen or not is another matter. But it would help 
you, would it not?
    Mr. Dombeck. Yes.
    Mr. Nethercutt. In the way you do your work.
    Mr. Joslin. Congressman, if I could.
    Mr. Nethercutt. Yes, sir.
    Mr. Joslin. In regard to the NEPA process, that part of it 
creates a tremendous opportunity, I think, for public 
involvement that we have, and I think as a result of that that 
we do get better decisions.
    Mr. Nethercutt. I understand. I appreciate that. And you 
may be right. But my question goes to the practicality of how 
you do what you are charged with doing. This causes you some 
stress, I am sure.
    I also have the impression that there are more 
environmental interests, if I can call them that, that exercise 
their rights of appeal than, shall we say, industry interests, 
if we can sort of agree on what those two categories of people 
are. Would that be accurate?
    Mr. Dombeck. Does anyone have that information? We could 
provide that for the record. I know that we routinely get sued 
from both sides.
    Mr. Nethercutt. But in your record, to date, is there a 
higher number of environmental interests that exercise their 
rights of appeal, or is it the other way? Do the industry 
interests exercise their rights of appeal?
    Mr. Dombeck. We can provide that for the record.
    Mr. Nethercutt. Well, what is your impression, Chief? I 
mean, you just have some sense of who is responsible. Which 
group is more responsible for appeals and the consequent delays 
that you have to deal with?
    Mr. Dombeck. In the salvage area, it was mostly 
environmental groups.
    Mr. Nethercutt. How about the green sales, or any other 
timber sales?
    Mr. Joslin. What I would say in regard to that is most of 
the appeals and litigation that we get are from individuals or 
groups that really do not have an interest as far as the 
commodity that we are dealing with.
    Mr. Nethercutt. And I think that is a big problem. If I 
live in Maryland or Virginia and I do not like the sale that is 
going on in the Colville National Forest, I could probably stop 
that, couldn't I, under the current condition of the law and 
regulations that exist today. Is that correct?
    Mr. Joslin. Well, you could certainly appeal.
    Mr. Nethercutt. I could slow it down.
    Mr. Joslin. You could appeal it, or certainly enter into a 
lawsuit.
    Mr. Nethercutt. And is that a common occurrence for you, 
these so called outside interest appeals?
    Mr. Dombeck. I believe certainly there are some. Specific 
numbers, again, we could provide you a breakdown.
    [The information referred to may be found at end of 
hearing.]
    Mr. Nethercutt. Is it your impression that it is a common 
occurrence? I am not trying to test your memory. What is your 
impression? Is it your sense that this is a common occurrence, 
that this happens regularly? Would you disagree with that?
    Mr. Dombeck. I would not disagree with that, but I am not 
sure from the standpoint of the long distance lawsuits. There 
are interest groups in all areas and all States. Everybody from 
those who think it is a sin to cut a tree to those that want to 
cut them all, and we deal with the whole spectrum of those 
interests.
    Mr. Nethercutt. I understand you deal with the whole 
spectrum, Chief. I am just trying to understand who do you have 
to deal with more? Is it the industry that is disaffected by 
the limitation a timber sale, or is it those who do not want 
any timber sale to occur, or some variation of that position?
    Mr. Joslin. Well, I would go back to my earlier statement 
that I made there, Congressman, that the appeals primarily come 
from people who are not connected with whatever those commodity 
interests, or whatever you referred to them, are.
    Mr. Nethercutt. Let me ask one other question. After you 
became the Chief, Mr. Dombeck, you indicated you were going to 
institute a new performance measuring system for all line 
officers in the Forest Service.
    What is the status of that effort?
    Mr. Dombeck. That was initiated last July, and we will be 
tying that to GPRA. But as was heard earlier today in 
testimony, performance is also an issue, and I believe we 
should evaluate and reward land managers based upon the 
condition of the land.
    And we looked at measures like soil stability, forest 
health, are we making progress with noxious weeds, the trends 
in water quality, those kinds of things, and move away from as 
much of the process measuring as we could.
    Being one whose general philosophy is what we measure, that 
is what we get. And if we measure process we are going to get 
it, and we have plenty of it.
    Mr. Nethercutt. Are the performance measures in place now?
    Mr. Dombeck. Yes.
    Mr. Nethercutt. Did they differ substantially from earlier 
performance measures?
    Mr. Dombeck. I would ask someone on the staff. They are 
tied to GPRA, but specifically how they are tied in, and the 
personnel mechanism. This is Ron Stewart. Ron is Deputy Chief 
for Programs and Legislation.
    Mr. Nethercutt. Yes, sir.
    Mr. Stewart. Good afternoon.
    Mr. Nethercutt. Good afternoon.
    Mr. Stewart. One of my responsibilities is managing the 
GPRA effort. And I would say that first of all it is somewhat 
difficult to compare, because the whole Department changed the 
entire--at least Senior Executive Service performance 
standards--in the process of implementing a change throughout 
the organization in which we will use more generic performance 
elements.
    The approach we have used is in those appropriate, what we 
would call elements. For instance, program management. We 
attach a specific list of performance measures that are 
assigned to that line officer, and they are disaggregated, if 
you will, from the performance plan, the GPRA performance plan.
    So, for instance, we are in the process right now of taking 
the first formal GPRA performance plan, which was submitted 
with the budget, as you know, and disaggregating that back out 
to the line officers through the organization.
    There are two kinds. There is a set that deals with the 
natural resource goals around the Forest Service agenda. And 
then there are ones for organizational effectiveness, and those 
are more associated with financial management, and information 
management and those kinds of things.
    And there is specific performance tied to each of those. 
They are somewhat different than last year's, in that we 
learned some from last year, and we think we have improved.
    One of the things we are trying to do is narrow the number 
of things, because one of our problems is we are trying to do 
everything and measure everything. So we are trying to focus on 
those corporate measures which best determine the agency's 
performance, particularly against the agenda and the 
organizational effectiveness which includes, as I said, 
financial management and so forth.
    Mr. Nethercutt. Do you feel there has been an improvement, 
then, since the time you put the new measurement standards, and 
you have had a chance to look at them? Have you been impressed 
that there has been improvement, or are things sort of moving 
slowly? How can you characterize it?
    Mr. Stewart. That is my sense, that we have improved. One 
of the things that we would like to be able to do, that we have 
not done in the past, is look at trends. In other words, when 
you are looking at condition on the land, it is not necessarily 
an annual change, and unfortunately we do annual performance 
evaluations.
    So what we are trying to do is begin now establishing some 
trends. And not only look at what the current accomplishment 
is, but what has the trend been. Have things been getting 
better, in other words, over the last 3 years or so?
    And so I think it is much better, but we still have a ways 
to go.
    Mr. Nethercutt. Well, I wish you well. I want you to 
succeed. I really do. I just think we are all struggling, 
trying to figure out how we can help you, and be constructively 
critical.
    But I think you have implemented good management changes, 
and if these performance measurement standards are going go 
work, you have a big job. We all want you to succeed, in my 
humble opinion. But on the other hand, we are going to tell you 
what we feel will help you succeed.
    So I wish you well, and thank you for being here today.
    Mr. Dombeck. Thank you.
    Mr. Nethercutt. Thank you, Madam Chair, for the extra time.
    Mrs. Chenoweth. Thank you, Mr. Nethercutt.
    Chief Dombeck, you have received a copy of the letter that 
you signed and sent out March 18th. Or it says reply due March 
18th and March 30th.
    You have it?
    Mr. Dombeck. Yes.
    Mrs. Chenoweth. I wanted to ask you some questions about 
it. Reading from the memo, it says as many of you know, the 
administration is proposing legislation to stabilize payments 
to States. I support this proposal, and request you and your 
employees to assist me in sharing information with your 
internal and external customers.
    The letter goes on to say that station directors, the 
Northeastern Area Director, the IITF Director are also to 
participate in communicating this important part of our Forest 
Service Natural Resource Agenda.
    What is the Conservation Leadership Policy Initiative, 
reforming Forest Service payments to States that you address in 
this memo?
    Mr. Dombeck. The proposal in the President's budget to 
stabilize payments to counties, the 25 percent fund that 
basically proposes to make the payment at the 1997 level, or 76 
percent of the average of 1986 to 1990, whichever is higher.
    Mrs. Chenoweth. OK. Who was involved in developing this 
memo, and the directives contained in the memo?
    Mr. Dombeck. Employees of the Forest Service, of the 
programs. Sandra Key is leading that effort, one of the 
associate deputy chiefs.
    Mrs. Chenoweth. All right. Were there any outside 
contractors, consultants or employees not directly working for 
the Forest Service involved in the development of any portion 
of this memo, including the lobbying, briefing and support 
material?
    Mr. Dombeck. Not that I am aware of.
    Mrs. Chenoweth. In your memo you refer to the effectiveness 
of this package for means of pushing this proposal. Is the 
package meant to be used to garner support for your proposed 
policy?
    Mr. Dombeck. The package is meant to make sure that the 
appropriate information is available to all individuals of the 
Forest Service so they can converse with their constituents, 
the public, people who ask questions, that they discuss this 
with.
    Mrs. Chenoweth. So it is meant to garner support for the 
proposal?
    Mr. Dombeck. It is meant to provide all of the information, 
yes.
    Mrs. Chenoweth. Let us again talk about the fiscal year 
1998 Interior Appropriations Bill, Public Law 105-83. We have 
been through this before. The President did sign this 
legislation, didn't he, Chief?
    Mr. Dombeck. Yes.
    Mrs. Chenoweth. And since he signed the legislation it is 
now the law of the land, is it not?
    Mr. Dombeck. Yes.
    Mrs. Chenoweth. Do you know that Section 303 of the Act 
provides that no part of any appropriation contained in this 
Act shall be available for any activities or the publication or 
distribution of literature that in any way tends to promote 
public support or opposition to any legislative proposal on 
which Congressional action is not complete?
    Did you know that is what is contained in Section 303 of 
the Act? And I read from the Act.
    Mr. Dombeck. Yes, I recall from our previous dialogue.
    Mrs. Chenoweth. As you know from previous dialogue and 
discussions about H.R. 2378, the fiscal year 1998 Department of 
Treasury and Postal Service Appropriations bill, did the 
President sign this legislation into law?
    Mr. Dombeck. I presume so.
    Mrs. Chenoweth. And since the President signed the 
legislation, it is now the law of the land, right?
    Mr. Dombeck. That is correct.
    Mrs. Chenoweth. Since it is the law of the land, are you 
bound by its provisions?
    Mr. Dombeck. Yes.
    Mrs. Chenoweth. Do you believe that one of your 
responsibilities is to obey the law?
    Mr. Dombeck. Yes.
    Mrs. Chenoweth. And do you think that Section 624 of the 
Act provides that, and I read from the Act, no part of any 
funds appropriated in this to any other Act shall be used by an 
agency of the executive branch other than for normal and 
recognized executive legislative relationships, for publicity 
or propaganda purposes, and for the preparation, distribution, 
or use of any kit, pamphlet, booklet, publication, radio, 
television or film presentation designed to support or defeat 
legislation pending before the Congress except in presentation 
to the Congress itself.
    And, Chief, I have just read from Section 624 of the Act. 
So here are two additional statutes which seem to limit your 
activities in this area.
    So as we look at your compliance with Section 303 of 
Interior and Section 624 of Treasury appropriations, and as we 
focus on the publication or distribution of literature, even 
though that is only part of the prescription of these statutes, 
your memo directs the employees to lobby county commissioners 
or supervisors, or school administrators to explain the 
proposal and get their concerns and key items of support by 
March 30th.
    Also, in your memo, you state that field units should seek 
opportunities to brief media on the proposal. In your mind, 
does that activity, or does that involve the distribution of 
literature or attempting to influence legislative proposals 
before the Congress?
    Mr. Dombeck. No. From the standpoint of--the questions that 
I asked myself with regard to your points on lobbying, and that 
is our responsibility is to provide information to our 
employees. And I believe this memo was an internal memo 
providing information to employees, so they were conversant on 
the issues proposed in the President's budget.
    And I would be happy to discuss this with you and staff. 
Questions that I ask myself are is the information that we are 
disseminating, is it complete, is it objective. Are we 
discussing proposals by the administration, since the Forest 
Service is also a part of the executive branch.
    Mrs. Chenoweth. Well, I think Section 624 and Section 303 
address that very, very clearly, and that is why I read very 
specifically from those Acts. That it prohibits lobbying 
activities of any kind by an agency to influence legislation 
before the Congress.
    Also, on page 1 of your memo, you indicate that by March 
30th the forest supervisors or district rangers must meet with 
and brief country commissioners or supervisors and district 
school administrators to explain their proposal and get their 
concerns and key items of support.
    In your mind does this activity involve influencing a 
legislative proposal currently before the Congress?
    Mr. Dombeck. No. I believe that since these constituents 
are those most affected by proposed policies, it is very 
important that they understand what those effects will be.
    Mrs. Chenoweth. Chief Dombeck, then I ask why do you want 
to get their support on legislation before the Congress?
    Mr. Dombeck. This is a proposal put forth by the 
administration and it is part of the President's budget and the 
agency proposal. We are not advocating a pass/fail. We are 
telling them what it means to them, what the impacts will be, 
in an attempt to lay out the pros and the cons.
    Mrs. Chenoweth. Why are you attempting to get their 
support?
    Mr. Dombeck. What we are doing----
    Mrs. Chenoweth. I mean, that is lobbying, by definition.
    Mr. Dombeck. I think I would again just say that the 
counsel that I have received is that our responsibility is to 
provide information so our constituents, people that we deal 
with, can make an appropriate decision.
    The specific definition that I work from on lobbying, and 
this could be where we have a difference, that I would be happy 
to discuss, is that lobbying is specifically the act of trying 
to influence a legislator.
    And one of the things we are very careful not to do, and 
that I always advise employees, is that our responsibility is 
to provide information to constituents so they can make 
reasoned decisions.
    Mrs. Chenoweth. Chief Dombeck, it would seem that we would 
not be at a point of disconnect if we knew that rather than 
pushing your proposal through a communication plan and those 
activities laid out in the communication plan if we knew indeed 
that you were responsive to those who asked certain questions.
    I think that is the difference. If somebody asks you a 
specific question, then by all means I think you should answer 
the question that is asked. No more, no less.
    But to initiate the activity is, I believe, and a court 
will ultimately probably have to answer this, initiating 
lobbying activity. But I was interested in your answer because 
did the administration direct you to lobby, and influence these 
groups?
    I mean, these are grassroots groups. Was it the 
administration that directed you to do this?
    Mr. Dombeck. No, they did not. We provide a wide variety of 
information on many, many topics to many people. Again, this 
was a proposal. The information that we put out, the letter was 
drafted by career Forest Service employees that have been in 
the field and are involved in many, many programs and have had 
experience in dealing with the whole array of people that we 
deal with in the field.
    Mrs. Chenoweth. Well, Chief, you did sign the letter.
    Mr. Dombeck. Yes.
    Mrs. Chenoweth. I want to look a little more broadly. Since 
Section 303 prohibits any activity that in any way tends to 
promote public support or opposition to any legislative 
proposal on which Congressional action is not complete, and I 
was reading from the law, this involves a rather broad 
restriction on agency actions.
    Since the activities outlined in your memo are meant to 
gain support for this legislative initiative, is it not a 
direct and blatant violation of Section 303?
    Mr. Dombeck. I do not believe so, no. And, again, I would 
be happy to get additional interpretations from counsel on 
this.
    Mrs. Chenoweth. Chief Dombeck, let me ask you, did you 
provide the same information and initiate providing the 
information, as you call it--I call it lobbying--with other 
industry groups, such as the logging and timber industry 
groups, grazing, other people, private sector individuals?
    Mr. Dombeck. I have personally discussed this proposal 
with, for example, when I was out in your State, most recently 
with county commissioners. I met with a wide variety of groups, 
including industry groups, unions.
    We went to the National Association of Counties at their 
request to provide this information.
    Mrs. Chenoweth. I wonder if you would provide a list, by 
close of business tomorrow, of the names, addresses, and all 
the groups you provided information to.
    Mr. Dombeck. That I provided the information to personally?
    Mrs. Chenoweth. Yes. As directed through your memo, yes. 
Would you provide by close of business tomorrow a list of the 
people who were contacted as a result of your memo?
    Mr. Dombeck. Well, of course the memo was sent to regional 
foresters, and to many, many Forest Service employees. But the 
information is also all on the Internet for public viewing, for 
whoever wants to make it available.
    Now, I would be happy to provide you that information. I am 
not sure we could, given the fact that we wouldn't even get the 
request out probably till the close of business today, I would 
be reluctant to promise that I could have it to you by the 
close of business tomorrow.
    Mrs. Chenoweth. Let us make it 10 days, 10 working days.
    Mr. Dombeck. Yes.
    Mrs. Chenoweth. Is that all right?
    Mr. Dombeck. Yes.
    Mrs. Chenoweth. Chief Dombeck, this line of questioning is 
the second line of questioning like this that I have tendered. 
I just want to ask you, as a Member of Congress and as chairman 
of this Committee, because the Committee members respect you 
and like you, I think you are treading, or your legal people 
are letting you tread on very, very tenuous legal grounds.
    I join Mr. Nethercutt in the feeling that we want to help 
you succeed. We are very sincere about that, but this makes it 
exceedingly difficult for us when the Acts of Congress are 
blatantly ignored.
    And I do not think that is your intention, but it is 
happening, and the buck stops with you.
    I guess just personally I want to say, this awful dangerous 
for a man as young as you are, and has a long way to continue 
with your successful career. I am just speaking as an 
individual, but I feel very badly about this, and I hope that 
you will ask your people to re-evaluate this kind of activity. 
I really mean it.
    I want to just close, Mr. Chairman, by saying we have heard 
some very startling information from GAO, from the Inspector 
General, and from you, Mr. Dombeck, today. And I know that 
there is a lot of frustration on both parts, and I want to come 
full circle and say there is a lot of blame to spread all over 
the place.
    We are at critical mass, and I sincerely hope, in spite of 
the fact that this year gets crazy, because it is an election 
year, I really hope that we can work together to come up with 
solutions that take us out of critical mass, or we may have to 
look in an entirely different direction.
    And that is not what our top priority is now. It may be 
what we have to resort to. And I appreciate you for your 
tenacity, Mr. Dombeck. Thank you very much.
    Mr. Dombeck. Thank you.
    Mr. Herger. [presiding] Thank you, Mrs. Chenoweth.
    Mr. Dombeck. I particularly appreciate the compliment about 
my age. I think that is only the second compliment I have 
received today, so thank you.
    Mr. Herger. Well, Chief Dombeck, I want to give you your 
third compliment. You and your entire team, everyone, really 
can be complimented for this long day, for answering these 
questions the best way you can.
    I know this is difficult for you. It is difficult for all 
of us. As has been pointed out today, this is not a new 
problem. The problem that has been identified specifically by 
the GAO and IG and during this hearing today is one of 
mismanagement, including the mismanagement of $215 million 
during fiscal year 1995, with the Forest Service, that cannot 
be accounted for, and that was before you took over.
    It is during this administration, but again this problem 
goes back even prior to this administration. I guess the 
concern I have is one that I would dislike very much to be back 
here 2 years from now or 4 years from now and see that things 
are not any different than they are today.
    Perhaps to conclude this hearing today, if you could, I 
would like to ask you if you could be as specific as you can, 
Mr. Dombeck, on what some specific things that we are doing, as 
far as keeping the Forest Service's fiscal house in order, both 
in the fiscal area as well as the personnel area, which at 
least I alluded to earlier.
    And also some specific dates of completion of these 
changes, if you could comment on that, please.
    Mr. Dombeck. I can comment on a few of these items, and 
then I would like to ask Mr. Pandolfi to elaborate. Much of 
this is in his area of expertise, as well as Clyde Thompson, 
also in this area.
    But what I would suggest, we talked about the Foundation 
Financial Information System, the FFIS, and that is moving 
forward. We are not out of the woods on that system, but the 
fact is it is moving forward.
    We have brought Coopers & Lybrand in. We have got a wide 
variety of recommendations that we will be moving forward on 
this. And, again, what we really need is we really need the 
climate to bring about change.
    And I think the time is right. For example, by mid-summer 
we will have a complete inventory of the Forest Service's real 
and personal property. And that includes location, the item, 
and the value.
    There are a variety of steps. Before you can run you have 
to crawl. And we are moving ahead on some of these items. And 
are there more items that you would like to highlight, Francis?
    Mr. Pandolfi. There has been a lot of progress made to 
date, Congressman Herger. For example, in cleaning up data. We 
are expecting, and the IG has reported on this, and has 
indicated that in fact the data going into our systems now is a 
lot cleaner than it used to be, and a lot more useful.
    Yes, the Chief just indicated, for example, that by June 30 
we will have real and personal property assets in our system. 
So we can give you some more dates on this.
    We are still struggling, though, with the FFIS, that the 
Chief just mentioned. You should know that. Our hope is that 
the system will be up and running--this is our general ledger--
for all of the Forest Service units on October 1 of 1998.
    But we cannot guarantee that. There are many problems yet 
to be overcome. And one of the things that you heard this 
morning was the Inspector General indicated that there was a 
qualified opinion given to the National Financial Center. They 
are our partner in this. We need to work together with them.
    I wish we could give you firm dates, but it is going to be 
very hard. There a number of things that perhaps we could 
provide you that would be useful.
    Mr. Herger. Well, I would appreciate you considering the 
question that I asked, and if you could provide this Committee, 
this joint committee with some specific dates.
    [The information referred to may be found at end of 
hearing.]
    Mr. Herger. I can assure you, and I do not say this to be 
down on you, but the fact is that the Congress is going to be 
watching this very closely. The Budget Committee that I sit on 
is going to be watching this very closely.
    Again, we do not want to be here a year from now and look 
and see that we are not any further than we were today. So I 
want to encourage you to go out of your way to be very specific 
on what it is that we are going to be changing.
    I want you to be very specific in analyzing these reports 
that have come out from the IG and the Government Accounting 
Office, because we are going to be watching those very closely.
    And we are also here to work with you. The areas where you 
need help, you need assistance. I have in past years--it might 
seem ironic to you--but I have probably been one of your 
strongest supporters, as far as supporting your budget.
    But I am serving notice, letting you know that I am going 
to be--if we are not getting the results, and if year after 
year we continue to not get the results, not only am I not 
going to be supporting your budgets, I think you can look for 
some pretty dramatic decreases.
    And that is not a threat. That is just merely be 
responsible to the American taxpayer.
    So again, I do want to compliment you. You do have a very 
tough job. You have an incredibly tough job. I certainly 
recognize that, and your whole team.
    Let me just conclude with this, and that is I believe 
everyone has indicated that we are very supportive, and 
recognize the outstanding effort of you and those who work for 
you.
    It is the direction, and the policy that we have very 
serious question with, and I believe question for very good 
reason.
    With that, this hearing stands adjourned. Thank you very 
much.
    [Whereupon, at 4:02 p.m. the Committee was adjourned.]
    [Additional material submitted for the record follows.]
  Letter written to Hon. Mike Dombeck, Chief, U.S. Forest Service, by 
                       Diane Henderson-Bramlette
    On the eve of the end of my eighteen year career, I feel compelled 
to give you some feedback and reflections from ``the field.'' I am 38 
years old and have been the Forest Supervisor of the Modoc in R 5 for 
almost six years.
    I love this position, the Forest and the Agency. I believe the 
Forest Service has one of the greatest workforce. We have employees 
that are well trained, educated and are dedicated to doing the best 
they can and care for the land.
    We are world leaders in natural resource management. So it is with 
a mixture of sadness and joy as I leave my position to pursue my life-
long dream as an entrepreneur in the private sector. However, a 
secondary reason for my departure is my frustration and dismay of the 
ever-increasing redundant andcostly Agency practices, policies and 
regulations, the lack of accountability both with all employees and 
with Agency management, and the lack of leadership and vision 
throughout all levels of the Forest Service.
    I share my reflections and concerns not as criticism based in 
malice or bitterness, rather as feedback based in a positive and caring 
light.
    Hopefully, they may invoke some pondering and along with other 
feedback,ultimately lead to some change.

ACCOUNTABILITY

    Somehow over the years, the Agency's leadership has created an 
environment that is not accountable personally nor professionally. To 
further compound the problem, many Supervisors have confused 
accountability with caring foremployees. I believe that many times 
Supervisors have not been honest with employees concerning performance, 
work behavior, and controversialissues, such as downsizing because they 
don't want to hurt employees, they fear complaints/grievances will be 
filed or they will not be supported from above. As a result, trust, 
morale, productivity and efficiency suffer. I believe the long-held 
traditional maternalistic/paternalistic attitudes of this Agency need 
to end. The Agency must deal with nonperformance, ethicaland Civil 
Rights violations in a more direct and active manner.
    In addition employees need honest and direct information concerning 
their future and that of this Agency. Please remember, employees are 
savvy and intelligent and usually have most information 
instantaneously, often times before Administrators do. Unfortunately, 
many Management attempts to help employees by not being open and direct 
and sharing information has hindered our ability to be an effective and 
efficient Agency. In the end this usually creates worse and more 
drastic effects on the workforce.
    I encourage you to continue to be open and direct with the 
workforce. In addition, require all management to be honest and 
forthright regardless of the nature of the information. Lastly, please 
support those individuals whom are pro-active with dealing with 
sensitive issues. Most employees would rather have the ``bad news'' and 
make their own decisions than allow others to do so for them, or wait 
until options are more limited.
    Sadly, I wish I had practiced this more throughout my career.

LEADERSHIP AND VISION

    I feel we are trying to be everything, to everyone, all the time. 
As a result, we deliver very little to anyone. This causes distrust 
within the Agency and with the public since we make vague commitments 
in an attempt to please all parties and be politically correct. Again, 
this only increases the distrust, as we continue with bureaucratic 
rhetoric which the public does not understand nor want.
    Increasing collaboration with the public in our process is a great 
idea. However, our Society is so polarized today, that difficult 
decisions still need to be made at times that may not please any or all 
of our Stakeholders. Yet we are fearful to make any decision or take 
any action that may result in litigation, an appeal or public uproar, 
especially if that leads to political or administration involvement. 
The end result to the Agency is a state of paralysis that produces 
costly and ineffective or poor decisions. We need an environment that 
allows employees to take risks and pursue decisions or actions that are 
the best for the land even if there is controversy from some groups or 
appeals/litigations. Without that environment, we will continue to make 
non-decisions and muddle through to the next crisis, wasting taxpayer's 
money and employees time and energy and lowering morale.
    Therefore, I believe it is imperative to have a clear vision and 
purpose for this Agency which is articulated to the entire workforce. 
It has been difficult and frustrating to lead a Forest into the 21st 
Century when I have had little or no idea of the future of this Agency 
nor its direction.
    Leaving that decision to each Forest is setting this Agency up for 
continued and increased chaos, dysfunction and ultimately the Agency 
demise. I realize change is inevitable and will continue to occur at an 
increasing pace.
    However, I strongly encourage you to work with Congress, the 
Administration and Employees to clearly define that vision and 
articulate it, even if it changes periodically. Then employees can make 
decisions effectively and efficiently more sure they are promoting the 
Agency's goals, and do so without fear. Thus ultimately enhancing the 
Agency image and increasing trust between all parties.

CIVIL RIGHTS & EEO

    I believe the Civil Rights/EEO programs and policies are outdated, 
ineffective and antiquated. I read the Civil Rights Action Team Report 
with dismay. This Agency has been trying many of the items as outlined 
in the reports for decades, apparently with little success and with 
great cost yet we continue to expect different results with the same 
actions.
    I really feel many of the problems would be resolved if individuals 
were held accountable for their actions, including management at all 
levels. In the early years of my career, I experienced a lot of sexual 
harassment and discrimination. I never filed a complaint and yet I 
always felt the situations were resolved and corrected. They were 
corrected through open and honest communication, education for all 
parties and through adverse actions if necessary. We were held 
accountable for our actions.
    Sadly, I have experienced more gender and sexual harassment and 
physical assault in the last six years then I have in previous years. 
Much to my amazement I watched many of those individuals be promoted. 
Thus, I feel many of this Agency's challenges lie within the upper 
levels of Management, their actions and attitudes, and not within the 
lower organization levels.
    Until Management is held accountable there will be little change. 
Why should there be? Why should employees at lower organizational 
levels be held to a higher standard or be more accountable than that of 
their leaders?
    As I watch the present backlog of EEO complaints be settled, I am 
again dismayed. It appears to many of us that the direction is ``settle 
at any cost.'' I am perplexed when I see cases settled for large sums 
which have little merit, with the only rationale being ``it makes good 
business sense.''
    If the Agency is in the wrong then settle and hold the responsible 
individual(s) accountable. If the Agency is not in the wrong then don't 
agree to large monetary settlements. I realize that many times it is 
good business to settle rather than go to court. However, it does send 
a strong negative message. Is it a message you want to send? I believe 
the system is broken and needs repair. Until both grievant, or 
complainant and the Agency is truly held accountable, it is too easy to 
abuse the system and little will change.
    Overall, my career has been fantastic. I have worked with great, 
intelligent, and ethical individuals. I have learned so much and I will 
continue to care about this Agency. I only hope my next career is as 
successful, memorable and great as this one.
    I wish you well in the difficult and formidable challenges you and 
the Agency face. You have one of the greatest workforces around, 
involve them, trust them and be honest with them. Thank you.
                                 Diane Henderson-Bramlette,
                                                  Forest Supervisor
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