[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
 DEPARTMENT OF THE INTERIOR AND RELATED AGENCIES APPROPRIATIONS FOR 2000

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS
                              FIRST SESSION

                                ________

   SUBCOMMITTEE ON THE DEPARTMENT OF THE INTERIOR AND RELATED AGENCIES

                      RALPH REGULA, Ohio, Chairman
 JIM KOLBE, Arizona                  NORMAN D. DICKS, Washington
 JOE SKEEN, New Mexico               JOHN P. MURTHA, Pennsylvania
 CHARLES H. TAYLOR, North Carolina   JAMES P. MORAN, Virginia
 GEORGE R. NETHERCUTT, Jr.,          ROBERT E. ``BUD'' CRAMER, Jr.,
Washington                             Alabama
 ZACH WAMP, Tennessee                MAURICE D. HINCHEY, New York
 JACK KINGSTON, Georgia
 JOHN E. PETERSON, Pennsylvania     

 NOTE: Under Committee Rules, Mr. Young, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
   Deborah Weatherly, Loretta Beaumont, Joel Kaplan, and Christopher 
                                 Topik,
                            Staff Assistants

                                ________

                                 PART 11
                           OVERSIGHT HEARINGS
                                                                   Page
 U.S. Forest Service-Fee Generation...............................    1
 Energy Conservation Program-Carryover Funds......................  101
 Recreation Fee Demonstration Program.............................  171
 South Florida Ecosystem Restoration..............................  297

                              


                                ________

         Printed for the use of the Committee on Appropriations

                                ________

                     U.S. GOVERNMENT PRINTING OFFICE
 57-097 O                   WASHINGTON : 1999



                        COMMITTEE ON APPROPRIATIONS

                   C. W. BILL YOUNG, Florida, Chairman

 RALPH REGULA, Ohio                    DAVID R. OBEY, Wisconsin
 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               STENY H. HOYER, Maryland
 TOM DeLAY, Texas                      ALAN B. MOLLOHAN, West Virginia
 JIM KOLBE, Arizona                    MARCY KAPTUR, Ohio
 RON PACKARD, California               NANCY PELOSI, California
 SONNY CALLAHAN, Alabama               PETER J. VISCLOSKY, Indiana
 JAMES T. WALSH, New York              NITA M. LOWEY, New York
 CHARLES H. TAYLOR, North Carolina     JOSE E. SERRANO, New York
 DAVID L. HOBSON, Ohio                 ROSA L. DeLAURO, Connecticut
 ERNEST J. ISTOOK, Jr., Oklahoma       JAMES P. MORAN, Virginia
 HENRY BONILLA, Texas                  JOHN W. OLVER, Massachusetts
 JOE KNOLLENBERG, Michigan             ED PASTOR, Arizona
 DAN MILLER, Florida                   CARRIE P. MEEK, Florida
 JAY DICKEY, Arkansas                  DAVID E. PRICE, North Carolina
 JACK KINGSTON, Georgia                CHET EDWARDS, Texas
 RODNEY P. FRELINGHUYSEN, New Jersey   ROBERT E. ``BUD'' CRAMER, Jr.,
 ROGER F. WICKER, Mississippi            Alabama
 MICHAEL P. FORBES, New York           JAMES E. CLYBURN, South Carolina
 GEORGE R. NETHERCUTT, Jr.,            MAURICE D. HINCHEY, New York
Washington                             LUCILLE ROYBAL-ALLARD, California
 RANDY ``DUKE'' CUNNINGHAM,            SAM FARR, California
California                             JESSE L. JACKSON, Jr., Illinois
 TODD TIAHRT, Kansas                   CAROLYN C. KILPATRICK, Michigan
 ZACH WAMP, Tennessee                  ALLEN BOYD, Florida
 TOM LATHAM, Iowa
 ANNE M. NORTHUP, Kentucky
 ROBERT B. ADERHOLT, Alabama
 JO ANN EMERSON, Missouri
 JOHN E. SUNUNU, New Hampshire
 KAY GRANGER, Texas
 JOHN E. PETERSON, Pennsylvania     
                                    

                 James W. Dyer, Clerk and Staff Director

                                  (ii)





                          Oversight Hearing
                 U.S. Forest Service--Fee Generation




  DEPARTMENT OF INTERIOR AND RELATED AGENCIES APPROPRIATIONS FOR 2000

                              ----------                              

                                      Wednesday, February 10, 1999.

             FOREST SERVICE, U.S. DEPARTMENT OF AGRICULTURE

                               WITNESSES

BARRY  T.  HILL,  SOCIATE  DIRECTOR,  GENERAL  ACCOUNTING  OFFICE
CHARLIE  COTTON,  ASSISTANT  DIRECTOR,  GENERAL  ACCOUNTING  OFFICE
    Mr. Regula [presiding]. I need to get this hearing started. 
We are happy to welcome John Peterson as a new member of the 
committee, a gentleman from Pennsylvania.
    Mr. Dicks. Maurice Hinchey----
    Mr. Regula. Yes, I know. I am just getting the wheels 
turning here. [Laughter.]
    Mr. Hinchey. Thank you, Ralph.
    Mr. Regula. I am meeting with the steelworkers.
    Okay. This is an oversight hearing. Today we have the GAO 
and the Forest Service. Well, it's an exciting subcommittee 
with a broad scope of programs. But, our responsibility is to 
provide oversight for the agencies we fund. This year, we have 
scheduled four specific program oversight hearings in addition 
to the many budget hearings we will have with the three 
Secretaries and individual agency leaders.
    Today, we will examine the Forest Service and its programs 
which provide land uses and revenue and we are happy, Mr. 
Dicks, to have you as our new ranking member. This is your 
bailiwick.
    Mr. Dicks. That's right and----
    Mr. Regula. And our salvation on Forest programs. 
[Laughter.]
    Mr. Dicks. Either that or we have gotten ourselves in a lot 
of trouble. One or the other. [Laughter.]
    Mr. Dicks. But, I am glad to be here with you, Mr. 
Chairman, and we will work together on these issues.
    Mr. Regula. And we will examine the recreation fee 
demonstration program as we go along in the oversight hearings.

                      Opening Remarks of Chairman

    The Forest Service is responsible for a huge portion of our 
lands--9 percent of the Nation, 192 million acres, 900 million 
visitors, far more than other Federal lands. We will focus on 
the revenue generation programs other than the traditional 
commodity activities, such as timber, minerals and grazing. We 
will focus on land use fees and cost recovery for permitting.
    I would like to ask the members to focus on these issues. 
We will have ample time during future hearings to deal with 
pressing policy issues of timber supply, roads and forest 
planning. The preoccupation with timber policy has led us, as 
well as the Forest Service, to neglect good, common sense 
oversight and business-like approaches.
    The GAO has reported that the lack of priority given to 
land use management by the Forest Service has resulted in a 
loss of revenue of about $50 million per year. And I think we 
have a responsibility to oversee that problem. We need to be 
able to assure the American public they are getting fair value 
for the land that they own.
    The Forest Service has 74,000 permits for 130 different 
categories of land use. Sixty percent of the Nation's skiing is 
done at resorts on Forest Service lands--Good morning, Mr. 
Cramer.
    Mr. Cramer. Good morning.
    Mr. Regula. Two hundred hydro-power facilities on these 
lands provide power worth perhaps $4 billion each year. Utility 
and pipeline rights-of-way, communications sites, and developed 
recreation are also multi-billion dollar industries. During 
this hearing, we will take a closer look at how these programs 
are being implemented.
    The bottom line is that both the Forest Service and the 
Congress have neglected opportunities in this area. The Forest 
Service alone has an infrastructure backlog of as much as $10 
billion and great needs for forest and riparian management and 
restoration. The committee should evaluate land uses as a 
potential area to enhance revenue streams.
    The GAO points out that until and unless adequate 
performance measures are in place and are used in serious 
accountability efforts, it is unlikely that the Forest Service 
will perform.
    The Forest Service complains about funding shortfalls for 
their programs, yet the administration has not shown an 
interest in these programs. Interestingly enough, during each 
of the past three fiscal years, the Congress has increased the 
appropriation above the President's request.
    The Forest Service also explains that appraisals and good 
land use management have not been a priority for them. We want 
to know why not. I urge the members to listen carefully and 
inquire about management of these lands. One hundred and 
ninety-two million acres. That's a lot of responsibility and I 
think we, as a committee, have to question whether we are 
getting good management and that the taxpayer is getting a fair 
return on his investment in these lands.
    It's amazing the diversity of activity of the Forest 
Service. It has triple the visitor days of the Park Service and 
74,000 permits. I was startled myself to see the number and 
breadth of activities. There are a couple of hundred hydro-
electric plants. I think in the area of communications--and, 
Mr. Dicks, this is one of real interest to you--the pressure 
will be on more and more for using Forest Service facilities 
for towers, for land use rights-of-way, and so I think it's 
important that we try to get ahead of the curve on that one.
    Our first witness this morning will be the GAO which has 
taken an oversight look at some of the things outlined in my 
statement.
    Mr. Dicks, excuse me. Would you like to make any comments 
here?
    Mr. Dicks. No, Mr. Chairman, except that I strongly support 
your efforts to have oversight hearings here. I think that, as 
we have seen the decline of timber receipts, that our ability 
to collect adequate fees for other services is something that 
this committee should look at. Certainly we are going to be 
questioned about that by our colleagues and I applaud this 
oversight hearing. I think it's overdue and I also do believe, 
based on my investigations here, that probably there may be 
some need for legislative remedies in order to give the Forest 
Service the authority to do what I think the committee is--
after hearing this--going to want to try to move towards. So, 
again, I applaud these hearings and we look forward to hearing 
the witnesses and, especially, the GAO initially here.
    Mr. Regula. Yes, our first witness will be Mr. Hill, the 
Associate Director of the GAO, and we would hope that you can 
stay after you are finished to listen to the Forest Service's--
I hesitate to use the word--rebuttal, but--observations.
    Mr. Hill. We would be more than happy to, Mr. Chairman.
    Mr. Regula. Okay. Thank you.
    Mr. Hill. Before I begin, allow me to introduce my 
colleague. With me today is Charlie Cotton who is responsible 
for pulling together our prior and ongoing work for this 
hearing. And, if I may, I would like to briefly summarize our 
prepared statement and submit the full text for the record.
    Mr. Regula. Without objection.

                         Oral Statement of GAO

    Mr. Hill. As agreed, our testimony today focuses primarily 
on opportunities to generate revenues from special uses on the 
national forests. These uses include resort lodges, marinas, 
guide services, private recreational cabins, special group 
events and rights-of-way. As noted in our prepared statement, 
increasingly legislative and administrative decisions and 
judicial interpretations of statutory requirements have 
required the Forest Service to shift its emphasis from uses 
that generate revenue to those that do not.
    In addition, the agency is required by law to continue 
providing certain goods and services at less than fair market 
value. However, when the Congress has provided the Forest 
Service with the authority to obtain fair market value for 
certain uses or to recover costs for services, the agency often 
has not done so. As a result, the Forest Service forgoes at 
least $50 million in revenue annually, as you pointed out in 
your opening remarks.
    For example, the Forest Service does not obtain fair market 
fees for commercial activities on the national forests, 
including resort lodges, marinas, and guide services. The 
agency also does not obtain fair market fees for non-commercial 
uses, such as private recreational cabins and special group 
events that require a special-use permit, nor does it recover 
the costs of reviewing and processing applications for these 
permits. In addition, the Forest Service does not charge fair 
market value for rights-of-way for oil and gas pipelines, power 
lines, and communication lines on its lands.
    Our work has shown that the Forest Service does not always 
obtain fair market value or recover costs when it is authorized 
to do so because generating revenue is just not a priority for 
the agency. For instance, according to Forest Service 
officials, the agency is evaluating whether to issue 
regulations to allow forest managers to charge fees to recover 
their costs to review and process special-use permit 
applications. However, the agency has been authorized by the 
Congress to recover these costs since 1952 and has twice, in 
the past 12 years, developed but not finalized draft 
regulations to implement this authority. According to Forest 
Service Headquarters officials, both times staff assigned to 
develop and publish these regulations were reassigned to other 
higher-priority tasks.
    Mr. Regula. You are saying they have statutory authority--
--
    Mr. Hill. Correct.
    Mr. Regula [continuing]. Now.
    Mr. Hill. They have had it since 1952.
    Mr. Regula. But they have not exercised it.
    Mr. Hill. That's correct.
    As a result of this, the agency estimates that it forgoes 
$5 to $7 million each year.
    The key to the Forest Service's obtaining fair market value 
for goods and recovering costs for services is holding the 
agency accountable for its performance. For example, since 
1982, we have criticized the Forest Service for not obtaining 
fair market value for special use fees. The agency has not, 
however, provided the strong leadership and the Congress has 
not provided the sustained oversight needed to ensure that the 
agency maximizes revenues under existing legislative 
authorities.
    An option for increasing revenue for special uses of the 
national forests would be to give the Forest Service a 
financial incentive to do so. One incentive would be to allow 
the agency to retain and spend the revenue generated to address 
its unmet needs. For example, from the end of World War II 
through the late 1980's, the Forest Service emphasized timber 
production on national forests in part because a substantial 
portion of the receipts from timber sales are distributed into 
a number of funds and accounts that the agency uses to finance 
various activities on a sale area. Even now, many forest 
managers have the opportunity to increase their budgets by 
increasing timber sales.
    Similarly, the Recreation Fee Demonstration Program, first 
authorized by the Congress in Fiscal Year 1996, allows the 
Forest Service to test new or increased fees at up to 100sites 
and to retain the revenue to help address unmet needs for visitor 
services, repairs and maintenance, and resource management.
    By allowing the agency to retain the fees collected, the 
Congress created a very strong incentive for forest managers to 
emphasize fee collections. Gross revenues from recreational 
fees on the national forests increased from $10 million in 
1996--prior to the program--to over $26 million in Fiscal Year 
1998. That's an increase of 163 percent.
    The administration plans to forward legislative proposals 
to the Congress and the Forest Service is considering other 
legislative changes that would allow the agency to collect, 
retain, and spend more special-use fee revenues.
    However, allowing forest managers to retain and spend all 
or a portion of the revenue they collect involves some risks 
and some difficult tradeoffs. In particular, the Forest Service 
is still far from achieving financial and performance 
accountability and, consequently, cannot accurately account for 
how it spends its money and what it accomplishes with it.
    Allowing the agency to collect, retain, and spend more of 
the revenues they generate also requires difficult tradeoffs or 
policy choices between increasing revenue and other values and 
concerns, such as providing free access to public lands, 
promoting the economic stability of historic commodity use, and 
setting aside additional lands for resource protection and 
conservation.
    Therefore, if the Congress believes that increasing revenue 
from the sale or use of natural resources should be a mission 
priority for the Forest Service it will need to work with the 
agency to identify legislative and other changes that are 
needed to clarify and modify the Congress' intent and 
expectations for revenue generation relative to ecological, 
social, and other values and concerns.
    Mr. Chairman, this concludes our prepared statement and we 
would be pleased to answer any questions that you or other 
members of the subcommittee may have.
    [The statement of Mr. Hill follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Regula. I have just one question. You said retain 
revenue. Would that be by agency or by Forest? You know, in the 
case of the parks, they get to keep the revenue in the 
particular park that generates it and I think I heard you say 
that you suggest possibly retaining revenue from all these 
myriad of activities in the agency for furthering their 
responsibilities.
    Mr. Hill. It could be set up a number of different ways. 
Under the current demonstration program, the agency is required 
to retain 80 percent of the fees that they generate at the site 
that they are generated----
    Mr. Regula. That's in recreation----
    Mr. Hill. Correct.
    Mr. Regula [continuing]. On the concessionaires and that 
type of thing--skis, areas and so on. Would you do it by agency 
or still do it by facility?
    Mr. Hill. Well, we are not recommending anything. I am 
saying there are lots of options you could consider. Right now, 
the fees that are collected go to the Treasury. If you were to 
send those fees to the agency as a whole, there might not be as 
strong an incentive for the individual sites to be collecting 
those revenues. The strongest incentive, obviously, would be to 
have those fees stay at the sites where they are collected. 
But, the Forest Service has a lot of units that it needs to 
make sure are up and running properly. I think you have got to 
look at which individual sites would be generating what 
revenues and you don't want to create a situation where you are 
going to have ``have'' and ``have-not'' sites--where the 
heavily visited sites would be collecting all the revenues and 
those that aren't wouldn't.
    Mr. Regula. Mr. Dicks.
    Mr. Dicks. Thank you, Mr. Chairman.

                              LOST REVENUE

    You testified that the Forest Service forgoes at least $50 
million in revenue annually but it does not obtain fair market 
value for certain uses. Can you tell us the approximate 
breakdown of this $50 million?
    Mr. Cotton. Yes, I can. Again, the first thing that I would 
need to stress is the $50 million is an extremely 
conservative----
    Mr. Dicks. Right.
    Mr. Cotton [continuing]. Estimate. Just to give you an 
example, what we added in that $50 million was about $25 
million from commercial and non-commercial recreational 
activities. Everything from the resorts to the recreational 
residences. That alone could be up to $148 million if you took 
percentages within comparable State lines.
    Another $11 million came from having oral bids versus 
sealed bids at single-bidder sales. But, we found----
    Mr. Dicks. Why did they do that? I mean, that was $56 
million, right?
    Mr. Cotton. That was roughly $11 million a year; yes, sir. 
I don't know. When you only have one person sitting there and 
they are not bidding against anybody, it would seem to make 
sense that you would have a sealed bid as opposed to an oral 
bid.
    Mr. Dicks. Would the sealed bid be submitted earlier----
    Mr. Cotton. Yes.
    Mr. Dicks [continuing]. Then--so----
    Mr. Cotton. And in your----
    Mr. Dicks [continuing]. They don't know if the competition 
is going to show up----
    Mr. Cotton. That's right.
    Mr. Dicks. So if you allow this then--what is the Forest 
Service's excuse for this?
    Mr. Cotton. You will have to ask the Forest Service.
    Mr. Dicks. Well, we will.
    Mr. Cotton. Recovering special-use permit costs--the 
authority that they have had since 1952--and I have always 
wanted to point this out: when they got this authority, I was 6 
years old. I am two years from retirement and they still 
haven't issued the regulations. We estimate--they estimate 
roughly $5 to $7 million a year. We estimate roughly $13 
million a year.
    As to the linear rights-of-way, right now they are charging 
as little as 10 percent of fair market value. And, again, this 
is separate from the commercial towers and sites. We estimate 
there are foregone revenue of about $20 million a year.
    Mr. Dicks. And in all these cases, you are saying the 
States do it differently and get fair or something close to 
fair market value?
    Mr. Cotton. To give you an example of the commercial and 
non-commercial recreational activities, the Forest Service 
collects about 3 percent of gross revenues. The States that 
these forests are in collect between 5 and 15 percent. 
Therefore, that's why you get the range of $25 to $148 million 
that they could collect if they collected percentages equal to 
the States.

                          FEES FROM SKI AREAS

    Mr. Dicks. Now, you mentioned the ski areas are the second 
largest revenue source for the Forest Service behind timber 
sales.
    Mr. Cotton. Right.
    Mr. Dicks. You also state that the new ski revenue 
procedures passed into law in 1996 do not ensure that fees 
collected from ski areas reflect fair market value.
    Mr. Cotton. Right.
    Mr. Dicks. Please explain how the new fee system works and 
how it will be changed as the new law is fully implemented.
    Mr. Cotton. Well, the new system was developed based upon 
the Congress' concern that they weren't collecting anything 
approaching fair market value. When it was developed there was 
a proposal by industry. At the time when industry presented 
this back in 1993 for the first time, we pointed out that the 
total fees under the new system are comparable to the total 
fees under the old system that hadn't been updated for 20 
years.
    And so, the new system--because the old system didn't 
reflect fair market value, the new system that was put into 
law--although it does increase the fees for certain ski areas--
in total it does not reflect fair market value for ski areas.
    Mr. Dicks. Can you give a--this is my last one, Mr. 
Chairman--rough guess what revenue would result if the ski 
areas were charged a full and fair market value?
    Mr. Cotton. That's one I didn't write down. I couldn't do 
that, no.
    Mr. Dicks. Can you do it for the record?
    Mr. Cotton. I think we had a estimate in that report and I 
will provide it with answers to questions for the record.
    Mr. Dicks. Thank you.
    Mr. Regula. Mr. Taylor.

                             TIMBER REVENUE

    Mr. Taylor. You state that Congress has provided the Forest 
Service with the authority to obtain fair market value and for 
certain uses and your quote is, ``such as timber.'' Can you 
tell us how they failed to provide fair market value for 
timber?
    Mr. Hill. I think the issue there is what they do with the 
receipts they receive from timber sales. In terms of----
    Mr. Taylor. That's not the question. I mean, the question 
is how did they--the timber is sold on a bid basis and the 
Forest Service has the right to reject a bid and the Forest 
Service put together the bid on the basis of comparable sales 
as much as possible. Now, given that system, how did they fail 
to provide fair market value for the timber they sell?
    Mr. Cotton. Mr. Taylor, that is not under the examples that 
we have as far as failure to obtain fair market value.
    Mr. Taylor. I see here--do you have page 1?
    Mr. Cotton. Yes.
    Mr. Taylor. It says, ``Moreover, when the Congress has 
provided the Forest Service with the authority to obtain fair 
market value for certain uses, such as timber'' and then you go 
on to resort lodges, and so forth, and I was just taking you 
personally. Am I reading that incorrectly? I need glasses and I 
haven't been able to get them--[Laughter.]

                         TIMBER BIDDING PROCESS

    Mr. Cotton. No, the example that we were using there was 
the example that Mr. Dicks asked about as far as using oral 
bids versus sealed bids on single-bidder sales.
    Mr. Taylor. That results----
    Mr. Cotton. You have given them the authority.
    Mr. Taylor. I know but how are they not obtaining fair 
market value----
    Mr. Hill. What we are saying is the bids----
    Mr. Taylor [continuing]. Or oral or----
    Mr. Hill. The bidding process they are using is not 
resulting in a bid as competitive as they could be getting if 
they were using sealed bids. The bidders that are coming to the 
table are basically the only ones at the table in some cases so 
they are giving an oral bid and there is no one else in the 
room. The bid they may be giving may not really reflect what 
the true value of that timber was if they felt there was going 
to be another competitor at the table bidding along side him or 
her.
    Mr. Taylor. Well, that isn't my understanding in years of 
watching the Forest Service in the southeastern regions with 
their bids. I mean, you have a bid and it's the highest bidder 
that comes in. Now, they have to provide bond and reliable and 
that sort of thing but most of the people that bid are----
    Mr. Hill. Can I give you an analogy? It's as if you were 
selling a car--a used car--and you decided you had to sell it 
by the afternoon. At 3 o'clock in the afternoon I am going to 
sell my car and only one person shows up and he looks around 
the room and says, I am the only one here, I will give you $500 
for it, as opposed to saying I have a used car and the Blue 
Book value may be $2500 and I am going to sell it to the 
highest bid that I receive as of 3 o'clock and give me your bid 
in a sealed envelope.
    Mr. Taylor. Well, that isn't how--what you are describing 
isn't the way most Forest Service sales go on but I will yield 
to the Forest Service on that.
    I would say you have missed the point on this. Wouldn't you 
say that, given the fact that this administration--modern 
silviculture is a joke played on the public as far as what the 
State forest does or the private forests do to attain the 
greatest price.
    For instance, the great effort of this administration to go 
for political correctness rather than--and trying to placate 
special interest groups--practicing modern silviculture, that's 
really at the heart of the laws.
    For instance, the State--our State--and I am familiar with 
other States--they use the best forest skills of the 
universities and the forest rangers that would be involved and 
they have public bids, just like the Forest Service does. But 
when they go into a tract, they don't say, we are not going to 
cut any old-growth, we are not going to do this, we are not 
going to do all these things that are contrary to modern forest 
silviculture and you try to sell two trees here and one there 
and you try to get a bid for that and nobody wants to do it 
because it's not economical. And that probably is more what's 
hurting the Forest Service sales but I see nothing in their 
procedure that causes them to lose money but I will yield to 
the Forest Service to come forth to that. Thank you, Mr. 
Chairman.
    Mr. Cotton. Mr. Taylor, if I could add, you make two good 
points. If these lands were being managed for timber and using 
the science of silviculture, they would do things differently 
than they are doing now in managing these lands under the 
science of conservation biology or landscape ecology.
    Mr. Taylor. In that I will agree with you 100 percent.
    Mr. Cotton. The $11 million is our point, where they could 
have generated more revenue, but they didn't because they did 
not use the sealed bids.
    Mr. Regula. Let me say it's the intent of the Chair that we 
will have a round of questions. Then we will hear from the 
Forest Service and have a round of questions with them. Then, 
if you will stay, we will give the members a chance to ask 
additional questions to either the Forest Service or the GAO 
and that will probably be triggered a little bit by the 
testimony of the Forest Service.
    Mr. Hinchey. We go by the order in which you arrive.
    Mr. Hinchey. Thank you, Mr. Chairman. I appreciate that.
    You estimated that the annual loss is $50 million and you 
said that that was a conservative estimate. I didn't hear if 
you said that there was another amount that you thought might 
be the maximum amount or what the real amount might be.
    Mr. Cotton. What the real amount is it's hard to determine. 
But again, the example that I use is that if we used a maximum 
amount that States charge, 5 percent, and compare that to the 
revenue that the Forest Service generates from commercial and 
non-commercial recreational activities, that activity alone--
that program alone, it's $25 million and added into our $50 
million it would be $148 million at 5 percent. So, you are 
going from $50 million all the way up to hundreds of millions 
of dollars that are not collected.
    Mr. Hinchey. Okay. So, that's the real point. There could 
be here hundreds of millions of dollars that the Forest Service 
fails to collect every year.
    Mr. Cotton. Absolutely.
    Mr. Hinchey. The Forest Service in its testimony says 
something to the effect that it's very difficult to estimate 
the material value of these services and they don't do so 
primarily for that reason. It's difficult and takes time. Could 
you comment on that? How difficult is it to estimate the value 
of these services? How much time would be involved? Is there 
any material reason, such as those, why better prices aren't 
being set and more revenue isn't being realized?
    Mr. Hill. We don't have any estimate of the time it would 
take. I would say it would have to be cost-effective with the 
money that we are talking about here. The fact that the States 
are currently doing these types of appraisals and ways of 
valuing the use of their lands shows that it's a good 
management practice to do.
    Mr. Hinchey. So, it's clear that it can be done, the States 
are doing it, they are obtaining much more revenue than is 
currently being obtained by the Federal Government?
    Mr. Hill. That's correct.
    Mr. Hinchey. But, this is not a new problem. This is a 
problem that has been in existence for a long, long time and, 
the ``political correctness'' aspirations of this 
administration aside, this is a problem that goes back at least 
to 1953, as I understand it, which was--if I remember 
correctly--the beginnings of the Eisenhower Administration. So, 
this is a problem that's been around for some period of time.
    Mr. Hill. Yes. Not only that, I might point out that GAO 
has been issuing reports pointing out this problem as far back 
as 1982.
    Mr. Hinchey. Nineteen eighty-two?
    Mr. Hill. Nineteen eighty-two.
    Mr. Hinchey. Well, I think it's a very good hearing, Mr. 
Chairman, and I think it's about time that some attention was 
focused on this problem and it be corrected.
    Mr. Regula. Well, I think you are absolutely right and 
that's one of the reasons we have scheduled oversight hearings 
to focus on the management techniques. As you point out, the 
States are successful in getting maybe 15 percent versus what 
did you say, 5?
    Mr. Hill. Three percent.
    Mr. Regula. Three percent for the Forest Service, and 
that's the reason we are having the hearing.
    Mr. Peterson.
    Mr. Peterson. I wasn't expecting to go next. I was 
thinking----
    Mr. Regula. Well, let me say--excuse me--our policy is that 
you get called on based on the time you arrive and I think 
that's fair. We try to limit the first round of questions to 
about five minutes per member and do everything possible to 
have a balanced approach to all of this.
    Mr. Peterson. Yes, I know. [Laughter.]
    Mr. Regula. You're next.
    Mr. Peterson. I was still trying to decide which question I 
was going to ask. [Laughter.]
    Mr. Regula. You are next on the list here, Mr. Peterson.
    Mr. Peterson. Following up on Mr. Hinchey's comments, there 
has been a change though in the last decade. If my memory is 
correct, we are cutting 70 percent less timber now than we were 
10 years ago. Am I correct?
    Mr. Cotton. Less than that.
    Mr. Peterson. Even less than that, okay. What percentage 
less are we cutting? What percentage are we cutting of what we 
used to?
    Mr. Cotton. I think the Forest Service is cutting somewhere 
around 20 percent of what it cut----
    Mr. Peterson. So we cut 80 percent less.
    Mr. Cotton [continuing]. At the peak of the late 1980's and 
early 1990's, yes.
    Mr. Peterson. And was the Forest Service somewhat dependent 
on those revenues and not focusing on other types of revenues?
    Mr. Cotton. A lot of those revenues went into special 
accounts that the Forest Service could then use for activities 
like reforestation and other things at the site where the 
timber was harvested. So, obviously, they relied on that in 
addition to appropriated dollars.
    Mr. Peterson. Well, I think that sheds some light on the 
point that Mr. Hinchey made, though, that nothing has changed 
since 1952. A lot has changed since 1952 and what they were 
depending on and was somewhat of a crutch. I mean, I realize 
that's an issue that can be debated but for good management in 
silviculture should be ruling----
    Mr. Cotton. Mr. Peterson, could I point out they are 
essentially two different things. The authority that they've 
had since 1952 was the authority for the Forest Service to 
charge someone the costs of giving him a recreational permit. 
So, the permittee would pay essentially overhead and indirect 
costs.

                        EXAMPLES OF FOREST USES

    Mr. Peterson. Can you give me an example of a permit that 
they are not charging much for that they could be charging for?
    Mr. Cotton. Resort lodges.
    Mr. Peterson. Resort lodges.
    Mr. Cotton. Yes. Outfitters. Let me see. During the process 
of implementing the residential residences. Special uses, like 
group events, and those types of things. All those fit under 
the recreational--and then again, the non-commercial ones, like 
the linear rights-of-way. It's a fairly big one that they said 
they should be collecting $20 million and they are not.
    Mr. Peterson. From which? What was that one again?
    Mr. Cotton. That's where you put in oil and gas pipelines 
and fiber optics communications lines across Forest Service 
lands.
    Mr. Peterson. And what do they charge for it? Nothing?
    Mr. Hill. Very little.
    Mr. Cotton. They charge something but those fees are 
grossly outdated.
    Mr. Peterson. Much less than you would pay going across 
private land?
    Mr. Cotton. Just wait until they get to private land, yes--
--
    Mr. Peterson. Yes.
    Mr. Cotton [continuing]. Much less than what----
    Mr. Peterson. So, do you think most of those things are 
being done on public land when it's available because it costs 
very little?
    Mr. Cotton. Well, usually----
    Mr. Hill. I was going to say, when you are running an oil 
or gas pipeline, you probably want to take the most direct 
point and the least costly point. I am not sure if they are 
purposely routing these things through or around them or not 
but from the information we have--it costs 10 percent. They are 
basically getting 10 percent of what they should be getting for 
these permits. So, that's a pretty good deal.
    Mr. Peterson. But, in America, if oil stays at $9, it's not 
even going to be an issue because we are not going to be 
producing oil and gas--or oil, we are going to be producing 
gas, but not oil in this country, in my view. But, is that an 
ongoing fee that you pay for that line or is that a fee of 
putting it there?
    Mr. Cotton. That's actually one of the things that the 
Forest Service and industry are negotiating--or discussing, 
anyway--right now. Right now, you essentially get an annual 
fee--or pay an annual fee--for a permit and our understanding 
is that industry is saying, hey, we are willing to pay fair 
market value, we are even willing to pay for the appraisal, if 
in turn we get a fair market instrument in return. In other 
words, give us an easement or give us a long-term lease, quit 
wasting your time and our time with these annual fees, and let 
us be done with this thing. We will pay you once up front and 
we will save us all a lot of money and a lot of time and it 
will be based on fair market value.
    Now, my understanding is the Forest Service is still 
discussing this. It seems to make tremendous sense to us. But, 
right now, there are annual permits and annual fees that have 
revocable clauses in them that technically the Forest Service 
could make them come in and rip it up.
    Mr. Peterson. What kind of accounts do these fees go into--
whether it's timber, whether it's oil and gas line, or whether 
it's fiber optic line?
    Mr. Cotton. They are all piled in usually at the forest 
level put into a special-use fee revenue account. Then that is 
just aggregated up. But, most of that money then is returned to 
the general fund of the U.S. Treasury.
    Mr. Peterson. So, part of it can stay in the account that 
they can use.
    Mr. Cotton. No.
    Mr. Peterson. None of it?
    Mr. Cotton. No, no. It doesn't have the provision that you 
all provided, like the one in the rec fee demo program where 
they----

                          RECREATION FEE DEMO

    Mr. Peterson. That's new. Okay.
    Mr. Cotton. That's new.
    Mr. Regula. That's just the rec fee.
    Mr. Peterson. Was that targeted at maintenance? I guess at 
the State level where--I know a whole lot more about the State 
than I do the Federal but the crying need is still maintenance 
on our existing facilities----
    Mr. Cotton. Yes.
    Mr. Peterson [continuing]. Do you know what I mean? Was the 
rec fee targeted towards maintenance of existing facilities?
    Mr. Regula. Pretty much so, yes.
    Mr. Hill. Yes, the rec fee was targeted towards entrance 
fees or fees to hike or boat down a river, more geared towards 
uses by people, by visitors who are in those particular units.
    The fees we are talking about here are special-use permit 
fees--a permit you need to build a cabin, to hold a wedding in 
a national forest, or something like that where it's a special 
event and it's a different type of account.
    Mr. Peterson. I guess my thoughts are we ought to be 
targeting it towards maintenance of what we have.
    Mr. Regula. Well, let me say, in the rec fee we have really 
pushed. The testimony in this committee has been that there's 
$13 billion and that's parks, forest, the whole works, of 
backlog maintenance. And that's one of the things in the rec 
fee program we have emphasized--get caught up, fix those 
campsites, fix those toilets, fix those roads--because that's 
how the visitor has a decent experience, whether it's a forest 
or whether it's a park.
    Mr. Wamp.
    Mr. Wamp. Thank you, Mr. Chairman. I want to open by 
welcoming Mr. Cramer, Mr. Hinchey, Mr. Kingston and Mr. 
Peterson to what I think is the best subcommittee in the House. 
We have got a great bipartisan team here and we work together 
with great agencies for the most part. Sometimes they come in 
and we have to scold them or whip them into shape but when you 
are talking about the Park Service and the Forest Service and 
U.S. Fish and Wildlife and Geological Survey and all of them, 
they are really, really good agencies. So is the Bureau of Land 
Management. But, I love this subcommittee and I know you will 
as well.
    But, it seems to me--I hate to state the obvious--we need 
to get more of this money right back to where it can help the 
locals. One of the things the Park Service did well was to kind 
of poll their users to see if they wanted their fees and their 
revenues--any money we had asked them for--to go right back 
into upgrading that particular asset. You know, I have just old 
country fishermen that are kind of surprised about a $2 parking 
fee to go fish in a river that they have been fishing in for 
generations.
    I am interested in how we set fair market value in 
situations like that because fair market value to them is it's 
free somewhere else, on down the river, when you are outside 
the land, so it's hard to charge them $2 when fair market value 
is free everywhere else. And I mean I understand how much it 
costs to ski--you know, that's kind of a little easier--than to 
fish.
    But I wonder what the Forest Service did which the Park 
Service I know did well and I am very proud of what we have 
done with fee demonstration because, let me tell you, we may 
have saved the infrastructure over time of these national 
treasures by allowing this process to go but they actually 
polled and found out, would you pay and how much and what for 
if you knew that the money you are paying is going to keep this 
thing up and take care of these backlog maintenance issues so 
that the roads don't wash you, so that the parking lots don't 
crack apart, so that you can have access to these national 
treasures.
    And once you find that yes, they will pay, and then you 
find out how much, you determine what fair market value is and 
then you have built public support for what we are trying to 
accomplish. What have they done versus what the Park Service 
seems to be doing well where we visited?
    Mr. Hill. That's an excellent question, Congressman Wamp. 
In fact, next month we will be presenting the results of our 
fee demo report that we issued recently.
    The experience has been very favorable in the rec fee demo 
program in all the Federal land management agencies that have 
used it. One of the things that each of the land management 
agencies have done is they have put questionnaires out and 
gotten feedback from the visitors. The overwhelming majority of 
visitors to these sites agree--are agreeable to the fees in 
terms of paying the fees and they all stress as long as the 
majority--if not all--of that fee is staying in the park or in 
the forest that they are visiting, they are fully in favor of 
it.
    I think everyone wants these parks and forests to be in 
tip-top shape and in such a way that we can preserve them for 
the future generations. They are certainly our national 
treasures and we want to keep them that way. I think that 
visitors to these sites--when they realize that the fee they 
are paying is going to stay at these sites--are more than 
agreeable to pay it.
    Now, The Forest Service's experience, I think, differs from 
the Park Service's experience with implementing this. It's been 
a little easier for the Park Service, I think, because in a lot 
of the situations they were already charging entrance fees and 
fees in the national parks. This is a new experience for the 
Forest Service. In most cases, they were not charging entrance 
fees to enter the national forest, so I think it's taken them a 
little longer to adapt to the process than it did the Park 
Service.
    But, the indication we have is that they are up and running 
now and it seems to be working pretty well. They are collecting 
a lot of revenues and the reaction from the majority of the 
visitors has been very positive. You are always going to have a 
few complaints. Most of the complaints are coming from the 
local residents that live around these forests and parks. They 
have been using them for free for all their lives are suddenly 
now being charged $2 to fish in----
    Mr. Wamp. Do you see that they are phasing it in to make it 
a little more digestible for these consumers?
    Mr. Hill. Well, this demo still has an additional two years 
to run. The whole purpose of the demo is to try some innovative 
and creative techniques here so they are experimenting. They 
are still in the experimental phase so you are going to expect 
there are going to be some bumps and bruises as you go along 
and it's going to be a learning experience.
    We have--everyone, including the Congress--encouraged them 
to be creative and to be innovative so everything is not going 
to work. The important thing here is that they are monitoring 
what's going on, they are getting feedback from the public 
that's visiting the sites. If and when this does become a 
permanent program, they will adapt to the best practices and do 
what makes sense in these----
    Mr. Wamp. Mr. Chairman, let us work with the authorizers of 
this subcommittee to try to lock away as much of that money for 
the site that you collect the fee in as possible and that way, 
I think, the public will be behind us.
    Mr. Regula. Well, thank you and I might tell you, Mr. Wamp, 
on March 3 we will have an oversight hearing just on the rec 
fee demo program.
    Mr. Hill. If I may add one word of caution here. This 
probably holds true to the parks more than it does to the forest at 
this point because they are generating more revenue at this point. In 
our report, we have cautioned somewhat against this 80 percent 
requirement because what you are having is some sites--some heavily 
visited sites, like the Grand Canyon or Yosemite or Yellowstone--are 
bringing in lots of revenue and they are using those revenues for good 
purposes in terms of dealing with their maintenance backlog and 
cleaning the parks up. But, within a matter of three to five years, 
their backlog should be gone and they will still be generating these 
large amounts of revenues.
    You have other sites--like the Lincoln Memorial--that 
charges no fee and they will be getting no revenue. So, I think 
you have to closely monitor these sites to see if we are 
creating ``haves'' and ``have-nots'' and make some adjustments 
if necessary to make sure that some of this money is going to 
other parks, while maintaining the incentive at the sites that 
collect it and making sure that the public understands that of 
the fee they are paying, the majority is going to stay in that 
park.
    Mr. Regula. But, it all goes to parks. It might go to the 
Lincoln Memorial, it might go to the Cuyahoga Valley, it might 
go to our historic corridors, for that matter.
    Mr. Hill. That's correct.
    Mr. Regula. But, the 100 percent stays in the park system--
--
    Mr. Hill. In the park system, absolutely.
    Mr. Regula. Prior to this, it went----
    Mr. Hill. To the Treasury.
    Mr. Regula [continuing]. To the Treasury and I might tell 
you, the new members, we had a $90 million chargeoff that our 
committee had to absorb because the OMB said the Treasury is 
going to lose that $90 million because the parks are keeping 
it, so you have to eat that in your subcommittee as part of the 
overhead.
    Mr. Wamp. Mr. Chairman----
    Mr. Regula. It doesn't seem very fair to me, but----
    [Laughter.]
    Mr. Wamp. Mr. Chairman? Let me just point out that if 100 
percent of the money, though, went to the Forest Service and 
not back to the site, you have identified in your testimony 
that the Forest Service is not quite up to snuff at the top 
level of management to spend that money wisely and I want to 
make sure it gets back where it is supposed to be, also.
    Mr. Hill. And your point is well taken. Yes, we do point 
that out.
    Mr. Regula. Mr. Cramer.
    Mr. Cramer. Mr. Chairman, thank you, and I am excited to be 
a part of this committee. Mr. Wamp, thank you for those 
comments. I had hoped to come to this subcommittee when I first 
came on the full committee but it wasn't open to me at that 
time so I am glad to be here and look forward to working with 
you.
    And I am playing catchup to a certain extent because I am a 
new member of this committee but along with what Mr. Wamp was 
raising there with you, we have what, two years left on the 
demonstration program or about?
    Mr. Hill. That's right.
    Mr. Cramer. And you are here regularly to evaluate and make 
comment on practices and decisions that have been made by 
others. Along that line, speaking of the user fees, I have a 
national forest that comes to the edge of my district so I have 
a lot of users of that forest in my district and they are, of 
course, sounding off about the new practices of having to pay 
to get in there.
    Is there flexibility--and I assume that there is--with the 
Forest Service being able to determine, for example, with 
multi-users, are there passes that they can get and ways that 
this can be more user-friendly rather than folks having to at 
every opportunity to go there line up and be part of whatever 
line there might be?
    Mr. Hill. Yes, the program was set up with maximum 
flexibility here. It was set up to be innovative and creative 
in terms of trying different things, and they would certainly 
have the flexibility to do that sort of thing.
    Mr. Cramer. And if they see that something makes sense that 
they hadn't thought of then they can implement that rather 
quickly----
    Mr. Regula. Yes.
    Mr. Cramer [continuing]. And they should be challenged to 
do that.
    Mr. Cotton. Mr. Cramer, they are doing things like 
providing passes that will allow you into multiple parks and 
forests. They are also setting up programs where you don't have 
to come to the forest to get the permit. You can actually go to 
places in town and buy them before you come to make your visit 
more convenient. They are experimenting with a lot of different 
things for users.
    Mr. Cramer. I am getting a different feedback for the 
users----
    Mr. Hill. Well, there----
    Mr. Cramer [continuing]. But that's good to know.
    Mr. Hill [continuing]. Have been some horror cases and 
particularly where you have units--Fish and Wildlife Refuges, 
parks, and forests--all next to each other and someone decides 
that they are going to take a canoe trip down the river and 
they are ending up having to pay fees from three or four 
different units plus the State park that's located in there.
    So, here again, I think this is part of the learning 
experience. I think as they go along and we encounter some of 
these situations, hopefully we'll keep the visitor in mind. 
Hopefully the goal here will not necessarily in these instances 
be to maximize revenue, but to take the visitor experience into 
play and make sure that, in terms of the visitor who is 
visiting the facility, it's a pleasant experience and they are 
being charged a reasonable amount.
    Mr. Cramer. And the purpose of a demonstration, obviously, 
our program is to make sure that you evaluate the steps that 
you take and----
    Mr. Regula. We will really cover that at the March 3rd 
hearing, the whole gamut of--and there are a lot of different 
approaches that they have taken in different parks--annual 
permit fees for local people, and so on.
    Mr. Cramer. Right. In the initial part of your statement 
provided to us, you say that certain legislative provisions 
also serve as disincentives to either increasing revenue or 
decreasing costs, and I have read what is below that as well, 
but would you comment on that briefly a little further? What do 
you mean by that?
    Mr. Cotton. For many of the programs or some of the 
programs, anyway, they can generate revenue. The Forest Service 
is required to share those revenues on a gross rather than on a 
net basis. So, you don't take out your costs first before you 
distribute the revenue that that program generates. Because you 
are retaining the receipts the yourself or you are sharing them 
with the States and the counties before you take out the costs, 
and the costs are being funded not from those revenues but from 
the appropriations you give that agency, then neither the 
agency nor the States nor the counties are concerned about the 
costs of producing that revenue. That is our basic point on 
that issue.
    Mr. Cramer. All right. And, then further down from there, 
when you are talking about the fair market fees for commercial 
activities such as resort lodges, marinas, guide services, can 
you give us a breakdown on how much revenue is lost because the 
Forest Service has not updated appraisals and fee schedules?
    Mr. Cotton. That is pretty much the $50 million.
    Mr. Cramer. That is a very conservative estimate.
    Mr. Cotton. Again, very conservatively, $50 million to 
possibly hundreds of millions a year.
    Mr. Cramer. Thank you, Mr. Chairman.
    Mr. Regula. Mr. Nethercutt.
    Mr. Nethercutt. Thank you, Mr. Chairman.
    Welcome, gentlemen.

                      recreational residence fees

    I want to speak with you in my five minutes on the subject 
of recreational residence fees. I come from a part of the 
country, the east side of the State of Washington and northern 
Idaho is part of our inland northwest area that we are so proud 
of. We have--I know of one, in particular, example of--Forest Service 
leases on a place called Priest Lake, Idaho--beautiful lake; 25 miles 
long and historically has had residents there--shacks, cabins, part-
time year residences for some people. You can only get in to this part 
of the country maybe nine months out of the year; the other three 
months are pretty heavy with snow and are impassible. So, it is a part-
time use example. And a lot of families have owned these residences for 
many, many years and paid traditionally historically fairly low fees. 
Now, some of these families are faced--families of modest means--faced 
with multi-fold increases in their annual lease payments with the 
understanding that they can't literally cut a tree without getting the 
Forest Service to approve. You really don't have much control over your 
land except you can use it, and you pay for the cabin in addition, plus 
your real estate taxes--I guess you don't pay real estate taxes; you 
pay fees.
    I am wanting to balance and square the desire of your 
agency to get money and fair market return with the interests 
of families and others in not only the State of Idaho but other 
places around the country who may have similar circumstances. 
Balance it out with the idea that if you are going to price 
these leases so sky high, you are going to have only multi-
millionaires using these recreational sites, and, to me, that 
doesn't seem equitable; there is something wrong with that.
    Plus, you have some fluctuations in market values, and so I 
am interested in knowing what formula or what method you all 
use as you look at what is an expected $15 million, I think, 
you can get out of these recreational fee residences? How are 
you going to square that with the value that comes from having 
a variety of people and their families be able to use these 
residences rather than just multi-millionaires? Literally, what 
you are doing is making that happen. And how do you adjust for 
differences in market values on an annual basis or every 
several year basis, so you are not sticking a family with 
$5,000 and $6,000 and $10,000 a year just for lease fees when 
in fact maybe the property value has gone down; sunk like a 
rock? And they will sink if you place the fees so high--the 
lease fees so high--that only millionaires will buy them, 
because people will sell them and then the price will go down. 
So, it concerns me.
    Mr. Hill. Mr. Nethercutt, you raise a good question, and it 
is one that is of concern. And my response to that is we are 
not policymakers, we are auditors. We can tell you what is; we 
can tell you what could be; it is up to you to decide what 
should be. Now, what is here is the system that the Forest 
Service has used to charge fees on these permits is based on an 
assessment system. That assessment has not been updated in over 
20 years. So, in essence, when it was put into place, those 
fees may have been fair market value. They are now woefully out 
of date which creates the problem and a situation that you are 
referring to that these people now that have built cabins and 
are now living in these places and have been there for a long 
time are used to paying certain fees. If those assessments were 
redone and updated, the assessed value of those lots and those 
homes would be anywhere from 2 to 14 times higher than they 
currently are, which would trigger rate increases of up to 350 
percent on some of the people that are living in these cabins 
or have summer homes in these forests. That is what could be.
    Now, we are not policymakers, and I can understand people 
who are in the situation suddenly getting a bill that is 3.5 
times higher than what they are used to paying. I would be 
outraged as well. The problem was created because the system 
that is being used was allowed to go out of date. It was not 
kept up to date, so that people would be paying a graduated 
increase over this 20-year period and wouldn't feel as bad as 
suddenly getting the big bill in the mailbox. But here again, 
we are telling you what could be. Should the Forest Service 
increase the fee 350 percent and get it back to fair market 
value all at once? That is something that you and I think the 
Forest Service needs to consider. They must work out some kind 
of implementation scheme in terms of how can we make this 
increase and get these rates closer to fair market value in a 
more palatable way to the people that are affected by this.

                          updating appraisals

    Mr. Nethercutt. What is your recommendation to the Forest 
Service and this subcommittee relative to increments of 
appraisals? In other words, should it be a annual appraisal? 
Should it be every 2 years, 3 years, 10 years? What should it 
be in your best judgment?
    Mr. Hill. We have not recommended anything in terms of 
whether it is yearly or--you mean, the increase itself?
    Mr. Nethercutt. Well, the reappraisal recognizing that 
values do fluctuate depending on markets. What would your 
recommendation be as to what would be an appropriate 
reappraisal term?
    Mr. Hill. We have not made that recommendation. Here again, 
we can tell you what could be----
    Mr. Nethercutt. I know you haven't made it.
    Mr. Hill. But how you implement it, I think, is really up 
to the--what we would like to see, I think, is the Forest 
Service should come to Congress with a plan in terms of here is 
our plan and strategy for getting this thing back into sync and 
down the road getting fair market value. We think it is not 
only a plan that will get us to where we want to be in terms of 
collecting these fees, but we think it is fair and equitable to 
the people that are affected by it.
    Mr. Nethercutt. So, you have no recommendation.
    Mr. Hill. No.
    Mr. Cotton. Mr. Nethercutt, obviously, you would not want 
to do it yearly. It mean, it would impose a tremendous cost on 
the Forest Service to go out and do these appraisals, and it 
wouldn't make any sense. So, you would look at do you do it 
every 3 years, every 5 years, what makes sense? It may vary 
based upon market.
    Mr. Nethercutt. Thank you, Mr. Chairman.
    Mr. Regula. Mr. Kingston.
    Mr. Kingston. Thank you, Mr. Chairman. Last year, Jim Lyons 
had a big statement about the appalling state of decay in the 
recreational facilities in National Forests. Do you know what I 
am talking about? Do you remember that statement in August? And 
this seemed to be needling that there was underfunding by this 
Congress for recreational facilities, correct?
    Mr. Cotton. There is an enormous backlog of deferred 
maintenance and reconstruction needs on the National Forests, 
correct.
    Mr. Kingston. Well, the administration, as you know, is 
almost requesting level funding. On trail construction, they 
are dropping it from $29 million to $13 million, so I guess my 
question is, was the Lyon statement just election year rhetoric 
or is the administration being irresponsible? [Laughter.]
    Mr. Cotton. Let me rephrase that.
    Mr. Kingston. A or B.
    Mr. Cotton. There is an enormous backlog of deferred 
maintenance and reconstruction needs in the National Forests.
    Mr. Kingston. What goes on inside these budget meetings? I 
mean, when they cut the trails from $29 million to $13 million, 
what was your reaction? Internally, what goes on if I could 
have been a fly on the wall?
    Mr. Cotton. Okay, well, we weren't a fly on the wall.
    Mr. Hill. I think it is an excellent question, and you 
should probably direct that to the Forest Service who is coming 
up next.
    Mr. Kingston. All right. I will give them your kind 
regards. [Laughter.]
    That is my only question.
    Mr. Regula. Thank you. We will probably have some more 
questions, and, by the way, I want to tell the members, if you 
want to submit questions for the record, we will get them to 
the agency and get you back the responses. I have a whole list 
of them, and I am sure some of you do also.
    Mr. Taylor. Mr. Chairman?
    Mr. Regula. Mr. Taylor.
    Mr. Taylor. Could we ask one question before you leave? You 
cite the financial incentives and so forth that the Forest 
Service could raise a lot of revenue if it was so motivated in 
mostly recreation, and you cite very low figures--$50 million, 
$10 million, and that sort of thing--and yet they dropped from 
$3 billion a few years ago in timber down to almost nothing, 
and can we hope to gain the same amount of money in recreation 
that we get from the natural management of timber resources?
    Mr. Hill. We don't have a good estimate in terms of the 
total revenues that could be----
    Mr. Regula. We will save that one for the Forest Service.
    Mr. Cotton. Mr. Taylor, the most we have seen, though, is 
$250 million.
    Mr. Taylor. In recreation or--?
    Mr. Cotton. In recreation. Again, that is letting them do 
it everywhere. So, that is far short of the $3 billion down to 
$600 million that you have with the timber part of it.
    Mr. Taylor. Than if you just manage the forest.
    [Additional committee questions to GAO follow:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                      Wednesday, February 10, 1999.

             FOREST SERVICE, U.S. DEPARTMENT OF AGRICULTURE

                               WITNESSES

RONALD E. STEWART, DEPUTY CHIEF, PROGRAMS AND LEGISLATION
DENNY BSCHOR, DIRECTOR, RECREATION, WILDERNESS, AND HERITAGE RESOURCES
JACK L. CRAVEN, DIRECTOR, LANDS
    Mr. Regula. Okay, next we have the Forest Service. Mr. 
Bschor, the Director of Recreation, Wilderness, and Heritage 
Resources, and Mr. Craven, the Director of Lands. Oh yes, and 
we will have testimony by Mr. Stewart, the Deputy Chief of 
Programs and Legislation.
    Gentlemen, Mr. Stewart, are you going to lead off here?
    Mr. Stewart. Yes, Mr. Chairman.
    Mr. Regula. Okay.

                    Oral Statement of Forest Service

    Mr. Stewart. First of all, I am very pleased to be here. 
This is the first opportunity to appear before this committee 
in the 106th Congress, and it is nice to see all of you again. 
Many of you I have seen in other committees.
    With your permission, I would like to summarize my comments 
and have the full testimony----
    Mr. Regula. I appreciate that, and your full statement will 
be a part of the record.
    Mr. Stewart. Thank you. I would also like to say, I find 
this kind of ironic. This is the second hearing I have 
participated in in the 106th. The last one was also with Mr. 
Hill, and for the second time, I find myself agreeing with GAO 
and their findings, and I don't know whether that is a 
harbinger of good things to come or bad, because they don't 
always say good things about us, and there are certainly some 
issues of contention in their findings. But, in general, we 
would agree with their findings.
    This morning, I would like to make three points and then 
expand on them. And the first point is that generation of 
revenues from the National Forests must be consistent with good 
land stewardship and should promote healthy watersheds, 
forests, and rangelands; that is the fundamental principle.
    Second, the Forest Service has many existing authorities as 
has been mentioned already to both manage land uses and 
occupancies and to collect fees.
    And, finally, clearly, from the previous testimony and from 
the points I am going to make, we need to do a better job of 
obtaining fair market value for these uses and to use the 
authorities we have to collect cost recovery fees which we have 
not done.
    First of all, let me talk about generation of revenues that 
need to be consistent with good land stewardship and promote 
healthy watersheds, forests, and rangelands. Obviously, with 
192 million acres, there are many opportunities to generate 
revenues; these are extremely valuable lands. But the ability 
to generate those revenues, either for the Treasury or for use 
by the Forest Service, should not be or become in the future 
the basis for selecting projects and activities on the ground. 
That decision needs to be scientifically-based and 
professionally-based. Decisions affecting land management 
projects and activities should be based on the need for 
treatment, and they must be consistent with the best available 
science and professional judgment. I think that is a principle 
that we could all agree on.
    Secondly, the Forest Service has many existing authorities 
to manage land uses and occupancies and to collect fees. As has 
been mentioned earlier, we talked about 1952--in fact, we have 
had statutory authority to authorize special uses dating back 
to the Organic Administration Act of June 4th, 1897, and, 
currently, there are 16 Federal laws concerning the use and 
occupancy of the National Forest System land, and these 
individual statutes authorize specific uses and occupancies, 
and several also provide the authority to assess and collect 
charges from the holders of and applicant's for, special use 
authorization.
    There are two kinds of lands use or occupancy fees, and I 
would like to make that distinction if I could. First, there 
are land-use rental fees. We are directed to assess and collect 
a fair price or what is called a fair market rental fee that is 
commensurate with the value of the rights and the privileges 
that are granted to the holder of a particular use. We have a 
long history of assessing and collecting such kinds of fees. 
The second kind of fee is a cost recovery fee. We have had 
authority to collect cost recovery fees since 1952 under the 
Independent Offices Appropriations Act and, again, under the 
1976 Federal Land Policy and Management Act, so-called FLPMA. 
However, as has been pointed out, we have only recently begun 
to develop the necessary regulations to implement this 
authority. So, while we have had the authority, we have never 
developed implementing regulations. We are planning to publish 
draft regulations for public comment by the middle of next year 
and have final regulations scheduled for sometime in the year 
2000.
    I would like to refer you to your left to the pie chart up 
there called ``Special Uses by Type,'' and you should have a 
copy of that color chart in front of you.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Stewart. And as the chairman indicated in his opening 
remarks, the Forest Service has over 74,000 special-use 
authorizations and over 130 different categories. This 
reflecting the fact, as I said earlier, that there are 16 
Federal laws concerning the use and occupancy of National 
Forest System land. These uses encumber about 9 million acres 
of Forest Service and with a private sector capital investment 
of more than $150 billion, that is a ``b'', billion dollars. We 
separate these into two broad categories. About 27,500 of them 
are recreation related, and the remaining are non-recreation 
uses.
    I would like to refer to the bar chart to your right.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Stewart. Revenue generation under existing authorities 
and regulations has been fairly constant for the last five 
years. For Fiscal Year 1998, non-recreational revenues were 
$11.5 million and recreational revenues were about $37.3 
million, and, of course, that reflects, as said earlier, 
particularly revenues from ski areas of the recreation 
category. Because we have such a wide variety of permitted 
uses, we have a number of ways for determining fair market 
value, and they include such things as fee schedules, and those 
are used largely for communications sites and linear rights-of-
way. We have rental fees. These are based on a percentage of 
the appraised value of the land being used and occupied, and 
probably the most outstanding example of that is the recreation 
residences that were mentioned earlier. Graduated rate fees is 
another basis, and this is usually based on the gross revenues 
generated by an authorized use. Resorts and things like service 
stations and other occupancies that generate revenues are often 
a way that those are done. Competitive bid is used to obtain 
fees from things like campground concessions and, oftentimes, 
in new opportunities where it is thought that competition is 
available. And then, finally, something that is rarely used is 
a negotiated fee. An example of that would be a mobile vendor 
who sells firewood in a campground.
    The last point I would like to make is we do need to do a 
better job of obtaining fair market value for these uses and to 
use our authority to collect cost-recovery fees. As indicated 
in the testimony by the General Accounting Office this morning, 
that they have been critical of our inability to either use or 
keep land-use rental fee assessments and collections current 
with fair market value or to collect the costs for processing 
those permits.
    There are a number of reasons why. I might just highlight a 
couple, and they are outlined in my testimony. But, internally, 
we have lost a lot of skill, the kind of specialized skills to 
do appraisals. We have not put adequate resources into this 
issue, therefore, we have had to prioritize the workload, and 
what you see in the way of attempting to bring appraisals up to 
fair market value reflects that kind of methodical approach 
beginning with some of the high priority ones and working on 
those with the intent eventually of getting on top of all of 
them.
    Also, changes in procedures for determining fair market 
value fall under the Administrative Procedures Act, and, 
rightfully, therefore, require a lot of public input. As has 
been indicated by a number of you here this morning, changing 
land-use rental fees is a pocketbook issue, and anytime you 
change the cost of doing business to a businessman or the cost 
of occupying a site for an individual person with a recreation 
residence fee, it becomes quite controversial, and, therefore, 
sometimes difficult to change.
    And, finally, I think it is fair to say that we have not 
given collection of fair market value a high priority in the 
past, and I suspect that one of those reasons is that there 
have been appropriated dollars available. I believe as we all 
begin to live in a balanced budget environment, some realities 
face you as we are going to have to do business differently.
    Let me just conclude by saying that we are making some 
progress. We expect in the next three to five years to generate 
additional revenues through implementation of fair market value 
fee schedules for communication sites, and that is estimated to 
be about an $18 million increase; recreation residence with 
authorizations when that is fully implemented will be about a 
$15 million increase, and then, finally, linear rights-of-way, 
which will be somewhere between a $3 million to $5 million 
increase.
    In summary, I would like to say that we do have existing 
authority to authorize land-use and occupancies and to collect 
fees. We have always been encouraged to collect fair market 
values, however, we need to do a better job of doing that. That 
clearly is an area that needs additional attention. We also 
need to complete the process that I mentioned to develop the 
implementing regulations for collecting cost-recovery fees. 
These are the fees for processing a permit and overseeing--if 
it involves construction, monitoring and overseeing the 
construction. The administration is seeking authority to 
collect and retain annual rental fee receipts for commercial 
filming and photography on Federal lands which is one 
opportunity to generate revenues and to use those locally, and 
there are others that will be proposed as part of the budget 
process during this next year. As with other revenue-generating 
opportunities, we must be sure that our primary concern, again, 
is for good stewardship and health of the land.
    That concludes my remarks, and we would be glad to answer 
your questions.
    [The written statement of Mr. Stewart follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Regula. Mr. Bschor, do you want to add anything or Mr. 
Craven?
    I have a number of questions, but, in the interest of time, 
I will put most of these in the record.

                              filming fees

    Do you have movie companies using your lands? Do you charge 
them a fair market value if they come out there and do a 
western movie on forest lands?
    Mr. Stewart. The answer to the question is, yes, we do. In 
fact, certain forests particularly around the Los Angeles basin 
where the film industry is based, have a very high demand for 
everything from movies to commercials. A lot of the car 
advertisements you see have a National Forest as a background. 
In terms of where we stand on achieving fair market value, 
Denny, do you want to address that?
    Mr. Bschor. I guess my short answer is we are still working 
that, and we have the opportunity to work with our other sister 
agencies, like the BLM and the Park Service, to improve that 
effort. But I think the short answer is, probably not.
    Mr. Stewart. I think the other part of that is currently 
any fees generated, of course, go to the Treasury, and the 
proposal would allow those fees to come back----
    Mr. Regula. You don't have an incentive.
    Mr. Stewart. Yes.
    Mr. Regula. I often wondered how they got the jeep up on 
top of that mountain. [Laughter.]
    Mr. Craven. If I could, Mr. Chairman, let me add a couple 
points. We are working with the BLM on an appropriate fee 
schedule, and there have been a lot of different ways between 
the agencies of trying to collect fees, if you will, a fair 
market value. Some agencies even barter for xerox machines or 
equipment for use of that, but we are setting up right now if 
we can a schedule. We should be out with that this summer and, 
wherein, that it would be fair. Again, it is very tough to 
determine an exact fee in terms of how much it is worth to a 
particular company. So, that is why we are going with this fee 
schedule.
    Mr. Regula. So, you are really looking at it. They have 
been making movies on this forest land for umpteen years, and 
it doesn't sound to me like we have been getting any 
compensation to speak of.
    Mr. Stewart. Yes, that is correct. We have been getting a 
variable compensation.

                            hydropower fees

    Mr. Regula. Another area is hydro. As I understand it, we 
have a couple of hundred hydro plants producing $4 billion or 
$5 billion worth of electricity, and we get very little. We get 
maybe fair market value of the land. You wouldn't need a lot of 
land, but you might generate enormous revenues. I would like 
your comments on whether you think you are getting anything 
close to fair market from hydro plants?
    Mr. Stewart. If I might just for a second, I just realized 
that while you introduced us, we have not introduced ourselves, 
so you don't know who you are addressing, and this is Mr. 
Bschor to my right. He is the Director of our Recreation staff. 
Mr. Craven is the Director of our Lands staff, and I am going 
to ask Mr. Craven to answer that question.
    Mr. Craven. Thank you, Mr. Chairman. Yes, on the hydro 
electric relicensing or hydro electric initiative--hydro power 
initiative we are calling it within the agency--we view this is 
as a major opportunity to have revenue generation.
    To answer your question, specifically, regarding our cost 
recovery right now, that answer is, no, it is not based on fair 
market value. It is based on a linear right-of-way per acre 
basis fee schedule, and it has very little reflection of 
anything to do with the marketplace. We are conducting a market 
survey right now. Our chief appraiser and several of the staff 
have been tasked to conduct a market survey.
    Some very conservative estimates indicate that with roughly 
139 hydro power projects that we are looking at permitting or 
working with the Federal Energy Regulatory Commission on 
permitting over the next three to five years, that we could 
generate on the order of $100 million a year annually in terms 
of rentals, and this is a conservative estimate.
    Mr. Regula. Which you are now losing.
    Mr. Stewart. Yes. I believe we are generating approximately 
$6 million per year annual revenue.
    Mr. Regula. Mr. Dicks.
    Mr. Dicks. Some of this is repetitive, but please help the 
committee out by describing briefly the overall size and scope 
of some of the major uses that we are discussing. I want to 
take a couple of minutes so that all members of the committee 
can have a common understanding of just how extensive these 
problems of permitting activities are. For each category, 
please describe the number--well, we have got this chart that 
does that, basically, don't we?
    Mr. Bschor, you were out at Mt. Baker, right?
    Mr. Bschor. Yes, sir.
    Mr. Dicks. Let me ask you this: how many people on your 
staff did you have that were working on revenues trying to 
collect these fees?
    Mr. Bschor. Working in the lands area, do you mean?
    Mr. Dicks. Yes. I mean, on the ski areas or any of these 
areas--marinas, private recreation residence. Is it the 
responsibility of the individual forest to do this or is it 
region 6? Who is responsible here to get this done?
    Mr. Bschor. The forests are ultimately responsible for the 
billings and collection of the fees. We do get help out of the 
regional office on that, but to answer your question of how 
many people at the Forest level, it would be the Forest 
Recreation and Land Staff Officer, probably two people from his 
staff, and at least one person from every ranger district, and 
we have four ranger districts.
    Mr. Dicks. So, there are some people who have this 
responsibility.
    Mr. Bschor. Yes.

                       priority of fee collection

    Mr. Dicks. Is the problem that this has just not been given 
a priority because you had appropriated funds, so collecting 
these fees was not a major interest of the Forest Service?
    Mr. Bschor. I would say collecting the fees was definitely 
a major interest. The situation at the Forest level where I 
just came from is that you never had enough dollars in the 
land-use account to really handle the total land-use job. In 
other words, we had I would say on the average of two or three 
new cases every month coming through the door that we couldn't 
even process with the appropriated money.
    Mr. Dicks. These are new requests for----
    Mr. Bschor. New requests--let alone trying to stay on top 
of the existing cases where you have monitoring of those cases. 
You have to go out and see if the situation on the ground has 
changed at all; whether they are meeting the permit conditions 
and that sort of thing, in addition to the administrative work 
of fee collection. And what we did just to add to this is--I 
think it was mentioned in our testimony--our expertise is 
dwindling as far as the number of folks that we have, and I 
think that is part of what your question is.
    Mr. Dicks. For the appraisals and that kind of thing?
    Mr. Bschor. Right. And what we did on the Mt. Baker-
Snoqualmie was pour expertise into a team that worked forest-
wide. In other words, we had four or five people who, rather 
than working in land uses part-time, actually worked full-time 
as a team, and I found that that was much more efficient. 
Before, they were spread with other duties in different 
locations across the forest. So, that is one way of improving 
that effectiveness that I think worked very well.
    Mr. Dicks. How long were you there, four years, five years?
    Mr. Bschor. Five years.
    Mr. Dicks. Okay. When you started, what was your staff 
level at Mt. Baker-Snoqualmie?
    Mr. Bschor. The staff level--should I go back before I 
started?
    Mr. Dicks. Right.
    Mr. Bschor. Okay, before I got there, in 1991, our levels 
were at 440 permanent full-time employees.
    Mr. Dicks. And what was it when you left?
    Mr. Bschor. When I arrived, it was 236; when I left, it was 
189.
    Mr. Dicks. So, part of the problem we have had here is that 
the Forest Service has been under enormous pressure to downsize 
because the Timber Program is less. And, so we have wound up 
with fewer personnel, and yet you have to do all the work on 
the spotted owl issue, the marbled murellet issues, salmon 
issues, all of these high-priority Endangered Species Act 
issues, and is it--so, basically, am I right here, that you 
just don't have the people to get this done? In other words, if 
we are going to make this a priority, don't we have to convince 
the leadership of the Forest Service to put more people into 
this activity and really kind of assign them this duty?
    Mr. Bschor. You have to rely upon other specialists that 
help you with this work also, the same as they would help with 
a timber sale or with a recreation project or land-use type of 
case and the wildlife specialists, soil specialists and that 
sort of thing, and, in general, all those specialties have been 
reduced to some extent on the Mt. Baker-Snoqualmie.
    Mr. Dicks. And, of course--and I yield here, Mr. Chairman--
one of the problems, of course, we have had is that the Forest 
Service has this disastrous financial system which we 
highlighted last year and we are working on with you to try to 
turn around, and it seems to me that this issue could 
exacerbate that issue, but, again, I mean, at some point here, 
with the declining budgets, if we don't do something about 
this, you are not going to have the money to get the job done.
    Mr. Stewart. May I just--if I could add something, and I do 
want to, by the way, thank you that you have been patient with 
us as we try to get a handle on our financial system. That 
certainly is one of our problems. Without having good financial 
records, it is hard to know where and how to cut costs, and we 
are getting better on it.
    There are two ways to deal with----
    Mr. Dicks. Or how to recover costs.
    Mr. Stewart. Okay, that is a good point, and the other 
thing that strikes me, though, is we have got to--there are two 
ways to go about this: one is to staff up to do it, and the 
other way is to find better ways to do it, and we have put some 
energy over the last year internally with some teams looking at 
how to streamline the whole process, and I think that a 
combination of getting the right expertise, the right people in 
the right place, and doing business in a different way and 
making it easier to process the permit, which is better for us 
and also better for the customer, is, at least, a good part of 
the solution.
    Mr. Dicks. Thank you, Mr. Chairman.
    Mr. Regula. I think what we will do is suspend while 
members vote. Mr. Wamp has agreed to preside briefly while I go 
to the Transportation Subcommittee.
    Mr. Taylor. Can we go ahead if we want to ask some 
questions and go on the tail-end of the vote. I have got a 
committee meeting----
    Mr. Regula. Oh, okay, yes. Let us take yours, so you can 
leave, and then when you come back, Mr. Wamp will take over. 
Then I will be back, and what I want to do is finish the 
hearing. We may run over a little bit over the 12 o'clock, but 
I would like to finish the hearing today.
    So, Mr. Taylor.

                         state forest revenues

    Mr. Taylor. Do you have your revenue on the Forests 
recreation broken down by States? I was wondering about North 
Carolina in comparison to the amount of money being put into 
the program based on the amount you collected.
    Mr. Bschor. I don't have that with me or on top of my head 
right now, but we would be very----
    Mr. Taylor. I will submit that, and so these other 
questions then to you.
    Mr. Stewart, are you a forester?
    Mr. Stewart. Yes, sir, I am.
    Mr. Taylor. Could you explain to us about, in your 
estimation, why does the State receive so much more revenue 
from their forestry programs versus the Forest Service as 
outlined by the GAO a few moments ago, and it has been in many 
other articles?
    Mr. Stewart. I think there are a number of reasons; that is 
a question I kind of like. I started my career with the State 
of Washington Department of Natural Resources, which owns and 
manages for the people of the State of Washington about 2 
million acres of forestland, and I would say a number of 
things: one is that national priorities have been different. At 
the State level, their concern was generating revenues for the 
Treasury, and there is a good deal of emphasis put on that. It 
was a smaller organization, so that they had a fair handle on 
their costs and their information flow; probably internally 
more oversight at the time. Whether they are in that position 
now, I don't know; I mean, that has been a number of years ago. 
But in terms of national objectives, in terms of environmental 
objectives, I think they probably enjoy simpler procedures and 
processes. We have developed a lot----
    Mr. Taylor. You say that they are being managed more on a 
universally-recognized forestry management practices as taught 
by universities as opposed to the Forest Service?
    Mr. Stewart. At the time I was there, the practices between 
the Forest Service and the State were very, very similar----
    Mr. Taylor. How about today?
    Mr. Stewart. I think the difference being is they were 
operated more like a forest industry. They were operated more 
like, say, a Weyerhauser which would have been the model in the 
State of Washington.
    Mr. Taylor. Well, in their Timber Program, isn't that--
using silviculture, that is one of the areas that you are--and, 
yet, you can't violate the environmental laws whether you are 
the U.S. Forest Service or Weyerhauser. They both have to obey 
the law.
    Mr. Stewart. Again, I would suggest, though, that at the 
time I was with the State--and I can't say this about other 
States--there was a tremendous pressure to try to maximize 
revenues.
    Mr. Dicks. That has changed dramatically.
    Mr. Stewart. I would imagine it has.
    Mr. Dicks. Because the listing under the Endangered Species 
Act is out there.
    Mr. Taylor. In one other comment, I would say--and this is 
my personal opinion--does it bother you when you try to collect 
revenues in a variety of special areas? I pay my revenue on 
April 15 unless I get an extension. Doesn't that entitle me the 
right to go to the Forest Service and lands and do basic use of 
the lands? Now, if you provide me a donkey to go down the Grand 
Canyon, well, I ought to pay for it. If you provide me a 
camping site, I pay for it. But to charge me for basic uses, is 
that not contrary to the establishment of having the public 
lands? And shouldn't we, the Congress, be appropriating enough 
money from our $1.8 trillion to manage these lands, and 
shouldn't you be doing your management on the same basis?
    Mr. Stewart. Mr. Taylor, the answer to your last question, 
of course, you know the Forest Service, we can always use more 
money. But I think that the key here is a distinction you make, 
and that is the difference between an access charge--that is, 
just to go on the National Forest--versus a use charge to do a 
specific use--to use a parking lot, to pay for a campground or 
something like that--our surveys of our customers generally 
show people are more willing to pay and understand the use 
charge than they do an access charge. The Park Service has been 
much more successful because people expected always to pay to 
go to a national park; you pay an access fee. And, so to them 
it has been----
    Mr. Regula. We only have about five minutes to vote.
    Mr. Taylor. Thank you, Mr. Chairman.
    [Recess.]
    Mr. Wamp [presiding]. Let us go back to work. I don't want 
to make you rush, but it is kind of cheap way to get to ask you 
questions first is to agree to assume the Chair, and then 
hustle back from a vote. [Laughter.]
    Mr. Stewart, I will go ahead and ask my questions; save us 
a little time and try to finish before the top of the hour 
here.

                          financial management

    I applaud you for your statements and for your intent, your 
expressed desire. My question is, internally, as much 
internally as you can actually share without it being no longer 
internal, do you have a written plan for your--I heard some 
five-year goals earlier, general goals of what you are trying 
to accomplish? But just in my couple of years here on the 
subcommittee, one of our frustrations is we will talk to a 
group about improvements, and they will come back the next 
year, and there is no clear sign that they have improved, and I 
just wonder what your plans and goals would allow this time 
next year for you to be able to come back and report ``In these 
12 months, we have made this much progress at increasing our 
revenue or improving our analysis of fair market value'' or do 
you have public relations campaigns underway within the Forest 
Service that are expected to be completed in the next 12 
months, so you will know what fees are workable, so that you 
can actually make an annual progress report to us along these 
lines of increased revenues?
    Mr. Stewart. Let me just start by saying I think there are 
two aspects of this: one is the business management side of it, 
and, as GAO and the Inspector General have pointed out and as 
the chairman and members of this committee have pointed out, we 
have got some severe problems with our financial management 
system, and we have a time frame and plan laid out for that. 
While that has not been without some difficulties meeting the 
targets in there, we seem to be on target, and we should be 
able to report significant progress. I could provide for the 
record that timetable; it might be useful to you. Because until 
we can get good financial management and good records, you 
don't know how much revenue we are generating and we don't 
either, and that has been part of the problem. And also being 
able to control costs and know what the costs are to be able to 
appropriately charge costs. So, that is one side.
    The other side is the timetable, then, for getting the fair 
market value and where that is, and I would like to, if I 
could, turn to Mr. Bschor and also Mr. Craven to kind of give 
you some sense of what that is, and, if necessary, to provide 
you any detail for the record.
    Mr. Wamp. But before you do that, when you are looking at 
that first piece, which is better internal accounting, what are 
you going to do in the next 12 months to complete that internal 
accounting process, so that that is no longer an issue that we 
have got to get our internal house in order and know exactly 
where the beans are and how many there are and what we need to 
do, and then let us talk about how you can make progress in the 
next year and report back to us?
    Mr. Stewart. One key thing, by this time next year, we 
should have fully implemented the Foundation Financial 
Information System which meets the requirements of the Federal 
financial managers Accounting Standards Advisory Board. Our 
expectation is--and I believe we are still on track to do 
that--to have a clean financial opinion by the end of the year 
2000. There are a lot of intermediate steps to that that we 
would--in terms of being able to report progress on how well we 
are doing, but those are two key things. One is, is 
implementing the system and the other is getting the clean 
financial system. That will all occur--the full implementation 
is supposed to be in October of this year, and the clean 
opinion, then, using that system, the end of that Fiscal Year, 
it should be the year 2000.
    Mr. Wamp. Good. So, during the 106th Congress, let us try 
to do the internal stuff; get it done in the first year; have 
that out of the way; be making progress on increased revenues, 
and then one of you all is going to add something to that?
    Mr. Stewart. And if it would be useful to you, we can 
provide some details of some of the timetables for the record.
    Mr. Wamp. Please do.

                          re-engineering team

    Mr. Bschor. Mr. Chairman, we have several initiatives going 
on relative to the second part of your question. We referred to 
earlier--the committee referred to it earlier. In the 
recreation arena, we have the Fee Demonstration which you are 
very closely monitoring, and we are monitoring also, and we do 
have ways of determining what the results are and what the 
effects are of those individual projects.
    There is also an effort occurring which maybe Mr. Craven 
might want to talk about in more detail if needed, but we do 
have a re-engineering team for land uses that has been meeting 
for some time--I don't know how long for sure--but they are 
close to having some report for us to help us with that aspect 
of the general Land-Use Program.
    Also, we do have--as was mentioned in our testimony--the 
cost-recovery regulations effort that Mr. Stewart mentioned in 
his testimony.
    Mr. Wamp. Okay. Mr. Craven, that re-engineering team?
    Mr. Craven. Yes, maybe if I can expedite that. The re-
engineering team has been in place for roughly a year, year-
and-a-half. They have gone through and looked at all our 
special-use activities in the Forest Service. They have made 
quite a number of recommendations on how we can improve our 
management and administration of that particular effort. It is 
a sunset team; they are to disappear at the end of September of 
this year.
    Some of the major types of findings that they have come up 
with is that we need to utilize our scarce skills a heck of a 
lot more efficiently. We need to have a different management 
attitude towards a lot of these special uses. We need to get on 
with our data collection and financial management aspects of 
that, and, in that regard, we have implemented what is called a 
special uses data system, or what used to be called a forest 
land-use reporting system and getting that updated, so that we 
can get accurate billing information, if you will. And, again, 
that is on a one-year time line. Our cost-recovery regulations 
draft this summer and the final, first part of Fiscal Year 
2000.
    And then we have a number of other independent initiatives 
regarding market assessments, for instance, on the hydro 
electric. We are conducting a market survey there, and we will 
be coming up with some estimates of what the rental value 
should be for those hydro power within the next six to nine 
months. We are going through our whole Linear Rights-of-Way 
Program activity there to determine, again, fair market value 
instead of just the per-acre fee that we are charging right 
now.
    And, then, as far as our cost recovery goals, that came out 
of our special uses re-engineering. We are also trying to take 
a very close look at how much it does really cost us to do a 
lot of these activities, and they are costly, much more costly 
than they used to be.
    Mr. Wamp. Mr. Stewart, on a $15 million annual recreation 
fee and $18 million annual communication fees, that says over 
the next 3 years, you could get it that high. Do you know 
specifically--or what are your targets specifically when you 
will be able to say, ``We achieved these goals for annual 
revenues on those two areas?''
    Mr. Stewart. I will try to get an exact time frame on the 
communication site fees, but on the rec residence, we are in 
the second year of a five-year effort to get all the appraisal 
work completed and get the fair market assessments done. Then, 
it will be a 20-year--then, it is on a 20-year cycle for 
reappraisal. We have been limited, yes, by having the 
appraisers, and, of course, we are also having some dispute and 
discussion, if you will--it is controversial, some of the 
appraisals. As far as the communications sites, let me ask--
2002--for the schedule on that.
    Mr. Wamp. Without doing it here, if you could, for the 
record, submit as clear a program with evidence of where that 
revenue is going to actually come from.
    Just as soon as you can get that to us to make sure that we 
match up your assets, your programs, with the potential 
revenue, so that we can monitor it closely, so, again, we don't 
slip many years here before we actually achieve these targets. 
And, then, we will all be successful.
    Mr. Hinchey.
    Mr. Hinchey. Thank you very much, Mr. Chairman. Gentlemen, 
I think that the primary aspect of your responsibility, 
obviously, is the maintenance of the resource to make sure that 
it is up to where people expect it to be and maintain it very, 
very well, and I think you do a very good job in that regard.
    Some questions, of course, arise about the revenue-
generation aspect of the program, and I think they are 
legitimate, and you have said so yourself. So, the question is 
how do we proceed in order to make those improvements?
    I would like to see a chart like the pie chart behind us 
based upon not the number of uses but the amount of revenue 
generated per each type of use, and I think that would be 
helpful to us if you could produce that.
    Secondly, I think it is important to make a distinction 
between the kind of charges that are being levied. On the one 
hand, you have charges for people who are just coming and using 
the program, ordinary citizens engaging in ordinary personal 
activities, whether it is hiking or skiing, whatever it might 
be as opposed to the users who are interested in generating 
revenue for themselves, such as the people who operate the ski 
slopes and lease the land, the telecommunications uses, and 
things of that nature. I think we ought to have a clear 
distinction as to what those sources of revenue are, one as 
opposed to the other in addition to the distinct categories of 
revenue generated per each use, so we could better understand 
this problem.
    And, then, I think it is just a matter of either your doing 
the job, frankly, and getting the appropriate revenue out of 
these sources. Now, if that is a matter of the Congress 
allocating more funds for you to do it, I think that we have to 
live up to that responsibility. One of the questions that was 
asked earlier--maybe Mr. Wamp raised it again in my absence--
was the question as to why the Department didn't ask for 
additional revenue in this particular budget or why the 
administration isn't asking for additional revenue in this 
particular budget? I don't expect an answer to that question at 
this particular moment, but it is a very valid question, and it 
is one that needs to be answered, and I think that the members 
of the committee ought to be provided with an answer in writing 
as soon as possible.
    So, those are the things that concern me. I think that we 
ought to leave this oversight hearing with some clear 
understanding of how the problem is going to be corrected. If 
it is a problem that is amounting to several hundred millions 
of dollars a year, which it may be--we heard that from GAO just 
a few minutes ago--then it is a problem that starts to be 
serious, and I think that the message has got to be conveyed to 
the men and women on the ground, the operators of the specific 
forests, that relationships with concessionaires have to be 
arms-length in every single instance, and that a system of 
closed bidding ought to be implemented immediately. There ought 
not to be anymore open bids with simply one applicant sitting 
across the table from the Forest Service representative.

                         timber bidding process

    Mr. Dicks. Could you yield just to me for a second?
    Mr. Hinchey. Yes, sure.
    Mr. Dicks. Why isn't that done?
    Mr. Stewart. At some regions--first of all, the law has 
allowed flexibility, and we generally allow the local manager 
to make the determination. Some regions have gone----
    Mr. Dicks. Why don't you just tell them to do it the way--
this other way, if it is going to generate more income, why not 
just do it that way?
    Mr. Stewart. In fact, many of the regions already do. I 
think that was Mr. Taylor's observation; why he didn't see this 
as an issue, because Region 8, I believe, is one of the regions 
where they just regularly do a sealed bid, and, certainly, we 
need to do more of that. There are probably still some local 
situations where it would make sense to have an open bidding 
process, but we are clearly going to do more of it.
    Mr. Dicks. But it seems to me the estimate was $11 million 
a year that is being lost? That doesn't seem to me like--if 
that is true, then why are we doing it? Why not just require 
everyone to do it and not lose that money? Unless you dispute 
what the GAO is saying.
    Mr. Stewart. I think that the issue--since there is no 
way--I have a science background too--so there is no way to do 
a controlled experiment; you either do it all one way or you do 
it all the other in any one market to know----
    Mr. Dicks. The GAO did one on you. They did a controlled 
experiment, and they say that you are losing $56 million.
    Mr. Stewart. But for the--about $11 million they estimate 
for the sealed bid process----
    Mr. Dicks. Okay.
    Mr. Stewart. I think there are opportunities to do----
    Mr. Dicks. Eleven million dollars a year.
    Mr. Stewart. Yes--to do, certainly, more of the sealed bid 
process, and I believe that is what we are coming forward with 
saying we are going to do. But there may still be situations 
where it would be more advantageous to still allow the other 
process.
    Mr. Dicks. Thank you for yielding.
    Mr. Hinchey. It is my pleasure. I think the point has been 
made, and I would like to just, at least out of curiosity, know 
what those instances would be where a sealed bid arrangement 
would not be more advantageous, and under what circumstances--
so, we could understand the situation better, and we could 
understand the reason why you would make that kind of a 
judgment.
    Mr. Bschor. I can think of a couple of examples where you 
have a resource job to do or a recreation project to do or 
whatever, and it is essential you get it done in a time frame 
that is immediate or within that fiscal year. There are times 
where you might want to still use that tool to get the job done 
even though you don't maximize your revenue because you have 
got a resource problem to fix or something like that. That is 
what comes to mind to me.
    Mr. Hinchey. Well, I can understand that. Certainly, there 
are instances such as that that have to be done in that 
particular way for emergency reasons or something akin to an 
emergency. But if you are operating a bid arrangement for a 
long-term lease to run a ski slope or, as Mr. Taylor said, an 
operation to lease donkeys to go down into the canyon 
orsomething of that nature, then I can't see any reason why that would 
not be done on a closed-bid basis.
    Mr. Stewart. It is specifically in the timber area which 
was the issue that we were talking about when we use a bidding 
process, the place where the biggest opportunity to see 
potentially larger revenues generated is where you have no 
competition; you have got essentially one person coming to the 
table. That doesn't characterize most of our markets. In fact, 
during times of tight supply, having an open bidding process 
where you have the people at the table bidding against each 
other, can often generate more revenue. So, the biggest 
advantage--and I think GAO in their testimony pointed that out 
too--is in a situation where you have very limited competition. 
And it makes a lot of sense, then, not just to blindly go down 
and use a sealed bid process, but to allow open competition 
with the anticipation that the bidder is potentially knowing 
that there could be other people at the table, and they are 
going to have to at least beat their bid.
    Mr. Wamp. Thank you. Mr. Skeen and then Mr. Peterson.

                   state and local government impacts

    Mr. Skeen. Thank you, Mr. Chairman. What impact does this 
fee issue have with State and local governments? Do they get a 
share in this system that you have or not?
    Mr. Stewart. The only exemption--essentially, the counties 
get 25 percent of all revenues. The only exemption to that is 
the one you granted in the Fee Demo Program in which case we 
are not required to return 25 percent back to the county.
    Mr. Skeen. Well, has it become a real issue?
    Mr. Stewart. There are some counties that have become 
concerned about the potential, particularly if this program 
grows. I will point out that the administration has proposed 
and will be coming back this year again with a modified 
proposal for not tying the revenues to the counties--or the 
money going to the counties to specific revenues generated off 
the National Forests. And that would tend to eliminate that 
issue if it were adopted.
    Mr. Skeen. Another question I would like to ask is what is 
the specific problems you have had with the telecommunications 
system on leasing locations and things with antennas and things 
of that kind?
    Mr. Stewart. Let me allow Mr. Craven to answer that 
question. Also, he brought to my attention that there are some 
other fees that are not subject to the 25 Percent Fund. So, it 
is not all revenues generated.
    Mr. Craven. Thank you, Mr. Skeen. On the hydro power fees 
by the Hydro Power Act, it is 37 percent can be returned--or is 
returned to the counties, back to the States, to the local 
governments from any revenue generated there.
    Would you please restate your question on the 
telecommunications?

                         telecommunication fees

    Mr. Skeen. Well, what about the telecommunications industry 
and their location of sites that you allow, and they are fee-
regulated as well, as I understand it.
    Mr. Craven. We have a communication site fee schedule that 
is working a lot better under our new fee schedule that we have 
entered into with the BLM. Again, we are going to reassess that 
fee schedule on a periodic basis, every five years, and there 
are some built-in inflator clauses there, but it is working a 
lot better now the way we have set up the fees on that.
    Mr. Skeen. As you reassess them every so often, will it be 
yearly or----
    Mr. Craven. Every five years for----
    Mr. Skeen. Every five years.
    Mr. Craven. Ten years, I am sorry. When we don't pester 
them, it will be on a 10-year period.
    Mr. Skeen. Right, very good; very generous. What about 
grazing fees? Is grazing going to be allowed? Did you finally 
give it up or what is the situation?
    Mr. Craven. I am not prepared to answer that question, sir.
    Mr. Skeen. Well, it is a big issue in our part of the 
country.
    Mr. Stewart. Certainly, we have not come forward with any 
proposal. I don't know whether the administration is planning 
to do anything. But, certainly, I don't know of anything we are 
proposing this year in terms of reevaluating that.
    Mr. Skeen. Not in the cow business, then.
    Mr. Stewart. Well, we still allow grazing, and we still 
collect fees for it, but in terms of looking at the fee 
schedule, I don't know if we are doing anything.
    Mr. Skeen. If you could give us some idea of how you set 
your grazing fee schedule.
    Mr. Stewart. We would be glad to do that.
    Mr. Skeen. Thank you, sir. Thank you, Mr. Chairman.
    Mr. Wamp. One other thought before we go to Mr. Peterson is 
if you have member concerns, heartburn for Members of Congress, 
about these fees, report to us so that we can monitor as well a 
concern from the Members whether it is the $2 parking fee for 
fishermen that I referred to in my district or whether it is 
somebody from Colorado complaining about the ski fees that you 
are implementing. Give us any feedback we might not hear from 
our Members. They may be complaining to you and not saying 
anything to us. We need to know what is out there, and we can 
also, I think, help you explain better to other Members of 
Congress what we are doing and why we are doing it and how the 
revenues can help those particular sites.
    Mr. Peterson.

                        entrepreneurial approach

    Mr. Peterson. Well, I guess, I would like to question you a 
bit on--you have been criticized today and, I guess, ongoingly 
about not being very good at generating fees when opportunities 
present themselves. Having 23 years of government experience 
and 26 years of business experience, I may be asking you to do 
something you have not been trained to do. Program managers who 
have lived on the appropriations process are not entrepreneurs; 
those two things are as far apart as you can get, and we are 
asking you to suddenly become an entrepreneur. Now, I am an 
entrepreneur. I ran a business for 26 years; I started it with 
nothing, and I look at every business challenge as an 
opportunity. But when you are a program manager dependent upon 
an appropriations process, you are crossing all your t's and 
dotting all your i's to keep the appropriators happy and keep 
the process and keep your money coming, and suddenly you are 
now being asked to generate your own. I am not so sure you 
should be able to do that without outside guidance.
    Could we look at a group of some of the States that have 
been more successful and get some of their managers together 
and some private sector people together to guide you into this 
entrepreneurial process where you are attempting to generate 
more of your own income? Would that kind of help be welcomed by 
the Forest Service?
    Mr. Stewart. In fact, I know it would be. It is interesting 
you mention that. The first really big opportunity we really 
had to be entrepreneurial on this has been the Recreation Fee 
Demo project, and we can't say enough about--not to pat you all 
on the back--the vision that there was. And, yes, it has had 
problems, but, you know, one of the things it required was the 
development of a business plan, and it was kind of like you 
said, ``Develop a business plan,'' and somebody said, ``Okay, 
now what is a businessplan?'' And the first round of those we 
had a lot of, I would say, mistakes made that created some problems for 
you and some of your constituencies and us too. We are trying to learn 
from that.
    We have not had those kinds of skills. It has been people 
like me, foresters. I know something about natural resources 
but very little about financial resources or financial 
management. We have brought in now a chief operating officer. I 
think many of you have met Francis Pandolfi who was the CEO of 
a corporation. We now have a chief financial officer; we have 
never had that position before. That person is an accountant 
and knows business management. We are using some of our 
vacancies now to staff up with people with business acumen.
    So, it has been a learning curve for us, but there is a lot 
that we could be learning from other people, so that we don't 
need to reinvent the wheel, and I agree, we would be very 
welcome to be put in touch with other entrepreneurial people in 
the public sector because the private sector often has 
different bottom-line purposes and so forth, and I think that 
the model probably is more in other public agencies.
    Mr. Peterson. Well, I can just share with you--the ANF is 
my back door, and I just read an article in the paper over the 
weekend where locally they are trying to get a group of tourism 
agencies to join hands, and they were hoping the Forest Service 
could but they have no provision of becoming a part of that 
process where 10 counties and the Forest Service would pool 
their resources to sell the area and to actually advertise for 
people to come there, because it is really highly underutilized 
when you look at the beauty that is on the ANF and the Kinzu 
Lake that is in the middle of it. It is just a gorgeous, 
gorgeous place. It is kind of lonely even on a hot summer day, 
and it shouldn't be. But we need flexibility for you to be 
doing those sorts of things.

                            fire assistance

    And I want to shift gears on you for a moment, because I 
also know on the ANF, and I am sure it is true on all the 
Forest Service land, we don't have a provision to really help 
out the local fire department EMS people who provide a very 
vital service on very remote areas in the dead of winter where 
it is dangerous to go in very heavy snowfall, in zero weather, 
when people are lost, and people are harmed out there, and 
there are no roads that are plowed to get in. We have emergency 
people who risk their lives to help visitors in our forests, 
and, yet, we don't help them maintain the ability to do that. 
Is there some way in this process we can think about the 
emergency service people and the fire departments that really 
provide virtually free service for public land? Don't we have 
the means of subsidizing their budgets a little bit?
    Mr. Stewart. We do have some authorities to do that. One is 
the Volunteer Fire Assistance that provides money for, 
particularly, volunteer and local fire departments for 
equipment and training and so forth. Also, on the law 
enforcement side, and often law enforcement organizations are 
involved in search and rescue too, there is Cooperative Law 
Enforcement. They tend to be fairly small programs as they are 
currently funded, but we do provide some assistance whether the 
volunteer fire departments or others perceive it to be 
adequate, that is a question for them to answer.
    Mr. Peterson. Well, I think dollar-wise, it is almost 
minuscule; I don't think there is enough there to really help 
them obtain the equipment they need and the training they need 
to--because it is some of the most risky stuff they do, 
especially out on the reservoir where you have different layers 
of ice. It is pretty dangerous stuff when somebody is out there 
and goes through the ice.
    Mr. Stewart. I was just handed the--in the President's 
budget for 2000, the Volunteer Fire Assistance is $2 million, 
and it is a new line item. Before, we basically had it all 
under Cooperative Fire, did we not, and this was sort of a part 
of it, but it was not independently managed. Now, it is a 
separate budget line item, so you can look at it and ask us 
questions.
    Mr. Peterson. Can I have another minute or am I done?
    Mr. Wamp. No, go ahead.
    Mr. Peterson. The timber money, 25 percent goes to local 
government. How is the rest utilized?
    Mr. Stewart. There is a collection usually made for the 
Knutson-Vandenburg Fund which is based on a plan for what is 
needed in the area. It can be used for basic reforestation, for 
wildlife habitat improvement within the sale or betterment 
area, for watershed improvement, those kinds of activities. Any 
excess over the 25 Percent Fund and the KV Fund goes to the 
general Treasury.
    Are there any other collections--yes, they are salvage and 
brush disposal, also trust funds established from that. But 
then, again, the excess goes to the Treasury.
    Mr. Peterson. What percentage goes to the Treasury, do you 
think, normally?
    Mr. Stewart. We can get you that number.
    Mr. Peterson. But it is the majority, right?
    Mr. Stewart. Not today, it is not.
    Mr. Peterson. Really? Okay.
    Mr. Stewart. I think the most recent timber report, the one 
from last year, provides that breakdown. We will make sure you 
get a copy of that.
    Mr. Peterson. I guess the final question I would have is I 
would like to know why you would ever have an oral bid on 
timber? I just don't understand that. I just--being a 
businessman, an entrepreneur, if somebody is coming and wants 
to bid on it, they put it in writing and they put it on the 
table. If nobody else shows up, that is fine; they are the only 
bidder. But for them to know that and then orally bid, I think 
is just something as a businessperson I would never do. I don't 
know why you ever would unless the sealed bid process didn't 
work. But to start out with an oral bidding process, I think is 
a mistake.
    Mr. Stewart. I would only say that the timber market had--
at least in the public sector--had been treated more like a--I 
am trying to think what the equivalent in agriculture, a 
commodities market sort of thing--where there is often stiff 
competition for a limited supply in a local market, and I think 
that it was thought that having an open bidding process would 
allow the price to reach the maximum of what the market might 
be. Certainly, it is time to reevaluate that, and that is what 
we are doing.
    Mr. Wamp. Mr. Dicks.

                          recreation fee demo

    Mr. Dicks. Mr. Lyons said last year, ``The declining state 
of recreational facilities throughout the National Forest 
System have fallen into a appalling state of decay and cannot 
be used safely. Americans come to the National Forest expecting 
and deserving a pleasant recreational experience. If the 
maintenance situation is not addressed, the public will be 
disappointed in those experiences far more often. In addition, 
access to National Forest recreation will be more and more 
limited.''
    Now, if that is the case, then why is the administration 
requesting level funding for recreation management which really 
amounts to about a 3 or 4 percent decrease in service? It 
appears the administration is relying on the Recreational Fee 
Demonstration Program to provide basic, needed services. The 
committee has promised the American public that the Fee 
Demonstration Fund will be used for backlog maintenance and 
enhance public service and not used to replace normal 
appropriations. The administration has also requested a 
decrease in their trail construction account from $29.5 million 
this year to $13 million. Can you explain this?
    Mr. Stewart. In fact--and I am sure that when you have the 
oversight hearing on Rec Fee Demo, you will get into that--but 
what is not included in the budget request, of course, is about 
an anticipated revenue to go towards facilities maintenance and 
customer service improvements and so forth of about $25 
million. And I would suggest that there is some truth to the 
fact that holding a budget for the base program constant and 
relying on revenue generation is an issue--that is what this 
whole hearing is about. It is a trade-off issue. It allows you 
to make investments in some other part of the program for the 
committee and for us also.
    One the things the administration is going to be seeking is 
permanent authority for the Fee Demo Program, and I believe 
that expectation is to still hold the day-to-day appropriation 
level for the base program constant and to rely on fees to help 
us get on top of the backlog.
    Same thing in the Trails Program. We now have the 10 
percent Fund which allows us to take money, again, from timber 
sales and invest it in trails and trail maintenance, and so it 
does allow us to make investments in other areas and rely on 
revenue generation to try to do that.
    I think that is really, as I said, the whole issue we are 
all sitting here facing is in a balanced budget environment; we 
suddenly realize there is no such thing as a free lunch. And, 
so the question is what are the trade-offs and how do we best 
make the investments and use the opportunities?
    I would come back to the point that I made and try to 
reemphasize in my testimony that we need to be careful while we 
are doing that, because there are, obviously, very many 
opportunities to generate revenues off of that 192 million 
acres, but we need to do it in a such a way that it doesn't 
compromise wise stewardship.
    Mr. Kingston [presiding]. Any other questions?
    Mr. Dicks. Yes, I have got one for the record. I would just 
like you to tell us what would be the cost to the Forest 
Service in dollars and FTE's to collect the additional funds? 
If you could give us an estimate on that, that would be 
appreciated.
    Mr. Stewart. Mr. Dicks, is that for all possible ones or is 
that for like an expanded rec fee? We have been talking about a 
number of opportunities to get fair market value. Would that 
include all of the opportunities?
    Mr. Dicks. Well, I would like you to at least cover the 
major opportunities to give us a general idea of what would be 
needed to staff up to do this.
    Mr. Stewart. We would be glad to do that.
    Mr. Dicks. Was the idea behind the Demo Program to augment 
not replace appropriations?
    Mr. Stewart. That is correct. In fact, our customer surveys 
tells us that the acceptance of the program would go down if 
they were used actually to offset the appropriation.
    Mr. Dicks. Now, you guys used, I think in the questions, 
the Land and Water Conservation model which says that 15 
percent--was it 15 percent for fee collection?
    Mr. Stewart. Yes.
    Mr. Dicks. Why not do the Fee Demo model which says 100 
percent?
    Mr. Craven. Let me, Mr. Dicks, take a shot at that. The 
Land and Water Conservation Fund model allows 15 percent of the 
funds to be utilized by the Forest Service or by the agency at 
that site. We felt that until we get a better handle on our 
financial controls; till we get a better handle in terms of 
what the backlog is; how much it is going to cost us, and until 
we had our fee schedules and that in place, we were looking at 
15 percent as being an appropriate level to start with. 
Eventually, yes, I fully agree that we would like 100 percent.
    Mr. Dicks. And you have to have authority rights in order 
to keep this money, and last year, the BLM was given authority 
in some respects to keep these fees. Do you need that kind of 
authority as well?
    Mr. Craven. Yes.
    Mr. Dicks. So, if we want to do something about it, we are 
going to have to get you the authority to retain these fees.
    Mr. Stewart. Let me jump in as I pass the mike down--it is 
my understanding, too, that we have no authority to phase in 
large fee increases. So, for instance, the recreation 
residences, we appreciate the fact that Congress stepped in to 
help us out really out of a predicament where you have large 
increases in fees, and I think that is going to be an issue 
increasingly we will face. As we do reevaluate schedules and 
get to fair market value, we could see dramatic increases, and 
they are going to need to probably from all--I mean, I got to 
thinking about if I were--if I suddenly got a tax bill for my 
property taxes that it doubled, I would probably make sure that 
everybody in accounting got fired. So, we are going to need to 
have authority to do that also, but I see Mr. Bschor wanted to 
add something if he could.
    Mr. Bschor. The only thing I was going to add, Mr. Dicks, 
is that there are two authorities that we have other than the 
Fee Demo authority that you gave us, and those are previous 
authorities, and one you mentioned is the Land and Water 
Conservation Act, and the other one is the Grainger-Thye Act, 
and that is the one we use for campground concessions to 
collect fees there, and we can return monies back to the 
National Forests to decide. But those are the only two, so 
authority is one of the things that we really have to look at 
to make this work with the other uses.
    Mr. Dicks. The President's budget includes a proposal to 
gain $11 million from concession reform. Please explain in 
detail how this works?
    Mr. Bschor. Yes, currently, like I say, we have a large 
number of our campgrounds under concession contracts right now 
through the--actually, they are permits--through the Grainger-
Thye Act, and that is one area where we have seen about a 13 
percent return which I think would match some of the State 
figures you heard. So, various reform for other uses would be a 
benefit, I believe.
    Mr. Dicks. But the $11 million, is that just an estimate? 
Or do you have to actually go out there and do that stuff?
    Mr. Bschor. I can't answer that question, but I will get 
back to you with an answer.
    Mr. Dicks. For the record?
    Mr. Bschor. Yes.

                        special forest products

    Mr. Dicks. Okay, the President's budget also includes a 
special forest products initiative which you claim will net $12 
million in new money. Can you please explain this project in 
detail? How exactly and precisely--and do this for the record--
was the $12 million figured derived? What revenue has been 
collected from these activities during each of the past five 
years?
    Mr. Stewart. First of all, the revenue generation is an 
estimate based on our preliminary efforts of looking at what 
that specific proposal on special forest products might return, 
and we have had some hearings on special forest products, and, 
certainly, the value generated in the marketplace of these 
products is extremely high. In terms of the details of what the 
actual proposal would look like, we are still in the process 
within the administration of coming up with that, but we 
certainly would be I think able to provide you some information 
about what is being considered and the basis for the revenue 
generation.
    Mr. Dicks. You know in our area, we have got brush; we have 
got mushrooms--what are all the--? I mean, there are lot of 
things.
    Mr. Stewart. Brackenfern.
    Mr. Dicks. We have a lot of people picking out there that 
may not have their permit too. So, this whole area could be an 
area where we could pick up some considerable amount of money. 
Thank you, Mr. Chairman.
    Mr. Regula [presiding]. Mr. Kingston.
    Mr. Kingston. Thank you, Mr. Chairman. I want to get back 
to Mr. Dick's question about the Trail Fund since it was cut 
from $29 million to $13 million. Are you saying that the 
administration is supporting more logging in order to increase 
enough fees to make up that difference? Where are they talking 
about getting that? I think the committee is certainly trying 
to do everything it can to help you with the fee, but I haven't 
seen any leadership on the administration's point. Are they 
going to wait on this?
    [Pause.]
    Mr. Stewart. The first part of that answer on increasing 
the timber harvest, that decision to use some of those funds 
for trail construction has not changed the offer. The timber 
sale offer is based on what we believe, given resources, given 
ecosystem concerns, is doable. And, so that has not influenced 
it. But there has been an offset, and I was just asking for 
some clarification of the numbers. I think I am going to have 
to provide it to you for the record, because I don't quite 
understand the table here, but, certainly, we will be glad to 
give you that information.
    Mr. Kingston. Well, I guess my question is was Mr. Lyons 
speaking for the administration? Was he grandstanding? What is 
the problem here? If the maintenance so far behind, why is the 
administration only asking for 2 percent to 3 percent? What are 
we missing here?
    Mr. Stewart. Well, recognize that some of the Rec Fee Demo 
money, for example, is also going into trail maintenance. In 
fact, that is where some of our really successful projects have 
been. Mr. Bschor was telling me that some of the early 
opposition to the Fee Demo Program when he was on the Mt. 
Baker-Snoqualmie National Forest as a supervisor actually went 
away when people all of a sudden saw the trails fixed. And, so 
there are other sources of revenue being brought into it, too, 
so there is some balancing. While appropriated dollars may be 
going down, other sources of funding are going up.
    Mr. Kingston. Well, is it the administration's intent to 
address the concerns that Mr. Lyons so abundantly expressed in 
public when they, the administration, requested this budget? Or 
did they feel like Jim Lyons can go run out and say whatever he 
wants in public, but their administration who he works for 
isn't going to answer his concern in their budget request?
    Mr. Stewart. Certainly, I am not privy to what the response 
to Mr. Lyons' statement was. It is certainly our desire and 
concern to get our Trails Program in shape, and it certainly 
needs a lot of work. We are completing our first round of 
infrastructure inventories which are looking at improvements 
like roads and trails, facilities, and so forth, and we should 
be able to make a report of that as just what a--better 
information on what the status is. But, certainly, one of the 
advantages of the Rec Fee Demo Program is to be able to do that 
kind of work, and that has been, as I said, one of the more 
successful areas, I think, because you can see rapid 
improvement.
    Mr. Kingston. Let me ask you this question on fees in 
general as a newcomer to the committee: Culturally, the 
Department did not really push fees because the money was 
appropriated, and that is probably how we got here, correct? 
And I don't say that as a criticism.
    Mr. Stewart. I think that is certainly part of it. In 
general, the public is used to, at least on the National 
Forests, having fairly broad, relatively inexpensive or free 
access, and so one of the problems that has arisen from the Fee 
Demo Program is suddenly I heard charges that we are being 
forced to breathing the air on the National Forests, and that 
was because suddenly we had an entry fee which we never had 
before.
    Mr. Kingston. Well, the GAO said that there are some 
national park facilities, such as the Lincoln Monument that 
won't be charged for; they are not appropriate to charge for 
them, and so forth, and I do feel that way about much of the 
forestry land; that you should be able to go there. And so Iam 
not 100 percent sure that I agree with trying to make it a business 
proposition on all fees for all purposes, and I don't think that is the 
committee's intent anyhow.
    Mr. Regula. If the gentleman will yield. What we are really 
talking about is when you are going skiing or whether you are 
on campsites. It is not access as such to the forest, but it is 
access to the facilities, and we don't get a fair return on 
that under the present arrangement. The visitor's experience is 
substantially enhanced if you take good care of the trails, the 
toilet facilities, the campsites, and so on.
    Mr. Dicks. And the people seem to--at least in my 
experiences--that when they see that, and they know that part 
of the money is going to stay in their area and they also look 
at the cost of everything else in our society for recreation, 
this looks very reasonable, and they are willing to invest in 
it.
    Mr. Kingston. Do you have a park land pass the way the 
National Parks do? They used to have a Golden Eagle pass that 
you would buy, kind of lifetime--do you have something like 
that or is that----
    Mr. Bschor. Yes, we honor the Golden Eagle pass also. We 
are partners with the Park Service on that pass. The closest 
thing we have is in some of our Fee Demo projects, we have like 
a trail park pass that I am sure Mr. Dicks is familiar with. It 
covers more than one area, more than one forest. We have a ways 
to go as far as--as far as a national pass for the Forest 
Service, no, we don't have that.
    Mr. Stewart. One of the concerns that has been raised by 
the public is that in many areas we have--again, this is a 
demonstration project, so it is not nationwide--but in areas 
where we have several agencies providing services that all 
happen to be under Fee Demo, people are confused by the fact 
that they go from one unit to another and have to pay another 
fee, and so we have been made aware of that, and we are looking 
at ways to kind of coordinate that effort, provide one point of 
contact for a fee that would give you access to many places. We 
are also looking at the idea of a national pass for all Federal 
lands, so there are a number of things being considered to look 
at that.
    And I see two people who are willing to jump into this if--
--
    Mr. Bschor. I just wanted to mention that I have personally 
been involved with the Park Service in the last couple of weeks 
to talk about that possibility as far as an annual fee, and so 
we are at least beginning discussions and realize that there is 
a need. One of the concerns out of the Fee Demo is just what 
Mr. Stewart said that there are multiple passes, multiple fees, 
and we feel we need to be looking at the customer's 
conveniences on this more than what the agency's convenience is 
and try to get on top of that. So, I just wanted to let you 
know we were in those discussions.
    Mr. Kingston. Thank you.

                            public attitudes

    Mr. Craven. If I might just add a comment, Mr. Kingston. I 
have noticed in my over 30 years in working with the public 
lands is that what we are seeing is sort of a convergence of a 
lot of forces. We are getting a major change in just the value 
of the land that we are dealing with. It is not any longer 
looked at $200 an acre, $100 an acre, old rangeland. I mean, 
you are talking in terms of thousands, tens of thousands, even 
millions of dollars per acre.
    And we are changing a public attitude. What used to be 
considered free, open access in that anything that seems to 
smack of a exclusive use is viewed by others as saying they 
don't like that, and if anybody is going to use it exclusively 
then they have to pay for it. Virtually, for every person that 
comes in and complains about, say, the rec residence fees 
increases, we have five people that come in and want to know 
how they can buy those on the open market.
    A lot of the activities that we have that are 
authorizations that are time-consuming and costly going through 
quite a lengthy process to make sure that it is fair and meets 
all environmental standards, and that is what we are pushing 
for if we can to try to recover the basic costs of that, 
because once some person comes in, or a party, to our office, 
they trigger a process, because we have to give good customer 
service, and we try to not to delay them; to be expedient but 
at the same time make sure that we follow all the laws and 
regulations.
    And so that is where we are trying to get cost recovery if 
we can for that, because--and, again, that is somewhat of an 
exclusive dedication of our services or our people to that 
person for the time we are processing their permits. But that 
is just what I have seen over the last 30 years.
    Mr. Kingston. Thank you.
    Mr. Dicks. I am done, Mr. Chairman.
    Mr. Regula. Thank you all for coming. The GAO, as you can 
see, will be back on March the 3rd, and we will have--I guess 
all of you will be, and we will have a extensive hearing on the 
whole fee issue and opportunity to explore it in greater 
detail. I think this is a very significant point, and that is 
that these lands are suddenly becoming extremely valuable. We 
have taken them for granted.
    You discovered that in Cumberland Island. That was just a--
I don't know what you would call it, but now it suddenly is 
pretty valuable out there. There are more and more people with 
more and more time, more and more desire to use the outdoors, 
and the same amount of land or probably a little less in some 
instances. So you are going to have some real tough challenges, 
as I see it, down the road here. And now is the time we need to 
put some management techniques in place to deal with that crush 
of desire.
    An interesting comment--the people that have these houses 
and shacks--whatever you call them on waterways or lakes or so 
on--they love them, but the people that can't get access 
because they are not on the open market say, ``How about us?'' 
How to balance out all of this is going to be an enormous 
challenge for us policymakers and for those of you who have to 
implement it.
    Well, thank you again for coming. We will see you March the 
3rd.
    The committee is adjourned.
    [Additional questions from the committee follow:]

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                                       Thursday, February 11, 1999.

                          DEPARTMENT OF ENERGY

    STATUS OF CARRYOVER BALANCES IN THE ENERGY CONSERVATION PROGRAM

                               WITNESSES

SUSAN D. KLADIVA, ASSOCIATE DIRECTOR, ENERGY RESOURCES AND SCIENCE 
    ISSUES
EDWARD M. ZADJURA, ASSISTANT DIRECTOR, ENERGY ISSUES
DAN W. REICHER, ASSISTANT SECRETARY OF ENERGY FOR ENERGY EFFICIENCY AND 
    RENEWABLE ENERGY
    Mr. Regula. We will call the hearing to order this morning. 
We are happy to welcome our guests. We have Susan Kladiva, the 
Associate Director of Energy Resources and Science Issues from 
the GAO, and she is accompanied by Edward Zadjura, Assistant 
Director of Energy Issues and Dan Reicher who is the Assistant 
Secretary for Energy Efficiency and Renewable Energy.
    For the format this morning, we will have the testimony 
from the GAO and then from you, Mr. Reicher. Then we will take 
questions from the members.
    The issues we have before us are that there are unobligated 
balances of appropriated funds that are not dedicated to any 
contract instrument and also uncosted balances of funds that 
have been dedicated to particular contracts but have not been 
spent.
    What we are interested in is the problem created by that 
and why the uncosted balances remain at high levels, certainly 
much higher than recommended by GAO. The total of the 
unobligated and uncosted balances is estimated to be $319 
million for fiscal year 2000. The appropriation in that same 
period has been $692 million.
    These balances are troublesome because the Department of 
Energy has more money than it can realistically spend. That may 
be hard to believe, but at least that is the way the numbers 
come out. And even in 3 years, our funding for these programs 
has increased by 25 percent.
    We are concerned that the Administration continues to 
request large increases for Energy Conservation Programs 
without seeming to be concerned about the large carryover 
balances. So we are going to hear from the GAO on the 
methodology for determining these balances and from DOE on what 
is being done to improve its financial management practices.
    [The statement of Mr. Regula follows:]

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    Mr. Regula. Your statements in their entirety will be made 
a part of the record. We will appreciate your summarizing. So 
we will start off with you, Ms. Kladiva.
    Mr. Dicks. Mr. Chairman.
    Mr. Regula. Excuse me.
    Mr. Dicks. I have taken a look at this, and I am very 
interested to hear what the GAO has to say about this. But if, 
in fact, the unobligated balances are 2 percent for the fiscal 
year 1998, and if unobligated balances for fiscal year 1996, 
1997, approach this level, then in my judgment that wouldn't be 
a very serious problem.
    It seems to me the issue here is not the unobligated 
balances--which we have dealt with this in the military for 
many years--but is this uncosted issue; and that is, why the 
money is not being expended. And I think the Department has a 
good answer here. So I hope that we will listen to both sides 
of this argument. Thank you.
    Mr. Regula. Thank you. And, of course, that is the 
objective of the hearing. Please go ahead.

                          GAO Opening Remarks

    Ms. Kladiva. Thank you, Mr. Chairman and members of the 
subcommittee. We are pleased to be here today to participate in 
this hearing on the level of carryover balances in DOE's Energy 
Conservation Program. Carryover balances are essentially funds 
from prior years that DOE has not obligated for a specific 
purpose or has obligated but not spent.
    Some carryover balances are necessary to transition a 
program from one fiscal year to the next. However, we have 
reported over the last several years that some DOE programs had 
carryover balances that were larger than necessary to meet 
prior program commitments and could be potentially available to 
reduce DOE's budget request.
    At your request, we will discuss the level of carryover 
balances held in the Energy Conservation Program and the trend 
of these balances since fiscal year 1997. We will also discuss 
our methodology for determining the amount of carryover 
balances that may be available to reduce DOE's budget request 
and how our methodology differs from the one used by DOE.
    In summary, while carryover balances in the Energy 
Conservation Program have declined by about 11 percent since 
fiscal year 1997, we estimate that DOE's carryover balance at 
the beginning of fiscal year 2008 be $319 million. Of this 
amount, we estimate that about $74 million is potentially 
available to reduce DOE's budget request.
    We believe that this is a conservative estimate of the 
potentially available balance in the Energy Conservation 
Program that merits further justification to the Congress. Our 
estimate, which is based on DOE-estimated fiscal year 1999 
costs for the program, is above the target level of $60 million 
that we feel is a reasonable carryover balance for fiscal year 
2000.
    Further, in calculating the amount that is potentially 
available, we excluded $185 million in carryover balances 
because these funds were associated with grants and cooperative 
agreements that are often used to provide multiyear funds or 
awarded late in the fiscal year.
    In determining the potentially available balance, we follow 
what is essentially a three-part process. First, we establish a 
carryover balance goal for the upcoming fiscal year based on 
the total funds the program has available to obligate. This 
year, our goal equals 15 percent of the new budget authority 
plus any unobligated balances from prior years. Second, using 
DOE cost estimates, we project the level of carryover balances 
that the program will have at the end of the current fiscal 
year. Third, after adjusting for unique program characteristics 
like grants and cooperative agreements that could affect the 
amount of carryover balance needed, we determined the amount, 
if any, by which the programs' carryover balances exceed the 
amount necessary to meet prior year commitments.
    It is important to recognize that there is a legitimate 
rationale for retaining some carryover balances; for example, 
to account for the lag in time between when contractors or 
grantees spend funds and when they submit cost reports to DOE.
    Historically, DOE and GAO have had philosophical 
disagreements about the methodology for determining carryover 
balances. However, we are making progress in reaching 
agreements on some parts of the methodology. For example, for 
our fiscal year 2000 analysis, we worked closely with DOE 
officials to develop a carryover balance goal that can be used 
in our approach and that also takes into account all of the 
individual goals DOE has set for components of its program. 
Nonetheless, we still have some disagreements.
    Overall, we continue to believe that our methodology is the 
correct one. A key difference between us is that we apply the 
goals to DOE's Total Obligation Authority, while DOE chooses to 
apply the goals to what it defines as Total Available to Cost.
    Applying the goals to DOE's Total Obligation Authority, 
essentially the funds Congress has given DOE to spend, provides 
a stable goal against which to judge DOE's performance. It also 
accounts for DOE's often large unobligated balances. Use of 
DOE's approach assumes that a percentage of the uncosted 
obligations existing at the beginning of the year would again 
be carried over for an additional fiscal year. This is 
inconsistent with the assumption made in developing a goal for 
the uncosted obligations that would be needed only for a 
certain period of time, such as for a month for operating 
funding, before the balances would be costed.
    Further, DOE objects to the fact that our analysis does not 
identify specific areas that could be cut. We recognize that 
our approach for analyzing operating funds produces broad 
estimates and that we have consistently stated that these 
estimates represent a ``starting point'' subject to further 
justification by DOE. We believe that as the agency requesting 
the funds, DOE bears the burden of showing that it adequately 
manages its programs and that it is not carrying over funds 
into the upcoming fiscal year that are in excess of those 
needed to conduct the program successfully.
    In summation, we believe that our methodology provides a 
conservative approach to identifying potentially available 
balances that merit further justification to the Congress. 
Essentially the $74 million we identified for fiscal year 2000 
represents the minimum amount that could be considered 
potentially available.
    Mr. Chairman, this concludes my statement. We would be 
pleased to answer questions.
    [The statement of Ms. Kladiva follows:]

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    Mr. Regula. Thank you. Mr. Zadjura, do you have anything 
you want to add?
    Mr. Zadjura. No.
    Mr. Regula. Mr. Reicher.

                          DOE Opening Remarks

    Mr. Reicher. Thank you, Mr. Chairman. I am very pleased to 
be here this morning, members of the subcommittee, to talk to 
you about the progress we have made in managing uncosted 
balances for our programs, specifically those programs funded 
under the Interior account. I want to talk about the steps we 
have taken to reduce these balances and our new initiatives to 
continue the progress.
    When I became Assistant Secretary a little over a year ago, 
Mr. Chairman, you and your staff shared with me your concerns 
about the management of our programs, citing financial 
management, procurement practices in particular, as requiring 
further attention.
    One specific area which is the subject of this hearing is, 
in fact, uncosted obligations. And overall, I think we have 
made significant progress in this area, reducing our uncosted 
obligations for Energy Conservation Research and Development 
Programs by 38 percent between fiscal year 1996 and the 
beginning of fiscal year 1999.
    However, I want to quickly admit we can and will do more, 
and I am going to describe a specific action plan today that 
will allow us to continue this downward trend.
    As you know, carryover balances are the sum total of 
``unobligated balances'' and ``uncosted obligations.'' An 
unobligated balance is the budget authority that has not been 
committed for goods and services, essentially the dollars that 
are not yet committed under contract or agreement. We haven't 
reached an agreement; we haven't set a contract; and we haven't 
obligated those dollars. Those are the unobligated dollars. The 
Energy Efficiency Programs have historically obligated 
virtually all of the funds appropriated each year.
    On the other hand, uncosted obligations equal the value of 
goods and services on order that have not yet been delivered 
and for which payment has not yet been made by the government. 
They represent a commitment for the purchase of goods and 
services. All of the uncosted funds in my office have been 
obligated previously through legally binding contracts or 
agreements signed by Federal contracting officers. Once 
contracts are in place, DOE and its management contractors 
place funds into particular accounts to pay out to our 
contractors and subcontractors as they submit invoices and as 
they deliver on the agreed-upon technical work. These funds 
appear as uncosted obligations, the key to this hearing, until 
they are finally disbursed.
    In recent years, GAO has expressed concern about the size 
of DOE's uncosted balances, suggesting they could, and I 
emphasize ``could,'' represent amounts that would be, quote, 
``potentially available'' for offsetting or reducing requests 
for new budget authority. However, GAO officials stress that 
the formula that they use to determine funds which are 
potentially available is, as you just heard, merely a starting 
point for analysis. GAO representatives concede that a 
determination of the appropriate level of uncosted balances is 
not a simple arithmetic exercise but that such a determination 
requires substantial analysis and judgment to determine if the 
funds are truly available to offset a future budget.
    GAO's analysis is based upon the assumption that the funds 
in question are obligated and costed in a manner which is 
consistent among all types of DOE programs. Our programs, 
however, under the Interior account, differ from many other in 
DOE because they rely heavily on contracts and subcontracts 
with industry, universities, and other entities in conducting 
our R&D. This reliance on contracting and subcontracting with 
industry is essential to bring new technologies into the 
marketplace. However, Mr. Chairman, the key to this is that 
using this kind of contract approach with industry increases 
the level of uncosted balances.
    In addition, we have sought to conduct our R&D by 
competitive mechanisms to the maximum extent feasible. These 
competitive mechanisms can also require additional time and 
cause additional delay, thereby driving up uncosted balances. 
The benefit, though, is the competition. You get the best 
products and services in the market.
    In summary, uncosted balances are a normal part of doing 
business, and some level, as GAO says, must be maintained to 
ensure that programs are able to continue without interruption 
from year to year.
    Based on our review of DOE's financial data, we have good 
news to report about our uncosted balances. Over the past 3 
years, new budget authority for Energy Conservation R&D has 
increased by 8 percent, and the comparable uncosted balances 
have decreased by nearly 38 percent. This chart shows you the 
downward trend of uncosted balances, the upward trend of 
funding and we expect to see this trend continue. This 
calculation excludes formula grants such as Weatherization and 
state Energy Programs, as the GAO has just explained.
    During my tenure as Assistant Secretary, we have taken a 
number of actions to improve management practices by the staff 
in our office. In recent months, the greatest attention has 
been placed on increasing competition and strengthening our 
merit review process. This is a way to better ensure how we 
obligate our funds, that they go to the right people, the best 
people who can do the work.
    We also have focused on increasing the rate at which we 
obligate and cost our funds. In the coming year, we will 
intensify our efforts in this area. And I am announcing an 
action plan today that will assure our continued progress.
    Let me outline the four steps of the action plan. First, I 
will strengthen the accountability of program managers in 
controlling uncosted balances. These are the people who report 
directly to me and have the day-to-day authority for spending 
the funds that this subcommittee provides. Effective tracking 
of uncosted balances and follow-up by senior management and 
program managers are essential elements in our efforts to 
reduce uncosted balances and to ensure that the balances which 
remain are necessary and appropriate.
    During the past year, we have made actual significant 
progress. I will give you one example. With respect to the 
Interior funding component of the National Renewable Energy 
Laboratory, we achieved a 13-percent reduction in fiscal year 
1998 alone. Moreover, in fiscal year 1999, NREL, the National 
Renewable Energy Laboratory, projects substantial reductions in 
uncosted obligations for the Interior portion of our budget as 
a result of continued management, attention, and focus.
    Mr. Chairman, I have a letter from the director of the 
laboratory that I would like to provide you that goes through 
in detail the steps that he, working with our office, has taken 
to drive down uncosteds in the Interior account.
    Mr. Regula.  Without objection, it will be made part of the 
record.
    [The information follows:]

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    Mr. Reicher. Thank you very much.
    In the coming year, I plan to build on the lessons learned 
in successfully managing the National Renewable Energy 
Laboratory contract and focus increased attention on the 
reduction of uncosted balances by the other major national 
laboratories that receive funding from this subcommittee.
    I also plan to ensure that my managers intensify their 
focus on uncosted balances by reviewing progress and problem 
areas at each and every monthly meeting that I hold with them 
to chart various management issues.
    Also, I will review the progress of the managers in 
reducing uncosted balances and will include this criteria in 
their annual performance appraisal. There is going to be 
specific criteria in their annual performance appraisals that 
judge them on how well they are doing in further reducing 
uncosted balances.
    The second point in the action plan is that I will improve 
procurement planning. In reducing uncosted balances, it is 
essential to process and obligate funds as early as possible in 
the fiscal year. The earlier we can obligate them, the earlier 
the work can start and the sooner we are going to get the bill 
so that they become, in fact, costed.
    In fiscal year 1998, our program managers have made 
substantial progress in achieving earlier commitment of funds 
to laboratories and other entities. However, further progress 
can be made, and we are intensifying our efforts to ensure 
early obligation of funds.
    We will take steps in coordination with our Chief Financial 
Officer and our procurement organizations to improve the 
planning and scheduling of competitive solicitations to assure 
the obligation of funds as early as possible in the fiscal 
year.
    These steps will include an analysis of the distribution of 
our procurement workload to assure the most efficient and 
effective use of this support. The earlier we can put the 
competitive processes into play, the earlier we can make 
decisions about who is going to get the money, the earlier we 
can obligate it and the earlier we can ultimately cost it.
    Third, I am initiating a review of our financial management 
and procurement practices by the National Academy of Public 
Administration. In response to your request, Mr. Chairman, we 
are working with the National Academy of Public Administration 
to undertake an independent review of our financial management 
and procurement practices. This review will address concerns 
expressed by you and other members of the subcommittee, 
including the extent of carryover balances, cost-sharing, and 
competition in our acquisition and financial assistance 
processes.
    And fourth in our action plan, I am establishing a 
Management Improvement Team. I have recently taken steps to 
establish the team. Its mission will be to improve corporate 
management processes and procedures within our office.
    The team will be cochaired by Debra Jacobson, one of my 
senior advisors, and Marvin Gunn, the director of our Office of 
Management and Operations. Both of them are here today. Ms. 
Jacobson served as a counsel to Chairman Dingell's Subcommittee 
on Oversight and Investigations for 14 years and led 
investigations of government management and programs, and she 
brings a great wealth of insight. And Mr. Gunn has more than 25 
years of technical and administrative management in DOE.
    In conclusion, Mr. Chairman, I will continue to place a top 
priority on implementing best management practices to deliver 
the greatest return on the taxpayer dollars that you provide to 
our office. These practices include a major commitment to 
reducing uncosted balances further, consistent--and I emphasize 
``consistent''--with sound financial management.
    Thank you for the opportunity to testify today. I look 
forward to working with you, the other members of the 
subcommittee, and the subcommittee staff as we move forward in 
improving the management of our office. I will be pleased to 
answer any questions. Thank you.
    [The statement of Mr. Reicher follows:]

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    Mr. Regula.  Thank you. I have a couple of questions, and 
we will move to Mr. Dicks.

                       AMOUNT OF CARRYOVER FUNDS

    Am I correct that, giving the most generous application to 
the balance challenges, that there is probably at least $74 
million still available in the first of the 2000 fiscal year?
    Ms. Kladiva. That is correct. And I would emphasize that we 
believe it is very generous; that we have allowed 100 percent 
of the grants and cooperative agreements to be excluded from 
any consideration on the basic assumption that many of them are 
multiyear and are not awarded until late in the fiscal year. 
But we know that doesn't apply to all of them. Nonetheless, we 
have removed all of them first.
    Mr. Regula. You have been very generous in arriving at the 
$74 million.
    Ms. Kladiva. We believe we have.
    Mr. Regula. Mr. Reicher, in view of that, could we not 
reduce your budget request by $74 million without harming the 
program?
    Mr. Reicher. No, Mr. Chairman. The thing I want to 
emphasize today is that these are not free dollars. Too often, 
I think there is something of a confusion between unobligated 
dollars, literally dollars that we have not decided how to 
spend and not reached a contract to spend, and uncosted dollars 
where a contract has been introduced.
    Mr. Regula. No, I understand that.
    Mr. Reicher. What I am here to say is we don't think there 
is anything like $74 million available, because every one of 
those dollars has been committed to an industry, a laboratory, 
or a State agency for work. And there are serious impacts that 
would result from a decision to take those dollars and apply 
them against future budgets. It could lead to the slowing of a 
contract, to the breaking of a contract. There are a whole host 
of consequences that flow from taking uncosted dollars and 
applying them to future budgets. So we disagree strongly that 
there are those kinds of dollars.
    Mr. Regula.  Let me ask the GAO, --would you characterize 
this $74 million as unobligated or uncosted balances or some of 
both?
    Ms. Kladiva. It is some of both. Clearly the Energy 
Conservation Program, from its prior experience, does a good 
job of obligating the funds. Coming into fiscal year 1999, they 
brought only $15 million that were unobligated. When we are 
establishing the balance, we are looking at essentially what do 
they have available to spend, what do they have available to 
obligate, and we are establishing our goal for what is a 
reasonable carryover balance goal on that basis.
    I would point out that this year, in working with DOE, we 
reached an agreement to take into consideration that operating 
funds need only one month. There is generally only one month in 
lag time there, but for capital commitment, there may be as 
much as a 6-month lag time there.
    We have developed a weighted composite average looking at 
how long it takes the M&O contractors that are internal and 
external, the subcontractors, the nonprime as well as the 
capital equipment. So we have taken all of that into 
consideration to come up with this composite 15 percent. I 
would point out that even coming up with the $16 million that 
we think that at this particular point in time, that that is a 
point where we would like to get them to. And then if they can 
get to zero carryover balance from there, then we would suggest 
ratcheting down further.
    But the other point is that the total amount of carryover, 
absent application of the goal, is, even taking out the grants 
and contracts, they have $134 million that they are potentially 
carrying over. And of that, that is still almost 125 percent of 
what the goal is. So even taking the 60 out, they have got 74 
left.

                      COMPARISON TO OTHER AGENCIES

    Mr. Regula. What is your experience, as your office does a 
lot of different government functions oversight? Is DOE 
excessive in comparison to other agencies in terms of 
carryover?
    Ms. Kladiva. I really don't know. I think that----
    Mr. Dicks. I do.
    Mr. Regula.  Okay.
    Mr. Dicks. I have got the list right here.
    Mr. Regula.  Okay.
    Mr. Dicks. To answer your question, Mr. Chairman, I think 
they are very much on the positive side of this equation 
compared to Defense and a lot of other places where the 
unobligated balances are enormous.
    I have a one-page summary chart.
    Mr. Dicks. It has every single agency from 1998, 1999 and 
the year 2000. I will give you the number. Just take one, for 
example. Energy's obligated is $9.792 billion. Unobligated is 
$1.066 billion. And let us just take Defense. Defense obligated 
$137.484 billion. Unobligated is $37.5 billion. And each of 
these agencies is different. But when you look at the whole 
government, the total is obligated, $661.019 billion at the end 
of 2000; unobligated, $307.231 billion.
    Mr. Regula.  It is possible that Defense has too much in 
carryover, too.
    Mr. Dicks. Well, but see, the problem is when you are 
building a ship, you don't spend all the money in the first 
year.
    Mr. Regula. I understand.
    Mr. Dicks. But the way we do it is we put all the BA up 
front, and they take it out over the year.
    Mr. Wamp. Will the gentleman yield? Mr. Dicks, will you 
yield for a minute?
    Mr. Dicks. Sure.
    Mr. Wamp. Will you tell us what the Department of Commerce 
is, so we more compare apples to apples?
    Mr. Dicks. Department of Commerce, I am trying to get the 
right information here. Commerce is very low. Obligated is 
$5.058 billion. Unobligated is $41 million.
    Mr. Wamp. The Department of Commerce, the Department of 
Energy, if you follow these departments, would be more closely 
related. Department of Defense is very, very different from the 
rest of these Federal agencies.
    Mr. Dicks. Let me give you another one here just out of 
interest. It is Labor. Obligated is $7.1 billion. Unobligated 
is $14 million. It seems to me GAO ought to go over there and 
take a look at what is going on.
    Mr. Reicher. Mr. Chairman.

                            SPECIAL PROJECTS

    Mr. Regula. They probably should.
    Okay. Mr. Dicks, I will be back to you.
    I just have one last question, Mr. Reicher. To what extent 
does your organization use unobligated and uncosted funds to 
finance special projects that have not been specifically 
approved through the appropriations process?
    Mr. Reicher. Mr. Chairman, we spend our dollars----
    Mr. Regula. I understand that.
    Mr. Reicher [continuing]. Obligated, uncosted, all of our 
dollars, are spent according to very specific budget codes. And 
when we make a decision to spend a dollar, there has to be 
alignment of that spending with the particular budget code that 
provides the dollar.
    Mr. Regula. Could there be a special project that has not 
cleared the appropriations process?
    Mr. Reicher. We have hundreds if not thousands and 
thousands of projects. So they are not specified at thatlevel. 
And we have to make judgments, and that is part of the work between the 
Chief Financial Officer and our office to make judgments about these 
thousands of projects against a specific budget code.
    Mr. Regula. Well, my concern is that it could be a slush 
fund that you may use for pet projects that may not have a lot 
of value in terms of your mission.
    Mr. Reicher. And I appreciate that very much, Mr. Chairman. 
That is, in fact, why we have stressed over the last couple of 
years much greater competition for our funding. That is why, in 
fact, less and less of our dollars are going out without 
competition and without merit review. We put out a 
solicitation, we say we are interested in doing ``X''; please 
apply. We put out a recent one; over 400 applications for our 
dollars. We then go through a very specific review process.
    That isn't to say there aren't things that come up from 
time to time. We could get requests from the Hill. We could get 
requests from the Secretary. We could get requests from other 
agencies, from industries, about something that is needed to be 
done. We are looking at a breakthrough. If we spend a little 
more money, we could cause the breakthrough. We look for a new 
opportunity, a new problem that comes up.
    What we are careful to do in those situations, though, Mr. 
Chairman, is to go back and make sure that we can link those 
dollars back to a specific budget code.
    Mr. Regula. One last question. What percent of your 
projects have a match from the private sector or a state or 
another entity other than the DOE?
    Mr. Reicher. I don't know the specific percentage, but in 
our R&D projects the State Energy and Weatherization is a 
different story because those typically are not done.
    Mr. Regula. I understand that.
    Mr. Reicher. But in the R&D world, a large percentage of 
our programs are cost-shared. And not only that, there is an 
increasing percentage of costs provided by the industry partner 
that is going up. So the amount of costs of projects that are 
cost-shared is on the increase. And the amount of the 
individual cost-share is on the rise. I can get you that 
specific number though.
    Mr. Regula. And also get a breakdown for in-kind versus 
cash or thing of value, because in-kind is a little fuzzy.
    Mr. Reicher. Yes, I understand that. We will try to break 
that down as well.
    [The information follows:]
                energy efficiency cost-shared contracts
    A total of 52 percent, or 125, of the 242 contracts recorded for 
Energy Efficiency R&D programs in the Department's Procurement and 
Assistance Data System had cost-sharing. The 125 cost shared contracts 
included 62 with cost sharing of 50 percent or greater, 56 had cost 
sharing of between 20 percent and 50 percent, and seven contracts had 
cost sharing of 20 percent or less. A total of 117 contracts did not 
have cost sharing.
    We expect that at the end of FY 1999 cost-shared contracts for 
Energy Efficiency R&D programs will increase to approximately 131 cost 
shared contracts with 65 having cost sharing of 50 percent or greater, 
59 with cost sharing of between 20 percent and 50 percent, and seven 
contracts are expected to have cost sharing of 20 percent or less.
    This cost sharing represents cash contributions from non-government 
entities. Additionally, parties to Energy Efficiency R&D contracts also 
make contributions in-kind. Information on in-kind contributions can 
consist of goods and services and is only available through the review 
of the active contract files at Headquarters and throughout the DOE 
field organizations which implement the Energy Efficiency programs.

    Mr. Regula. Mr. Dicks.
    Mr. Dicks. Thank you, Mr. Chairman. Again, I am not 
suggesting we shouldn't be looking at the size of uncosted 
balances, but I think some perspective might be in order. 
Government-wide, the total unexpended balances at the end of 
fiscal year 1998 was $935.7 billion, composed of $628 billion 
in obligated balances, which means that it has been obligated 
to the purpose for which it is going to be spent, and $307 
billion in unobligated.
    The DOE part of that in total, including both the programs 
funded in the bill and in the energy and water bill, are $8.1 
billion in obligated funds and $2.2 billion in unobligated. At 
least 12 departments and agencies have higher unexpended 
balances than DOE. For virtually every agency, there are valid 
programmatic reasons why these balances exist. The existence of 
the balances by themselves does not represent bad financial 
practices.
    Mr. Regula. Will you yield, Mr. Dicks?
    Mr. Dicks. Yes I will.
    Mr. Regula. When you mention other agencies, are you 
talking in terms of dollars or percentages?
    Mr. Dicks. No, I am talking about----
    Mr. Regula. You say other departments have larger balances, 
but they----
    Mr. Dicks. We are talking about dollars.
    Mr. Regula. You really have to talk about percentages of 
their budget to get an accurate comparison.
    Mr. Dicks. Right. I agree with that. And we will be glad to 
look at that in that perspective. I agree with you on that.
    For virtually every agency, there are valid 
appropriatereasons why these balances exist. The existence of the 
balances by themselves does not represent bad financial management. And 
in the scheme of things, the energy conservation part of the total is 
pretty insignificant. But the point is that--and I always like to try 
to--you know, when you obligate this money, it is obligated to a 
specific agreement, right, to spend the money?
    Mr. Reicher. Correct.
    Mr. Dicks. And then the uncosted part is because the money 
hasn't actually been reimbursed to the people who have spent 
money on the particular project?
    Mr. Reicher. Correct. They have not yet delivered----
    Mr. Dicks. The good or services.
    Mr. Reicher [continuing]. The good or service, and we have 
not written them a check yet.
    Mr. Dicks. Now, in trying to rush this, I mean, I can 
remember times when we would, at the end of the fiscal year, 
because Congress would whip these agencies, they would obligate 
money and spend it on things and waste the money. I mean, it 
was not done in a fiscally responsible way. These are not 1-
year dollars; isn't that correct?
    Mr. Reicher. That is correct.
    Mr. Dicks. So they can be spent over a period of time?
    Mr. Reicher. Correct.
    Mr. Dicks. And so you are telling us that you are working 
as best you can with sound financial management so that you 
don't waste the money. I mean, the worst thing we can do here 
is tell them to go out and recklessly spend this money at a 
pace that would wind up in waste. That is what the American 
people hate more than anything else. I would rather have you 
spend the money on something that is valid and get the job done 
correctly, rather than trying to racehorse this thing and then 
wind up wasting money or obligating on things that we shouldn't 
have done.
    But now you are saying you are going to take all these 
steps again, these four steps to try and deal with this 
problem. In your professional opinion, do you think this is a 
real problem, or do you think that you are just being pressured 
by GAO and this committee? Do you think this is a valid 
problem? Why don't these people spend the money more quickly 
that you are giving them to? That is what I don't quite 
understand.

                     UNCOSTED V. UNOBLIGATED FUNDS

    Mr. Reicher. Let me say it this way. There is essentially a 
first order and second order problem. The first order problem, 
most important problem, is making sure how we spend the money, 
how we obligate it, to whom we obligate it; do we use 
competitive practices, do we use merit review? That is the key 
question. The secondary, less important question is how fast we 
spend it. And that is what this whole uncosted balances issue 
is, where we----
    Mr. Dicks. It is not really you spending it. It is the 
people you have given the money to, how fast they spend it, 
right?
    Mr. Reicher. Correct.
    Mr. Dicks. It is the fact that they are not spending it as 
rapidly that creates the uncosted balance.
    Mr. Reicher. Exactly. What we are trying to do, to answer 
your question specifically, I do think that we should continue 
to reduce uncosteds to some extent. I think they can come down.
    I wanted to point out two things. The Department, according 
to our recent report from our CFO, the Department's total 
uncosted balance is the lowest it has been in 16 years. And 
there have been dramatic, dramatic reductions in uncosteds 
represented by this chart, and they continue----
    Mr. Dicks. Why don't you submit that to be in the record?
    Mr. Regula. Without objection.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Reicher. So the Department as a whole is making 
progress. We are making progress. Let me give you two examples, 
though, because I think this would be helpful.
    Mr. Regula. I think by your admission of what you are 
trying to do is indicative that there is a problem. You are 
trying to remedy a problem that you have become aware of.
    Mr. Reicher. Yes, Mr. Chairman. Let me say we should 
continue to bring our uncosted balances down to some extent. We 
are on that downward trend. The question is how low do we bring 
them. And we have some difference with GAO about how low we 
bring them.
    What we are, though, saying is that there is a huge cost 
associated with taking those uncosted balances and applying 
them to a subsequent year's budget. That is the real rub here. 
There is no doubt that we can obligate our money faster than we 
do. There is no doubt that we should cost it, we should get the 
work back and write the checks more quickly if we can, where it 
is appropriate. But that is different from them taking whatever 
that appropriate level is and applying it to a subsequent 
budget, because that has serious impact.
    Let me, quickly, two examples: One of our laboratories, we 
entered into a 5-year lease for space. Part of the lease, a 
legal agreement, says we have to obligate all 5 years in the 
first year. So we obligate 5 years' worth of lease payments. So 
we suddenly have these huge uncosted balances that we start 
with that we then only work off year by year. If we were to go 
in and take those dollars, the entity we are leasing from would 
say where is the money. And we would say, well----
    Mr. Regula. You keep addressing uncosted balances. How 
about unobligated balances?
    Mr. Reicher. In the case of unobligateds, as we said, we 
have worked very hard and we have been quite successful.
    Mr. Dicks. You are down to 2 percent on unobligated; is 
that correct?
    Mr. Reicher. Or less. And I expect that this year we are 
going to go even less than that.
    Mr. Dicks. I think that is a pretty good record, Mr. 
Chairman. If they are obligating the money, what is really 
happening here is that all these agreements that they enter 
into, they are not spending the money as rapidly. Therefore, it 
creates this uncosted balance.
    Mr. Regula. We have two different problems here.
    Mr. Dicks. I don't think there is any magical solution 
here.
    Mr. Regula. You have uncosted and unobligated balances. 
They are two different situations.
    Mr. Dicks. Right.
    Mr. Regula.  I would like the GAO to comment on the 
dialogue that is taking place here.
    Ms. Kladiva. Well, we certainly agree that the movement 
that the program has made is in the right direction. They have 
made some reduction. When we started looking at shining the 
spotlight on DOE carryover balances at the end of fiscal year 
1995, the Department carried over $12 billion and the 
appropriation that year was $17.5 billion.
    So we recognize that you need to shine the spotlight on, 
you need to be asking the questions, and you need to be 
managing what is happening with the carryover balances, 
specifically in the costing process.
    I don't think that there is good data on how long after the 
obligation is made until all of the costing is complete against 
that obligation. It needs to be managed because until you get 
the costing, you don't know whether your obligation is 
overstated or understated.
    The Department of Energy has a unique situation because 
they have no-year funds. Most of the executive branch agencies 
are dealing with 1-year obligations or 3-year obligation 
authority. They know they have to get the money out. But they 
also have a basis and a reason to be tracking what is happening 
with the costing. If they don't get it costed within a certain 
period of time, generally the 5 years after the close of the 
appropriation, then they are going to have to pay. If they have 
got the legitimate and legal obligation, they are going to have 
to pay out of their current year funds.
    At least it gives an incentive to track and manage what is 
happening with costing, and that is our principal point. It is 
just to keep an eye on it. Otherwise, until we started looking 
at what DOE was doing, we felt they had no incentive to really 
manage and try to get the costing completed.
    Mr. Regula. We seem to be in agreement.
    Mr. Dicks. Mr. Chairman, let me finish up. Everybody wants 
to ask questions. You had a second example. You gave one. Give 
us the second example.

                          MULTI-YEAR PROJECTS

    Mr. Reicher. It is probably a better example. We have a 
major R&D contract with the automobile industry, suppliers and 
the Big Three, on the next generation of vehicles called 
``hybrid vehicles.'' And this is a multiyear contract. What 
happens in this multiyear contract is that, again, we obligate 
over those multiple years, and then it is costed against that 
as the work is performed.
    Mr. Regula. So that is an uncosted balance.
    Mr. Reicher. Correct. Now, what I want to point out is that 
the nature of R&D--and it is indeed why DOE in some respects 
has no-year money--the nature of R&D is unpredictable. We don't 
know when the lab breakthrough is going to come. We don't know 
when we are going to get delivery.
    It would be, I think, poor management to try to force these 
systems into little boxes. We have got to let this kind of R&D 
work go at a pace that is appropriate. When they get to the 
point where they can deliver something, we pay them. So I think 
that is very important.
    I do want to say that GAO, their oversight of the 
Department with respect to overall balances, uncosted balances 
in the Department has been helpful. I have been at DOE now 
since 1992 in various positions. And I have to say that it has 
caused us to focus appropriately on uncosted balances. And it 
is, in fact, one of the reasons, not the only reason, that the 
chart I just showed you is on the nice downward slope that it 
is.
    So I think we are managing this better because we are 
focused. GAO has helped us focus. But I go back to the earlier 
point, which is there is a big difference between that and 
taking these uncosted balances and applying them to subsequent 
budgets.
    Mr. Regula. Mr. Skeen.
    Mr. Skeen. Thank you, Mr. Chairman. I want to compliment 
you on holding this oversight hearing. Quite frankly, I can't 
understand why the program needs a 20-percent increase in 
funding while we have energy producers that are facing 
bankruptcy in New Mexico and other oil-producing States causing 
historically low oil prices.
    These towns and communities in New Mexico are being 
hammered by these oil prices, and I don't see any programs from 
the Administration to help them. As a matter of fact, I could 
stage a filibuster with the facts and figures about how bad 
things are with our domestic oil industry and hardly a peep out 
of the Administration has been forthcoming.
    I know that energy conservation is the topic of this 
hearing. I just want the Administration to go into southeast 
New Mexico and explain why they need a 20-percent increase in 
energy conservation funding while at the same time millions of 
dollars of money is already being carried over each year in the 
Energy Conservation Program.
    I also find it difficult to support these types of 
increases when this Administration has supported these programs 
and alternative energy research at the expense of traditional 
forms of energy research.
    Now, I am listening closely today and in the days to come 
in an attempt to keep an open mind on the President's energy 
budget. It is not easy. I have contacted Secretary Richardson 
regarding the subject of economic disaster in oil country, and 
I reiterate my offer to work with him to help the thousands of 
citizens who are being economically damaged by this crisis. And 
the Administration's budget is seemingly ignoring it.
    I thank you, Mr. Chairman. And I have a question I would 
like to ask the GAO. How does the new DOE plan sound to you, 
the one that Mr. Reicher has announced today?
    Ms. Kladiva. Again, sir, we are very pleased to see the 
Department focusing on its carryover balances, and we are going 
to be most anxious to see how in practice what effect it has.
    Mr. Skeen. We will be most interested to see how in 
practice the program works. I have relayed my concerns about 
this very serious issue. We have got enough disasters in 
agriculture and elsewhere, but seemingly the oil business is 
one of those areas that seems to be self-protected and self-
producing. Nobody has paid attention, but it has become a 
serious problem area. I am sure you are aware of it.
    Ms. Kladiva. Yes, sir.
    Mr. Regula. Do you have a comment, Mr. Reicher?
    Mr. Reicher. Yes, Mr. Skeen. I understand----
    Mr. Skeen. We have got an itch. Can you do anything about 
it?
    Mr. Reicher. I think we are trying across our various 
programs. And indeed, even within this energy conservation 
account, I just want to emphasize we are doing work with the 
oil industry within this energy conservation account. We have 
both got projects to reduce the cost of producing oil 
domestically, looking at literally the energy efficiency of oil 
production.
    Mr. Skeen. What technology items come out of it?
    Mr. Reicher. Motors, pumps. You know better than I, one of 
the costs of pulling oil out of the ground is how much you have 
to spend in terms of energy to do it. And we are working with 
the oil industry.
    Mr. Skeen. Correct.
    Mr. Reicher. The second big focus with the American 
Petroleum Institute, again under the energy conservation 
account, is the cost of oil refining. And we are working with 
the major refineries, beginning some major work with them, to 
cut the energy costs of producing gasoline and all the things 
you get out of a barrel of oil.
    And that is separate from the work that goes on in our 
Fossil Energy Office where, of course, there is quite a focus 
on helping to improve the technologies for both oil, gas, and 
coal production.
    So I understand the problem. And world oil prices being 
what they are, it is a very difficult situation that we face. 
But we are mindful of it. And particularly, the Secretary is 
very mindful of it and committed. And we are going to do our 
piece within the energy conservation account to address it.
    Mr. Skeen. Is there any relevancy in the study being done 
about the importation of oil, how this has affected our own 
domestic productions?
    Mr. Reicher. To be honest with you, I think I am out of my 
area of expertise. And if I were to step into that----
    Mr. Skeen. That makes two of us.
    Mr. Reicher. I am not even in my area of expertise.
    Mr. Skeen. I thought you could help me out.
    Mr. Reicher. We can get you that information, and we will 
get that to you.
    Mr. Skeen. Very well.

                      strategic petroleum reserve

    Mr. Regula. There is an interesting development this 
morning. We have been advised that the DOE will receive oil to 
fill the SPRo in lieu of royalties paid to the Minerals 
Management Service for oil production in the Gulf of Mexico. 
The DOE is going to take oil, put it in the SPRo instead of 
receiving cash royalties.
    Mr. Dicks. That will help the industry somewhat, I hope.
    Mr. Regula. I think that is the objective. I think it is a 
good move.
    Mr. Reicher. I am glad to hear that was announced, and I 
know the Secretary has been working very diligently on putting 
that whole plan together.
    Mr. Regula. Mr. Wamp.
    Mr. Wamp. Thank you, Mr. Chairman. I do also think this is 
a good exercise because the lack of oversight hearings like 
this is possibly what led to the uncosted, unobligated balance 
problem that we had in 1995. And so it is important that we 
continue to work together.
    I also want to make a point that I know Secretary Reicher. 
I have worked with him now for a number of years. I have great 
confidence and respect in his work and for his work. But I also 
understand that our Majority staff and the Majority members 
here, we are not recommending some of the more vigorous 
measures; like I understand Energy and Water doesn't even allow 
more than a 1- or 2-year window on dollars to be committed.
    And this is a legitimate and debatable issue because 
research, particularly, has to be funded on a longer-term basis 
than a year or two.
    But then again, Mr. Secretary, you said that there was 
confusion on this unobligated, uncosted issue. And I do think 
that the programs that you implement help eliminate that 
confusion as we go. And I know just as a new Member, 4 years 
ago, wading into very complex DOE issues, it took me a while. 
And I kind of pride myself at trying to understand it, sitting 
down with it. It took me a while to follow this. So we want to 
encourage your continued work on eliminating the confusion.
    One of my questions to GAO is more specifically on grants 
and cooperative agreements. How can--beyond maybe what he said 
today, laying out his four principles and his agenda items--
more specifically, what can they do? Or can you be more 
specific on grants, cooperative programs, to, (1), eliminate 
the confusion, (2), to carry over fewer and fewer dollars to 
try to hit your $60 million target per year?
    And maybe a follow-up question: Is 60 too high? I mean 
isn't it maybe twice what other agencies are called on when you 
are looking at a 1-month carryover versus a 2-month overall 
carryover? It is 8 percent on some agencies, I understand, and 
you are saying 15 percent. Is that just because we made a lot 
of progress? Do you want to try to get to 15 and then maybe go 
lower?
    Ms. Kladiva. I would underscore that we do think that until 
we get to 15 percent, that it is not too relevant to look lower 
because we are so far above 15 at this point. Your point is 
well taken that there are different activities that go on 
within the Department.
    While we have given them credit for all of the grants and 
cooperative agreements as though they were all multiyear and 
they all went out late in the fiscal year, we think that the 
emphasis on those activities should be in getting them to 
happen earlier in the fiscal year. That is something that Mr. 
Reicher has alluded to, that they are focusing on trying to get 
the grants out earlier in the year.
    I would also like to say that our application of the 15 
percent to establish the carryover balance goal is not a 
mindless application of a number. In effect, we place no limit 
on the unique characteristics that DOE tells us that these 
programs have. So he indicated, for example, a 5-year lease 
where they had to fund all 5 years up front.
    When we do our analysis, in addition to taking out 100 
percent of the grants and cooperative agreements, if he had 
indicated that this is an area where we should also take it 
out, if it is a unique characteristic of the Energy 
Conservation Program and therefore it shouldn't be held against 
them--we would not have taken that out also.
    So we place no limit on the unique characteristics that the 
Department can demonstrate to us that we will give 
consideration for in establishing the carryover goal.
    The other thing is to say that we also use what DOE is 
estimating that it is actually going to cost in fiscal year 
1999 in the Energy Conservation Program. Even after that, they 
have got $74 million that they are not indicating that they 
will be costing in fiscal year 1999. They have also got some 
portion that will be an obligated balance that will go from 
fiscal year 1999 and carried into fiscal year 2000.
    Now, given that they are asking for a 21-percent increase 
in their budget, and this program has not offered them even $1 
as an offer of saying that from our carryover balance take this 
and offset our budget request, we think that some portion of 
that should be used to offset the budget request for 2000.
    Mr. Wamp. That strikes at the heart at what this hearing 
ought to be about today is that those more specific 
recommendations for what we are looking at are right in front 
of our nose.
    Secretary Reicher, just in closing, just do this for me. I 
know there is not a paranoid member of this subcommittee from 
either side of the aisle, but there are probably paranoid 
Members out there that might say Secretary Reicher has the 
Kyoto controversial protocol issues under his jurisdiction. And 
any carryover funds, just let us know today that none of these 
monies, unobligated or uncosted, will be moved over to 
implement any unagreed-upon Kyoto-type stuff; that we can agree 
on PNGV and many other programs, but until we have more 
agreement on Kyoto, you are not going to spend any of this 
money, are you, Mr. Secretary?
    Mr. Regula. We are not going to swear you before you give 
that answer.
    Mr. Reicher. Mr. Wamp, I appreciate your comment. And it is 
the administration's policy that we are not spending dollars to 
implement the Kyoto agreement. Thank you.
    Mr. Regula. Mr. Hinchey.
    Mr. Hinchey. Thank you very much, Mr. Chairman. This is a 
very interesting hearing and an interesting subject. And it 
would be so at any time. It is particularly so occurring at a 
time when oil prices are at an all-time low. And so I can 
readily understand the interest that people have in the oil 
production industry and the issue of energy conservation at 
this particular moment.
    And I think that it is the point that Mr. Skeen has made 
about the fact that we ought to have some concern about that 
particular issue from the point of view of the energy producers 
I think is a legitimate one, and we certainly ought to. But I 
think that we ought not at the same time to lose sight in the 
long range, of the understanding that it is in the best 
interest of our country to engage in Energy Conservation 
Programs that are comprehensive and effective.
    And I think that it is clear, based upon what the Secretary 
has said about the history of these balances over the course of 
the last 16 years, going back to 1983, that they have been 
working very diligently to bring those balances down. And they 
are, in fact, now at a level lower than they have been at any 
time since 1983.
    That doesn't mean that we have to relax our guard with 
regard to producing programs that will, in fact, bring about 
essential energy conservation, which of course is in the best 
long-term strategic interest of the country, given the fact 
that we are now dependent upon foreign sources for our oil, to 
the tune of more than 50 percent. In other words, to rephrase 
that, we are now importing more than 50 percent of our oil 
energy from places outside of the Continental United States. So 
energy conservation remains a very important issue.
    I was interested to hear, if I am correct, that GAO is 
looking at the Energy Department in this particular context 
sort of in isolation, not in comparison to other agencies. And 
we heard Mr. Dicks say in that regard that energy is sort of in 
the middle range of all Federal agencies with regard to unspent 
balances.
    And while I readily concede a point that Energy is very 
different from the Department of Defense, so too it is equally 
different from the Department of Commerce. And I would not 
expect the Department of Commerce to carry these kinds of 
balances because they do not engage in the same kinds of 
activities, same kinds of contracts, the same kinds of storage 
facilities----
    Mr. Dicks. Exactly.
    Mr. Hinchey [continuing]. That you pointed out, Mr. 
Secretary, and things of that nature.
    So it is very difficult to compare these agencies and come 
out in that regard with a clear understanding of what it ought 
to be, simply by making those comparisons.
    I would just again draw attention to the fact that we are 
looking at a problem which, to the extent that it is a problem, 
it is a diminishing problem. And it is a problem that is much 
smaller than it was last year and the year before and the year 
before that, going back to 1983 at least. And we have the word 
of the Secretary that they are going to continue to move in 
that direction and the visual aid of the flowchart that 
demonstrates that.
    So my question to you, Mr. Secretary, is: Can you tell the 
subcommittee with what degree of confidence we can take away 
from this hearing the idea that, in fact, you will be able to 
continue that trend and you will be able to increase the use of 
these funds in a material and helpful way?
    Mr. Reicher. Mr. Hinchey, first of all, I can state today 
that we are going to very aggressively continue to work at this 
issue of uncosted balances. It is a top priority for me. It 
will be a top priority for the managers in my office. They are 
going to be monitored on a monthly basis, and it will be part 
of their performance review.
    So we are setting up a new management improvement team. So 
I think we will do as good a job as we can to continue to bring 
these down, knowing that sound fiscal management does suggest 
that you don't bring them anywhere close to zero. You have got 
to land at a reasonable point.
    Secondly, linking your statement and Mr. Skeen's statement, 
our office is very much focused on using traditional energy 
sources, oil, coal, nuclear, in a more efficient manner in 
cars, in homes, in industries, in the Federal sector. There is, 
I think, too often the sense that we are somehow engaged in 
some alternative effort. But we are the folks who take the 
electricity made from coal, made from nuclear, which are the 
two largest sources today, and when that electricity goes into 
a house, we are the folks that make sure we use it as 
efficiently as possible; or the gasoline that goes into a car, 
we are the folks that are supporting the work to make the most 
efficient use of that.
    So I think this all fits together in a pretty cogent, 
pretty compelling way, the two important use views that are 
shared here this morning.
    Mr. Hinchey. I would agree with that, Mr. Chairman. And I 
also take note of your observation a few moments ago that the 
Energy Department, not under your jurisdiction, but a different 
part of the Energy Department, is taking advantage of the fact 
that oil prices are at a very low level and adding to the 
strategic oil reserve.
    Mr. Regula. That is a good move.
    Mr. Hinchey. It is a very good move, and it is something we 
should certainly encourage, both from the point of view of 
long-term interest and also from the point of view of the 
energy producers, which is something, that as Mr. Skeen points 
out, ought to be of concern to us.
    So I think that is a message we ought to send back to the 
Energy Department, that we fully endorse that particular move 
and encourage it and would like to see it move forward very 
expeditiously toward an objective being the full revitalization 
of the SPRo, which we know has been drawn down very 
substantially back in the decade of the 1980s.
    Mr. Reicher. Mr. Hinchey, I will take that message back to 
the Secretary and communicate that.
    Mr. Regula. I would like to ask GAO a question, and then we 
will go to Mr. Cramer. You have said there is $319 million of 
unspent funds, and you have tried to accommodate specific 
circumstances. You haven't taken them to zero by any strategy.
    Ms. Kladiva. No, not at all.
    Mr. Regula. You are saying after factoring plenty of 
protection, there is still $74 million left. And of course, Mr. 
Hinchey, when we get to markup and we have a lot of projects we 
would like to do, maybe one in your district, that $74 million 
will look attractive.
    Mr. Hinchey. I am sure the temptation will be there. I will 
try to resist it.
    Mr. Reicher. Mr. Chairman, just very quickly, one of the 
issues in taking some portion of that is that it actually 
affects projects, to be very candid, in other people's 
districts. One of the experiences we have had is when you go 
into a budget and you say we are going to have to slow a 
contract down, we are going to have to break a contract, we are 
going to have to do something, that actually comes home----
    Mr. Regula. You are not talking about breaking contracts. 
You are talking about the uncosted balances. We are talking 
about the unobligated balances.
    Mr. Reicher. No.
    Mr. Regula [continuing]. And some uncosted, too.
    Mr. Reicher. Seventy-four million is the uncosted, maybe 
with a very small amount of unobligated.
    Mr. Regula. But you have----
    Mr. Reicher. Those are dollars already under contract.
    Mr. Regula. Do you want to comment?
    Mr. Zadjura. Yes, I would like to comment. I guess I would 
like to say a couple things about the general conversation. We 
have done this for quite a few years. And to give DOE credit, 
they have done a lot better than when they were at 12\1/2\ out 
of a budget of 16 or $17 billion. And that, in GAO's view, 
coming down is good in the sense of reducing your unobligated 
and your uncosted carryover balances.
    But as you said, they do have $319 million to carry over. 
When you take out the allowance, the portion of the program 
that we exclude, the cooperative agreements and the grants, 
which maybe they could do better on getting those out faster 
and costing them faster, but we give them a 100-percent 
exclusion on that right now. When you take that out, there is 
still about $134 million. We say the goal should be about 15 
percent of what they have available, or $60 million. That is 
about 2 months' spending on average, 15 percent. They have more 
like 34 or 35 percent. They still have quite a bit of room to 
come down to before we even think they are where they should be 
at.
    And at that point in time, I think it is the question 
somebody asked before: Should we look at why they are not doing 
a better job of getting the grants and cooperative agreements 
both out and obligated and then costed on time?
    And in the sense of whether taking away the $74 million or 
not will kill any project or not, this is what is left over 
after they told us what they expect to spend this year. So this 
$74 million is not going to be spent this year.
    Mr. Regula. So it wouldn't cripple them?
    Mr. Zadjura. As our big boss has been known to say, ``We 
haven't heard them scream yet.''
    Mr. Dicks. Mr. Chairman, wait a minute. Let us give him a 
chance here. The issue is do you have to break existing 
contracts to do this?
    Mr. Reicher. If we were to take $74 million and apply it 
against a subsequent budget, money that is already under 
contract or under cooperative agreement, that would have 
impacts. It could slow a contract down. It could cause us to 
have to renegotiate it. It could cause us in some cases to 
literally have to----
    Mr. Dicks. I know, but the staff says you have never broken 
a contract before under this program when money has been taken 
away from you, that you have never broken a contract.
    Mr. Reicher. Typically, to the extent money has been taken 
away, they have been very small amounts of money. As I say, I 
am not saying it is a sure thing. I just swallowed a bug.
    Mr. Dicks. Do you want some water?
    Mr. Cramer. We won't draw any conclusions.
    Mr. Reicher. This is highly unusual. It was looking like a 
fruit fly. It was kind of sweet.
    Well, excuse me, Mr. Chairman. There are a variety of 
impacts that would result. For example, in the case of this 
lease, we would have to go back and figure out how we are going 
to have to deal with this lease that has got----
    Mr. Dicks. Wait a minute. She says that they have taken 
into account all of those kinds of expenditures, and not one of 
those would be affected in this 74 million. This 74 million is 
just sitting there.
    Mr. Reicher. No.
    Mr. Dicks. This reminds me of the NREL, by the way. It is 
just sitting there, that is not going to be--if you had to 
obligate and if you had cash flow and lease payments, all of 
that is counted here--that you have told her everything that 
you have got like that.
    Mr. Reicher. Not at all.
    Ms. Kladiva. The point is he didn't tell us everything like 
that. That is the first we heard of it this morning. Had he 
told us of that, we would have in fact taken it out.
    Mr. Dicks. Wait a minute. That is a different story. Now we 
have got a little conflict here about what--you said earlier, I 
thought, all of those things had been taken into account. Now 
you are saying they haven't been taken into account.
    Ms. Kladiva. If the agency had identified them to us, we 
place no limit on what they define as their unique program 
characteristics. This was not defined as a unique program 
characteristic. I guess from their view, it was business as 
usual.
    Mr. Zadjura. Let me do some more clarifying on that. 
Whatever they offer up as a unique program characteristic, we 
look at. We don't buy everything unless there is a good reason 
and a good justification.
    Mr. Dicks. Even if the money has been obligated.
    Mr. Reicher. We are talking all obligated dollars here.
    Mr. Zadjura. These are obligated dollars. We are talking 
about the uncosted portion, for example. Okay. I find it 
personally hard to believe that they would have to cancel or do 
anything else to their lease because there is a rollover amount 
of in excess of $300 million that is carried over this year. 
Last year it was $333 million. Of that, we set aside some stuff 
that may not be funded until way late in the fiscal year, which 
means those funds--there is a big amount of cash that is being 
rolled over, and this pool is only diminishing slowly.
    Mr. Regula.  Let us come back to this. I want to give the 
other two members an opportunity to speak.
    Mr. Cramer. Thank you, Mr. Chairman. This is a great 
hearing, and I may jump right in the middle. I am a new member, 
and I am trying to keep up with this. And it is very 
interesting.
    Secretary Reicher, I congratulate you on your presentation 
here today, not only today but, as well, issues that I am aware 
that you have worked on have been just what I think DOE should 
be working on.

                    availability of carryover funds

    But GAO, right in line with where I think we were just 
then, this remaining $74 million that you say is potentially 
available to reduce DOE's budget request, specifically, do you 
have any idea what the impact would be on Energy Conservation 
Programs if the Congress were to reduce that amount from the 
Department's 2000 budget request?
    Mr. Zadjura. I mean, it is essentially money that right 
now, coming into this year is sitting in a pool. It is 
basically sitting in your bank account and is not going to be 
spent. Now, if it was a permanent reduction, it would have an 
impact. But if you reduce it because it is a carryover pool of 
money that sits there, and essentially if you will look at it 
as a bank account, and the pool is about $300-some million, it 
would not have an immediate impact. It wouldn't require them to 
cut any grants or contracts that we have ever seen in the past; 
and this has been done in the past in programs with DOE.
    Mr. Cramer. Mr. Secretary.
    Mr. Reicher. Two things, Mr. Cramer. First, the dollars 
have been set aside to pay for work under contract. When you 
take those dollars, you have some effect on the work. And where 
I disagree with GAO is that this is just sort of a large bank 
account, because these dollars, as the Chairman knows so well, 
are very specifically tailored to very specific kinds of work. 
We have literally hundreds of budget categories we have to 
match up our spending against. And we simply can't reach into 
another part of our funding without getting into a lot of 
trouble.
    When we face the necessity to find new money to deal with 
the fact that we have had to take money away from an existing 
contract, you simply can't look into some other part of the 
account or we will get a letter from this subcommittee asking 
us why we moved money around in an inappropriate fashion. So it 
is much more technical.
    And my point is that this--and GAO has admitted--this $74 
million is only the starting point for an analysis of uncosted 
balances. It is not the end. This is a projection that they 
make of where we are going to be in many, many months. If one 
were to actually consider taking some of these dollars, you 
would have to do a very careful analysis of each and every 
dollar and where you are going to find it and what the impacts 
are going to be on the contract or agreement that is already in 
place.
    So where we differ with GAO is that GAO has made a 
projection with a fairly simple formula. What we are 
emphasizing here is that this has consequences and it has to be 
looked at in a very, very particularized fashion if any single 
dollar is to be taken away from an existing contract. I can't 
say to you that today that it is a sure thing we have to break 
a contract. It is a sure thing we have X, Y, and Z impacts. I 
can tell you today it would have impacts.
    Mr. Cramer. It becomes a question whether it is a permanent 
reduction, doesn't it?
    Mr. Reicher. It can have a permanent impact, and that is 
the key because the work might be slow. Now then, the question 
is, in some subsequent budget, can you fill back in with some 
dollars? That is not always clear. It depends on, again, the 
very specific categories and the amounts that are appropriated.
    Mr. Cramer. If we don't appropriate $74 million in the 
budget and we tell DOE to use uncosted balances, it will be 
permanent, and it will have an impact?
    Mr. Reicher. Yes.
    Mr. Cramer. GAO.
    Mr. Zadjura. First we go right to the lease. No lease will 
be broken because our projections will be based on what DOE 
told us they are going to spend, which meant that they have 
obligated payments on the lease, and they are going to make a 
payment on it, it is included in our analysis.
    So no money would be taken away from any lease. This is 
their projection of what they are going to spend this year, 
including things such as that lease. That is all included in 
the analysis. We get the numbers from them. I don't see how 
they could possibly say they have to go back and break this 
lease. The projections include the money for that lease.
    Second of all, last year, they rolled over $333 million, 
just to use last year and this year's analysis. If you had 
chosen to tell them to use some of their carryover balances, 
$74 million, for example, because it happens to match the 
number, this year instead of rolling over $319 million, they 
would have rolled over 319 minus 74, which would have come out 
pretty close to the target goal of $60 million in carryover 
balances that we think they should have had.
    We don't see any dire consequences for taking some of this 
pool of money on an interim basis. It is going to sit there, 
$300-some million dollars are going to sit there this year 
unspent. They may need to be spent in the future, but it is not 
going to be spent this year.
    Mr. Regula. Are you talking about fiscal year?
    Mr. Zadjura. Yes.

                         accounting complexity

    Mr. Reicher. Again, just briefly, it is not that simple, 
given the incredibly complex accounting systems that one has to 
use. And every dollar has to be accounted for and every dollar 
you take to spend against a future budget has to come out of 
one of our hundreds of accounting codes. And you then have to 
trace that and see what kind of impacts you would then have.
    So it is not like your and my bank account where we simply 
have sort of overall authority to reach in and spend as we 
want. This does have impacts. And I take this not as the expert 
that some of my colleagues are, but in the Chief Financial 
Officer's office, this is the view that what we do is a very 
careful analysis. And what we would find is in many cases there 
would be impacts.
    Mr. Cramer. Thank you.
    Mr. Regula.  Mr. Peterson.
    Mr. Peterson. Yes. I think you just stated that the problem 
is a very, very--and I think these are the exact words--complex 
accounting system. You remind me of HCFA in these gymnastics, 
and that is not a compliment. That is not you personally, but 
the system you have to deal with.
    We ought to have a system where we know what your needs 
really are. You mention lab rent for 5 years, and you obligated 
it all at the beginning.
    I come from State government and from business, and you 
don't obligate--I mean, you obligate yourself to pay the rent, 
but it is allocated to the year in which you rent the facility. 
If every agency in government--and it is not your fault, you 
are just implementing a system--if we prepaid a rent and put it 
in the bank, we would have accounts all over the government 
that are multi-hundreds of billions of dollars that are sitting 
here, doing nothing.

                         multi-year obligations

    We need a system to work--that 5-year obligation is for 5 
different years or one-fifth of it, or whatever percentage--if 
it is escalating, it would be less than that at the beginning 
and more in the end--that amount is allocated to the next 
year's budget.
    You also talked about an R&D contract with the auto 
industry, which is sort of ongoing. You must have some 
estimates of how much you are going to spend in 1999 with the 
auto industry on fuel efficiency and maybe some goal of what 
you are going to spend in 2000. I wouldn't even mind if you 
overobligated a little bit per year. But if you are obligating 
3 or 4 years out, I mean that is funny money. It is not your 
fault. It is the system. But I think we should have a system 
that we don't have to do these mathematical gymnastics to 
figure out if we have money in the bank or not.
    I just think the system--I think that it is GAO's job to 
simplify the accounting system so simple Congressmen can 
understand whether you have money in the bank or whether you 
are carrying huge balances or whether you are not. To obligate 
the rent 5 years I don't think makes public policy sense.
    Mr. Reicher. I appreciate the views. Let me quickly talk 
about those two things, and this gets to the heart of it, I 
think. We are, in fact, obligating the dollars in the first 
year. But unlike the way you posed it, we are not prepaying.
    Mr. Peterson. No, but you are obligating it.
    Mr. Reicher. We are obligating it. Which, under the current 
system, means that the dollars immediately become uncosted 
obligations. We haven't yet paid them. Five years' worth of so-
called uncosted obligations immediately get put in the column 
of uncosted obligation. So that is, in fact, a function of the 
way we do the business.
    And I appreciate your comment about reducing complexity in 
the accounting system. As a nonaccountant, I would welcome it. 
But I do have to say it is the system within which we are 
operating, and it is the system which we have to look at 
carefully if we were, in fact, to take some of these dollars 
and apply them to future budgets.
    Secondly, on the automobile contract, in a sense, I don't 
think it is ``funny money.'' What it really is, in order to get 
companies to come to the table and cost-share, put up their own 
dollars to do work, we have to give them some confidence that 
we are going to stick with this. That is number one.
    Number two, R&D in and of itself has a longer time frame 
than a year. So we basically sit down--some of these are very 
small companies that we work with--we plan a 3-year project. It 
is going to cost X millions of dollars. Frequently, we then 
obligate all those monies in the first year, and then they 
immediately become uncosted obligations that GAO looks at.
    The good news is that this particular contract I am talking 
about, we are nearing the end of it, so in fact those uncosted 
obligations are coming down rapidly, and we are going to be 
able to show yet further improvement in uncosted results.
    Mr. Peterson. But would you welcome an accounting system 
for rents that would be paid year by year; where you obligate 
for 1 year, not for 5 years? I mean, if every agency in 
government puts the money in the bank and obligates it for 5 
years, we are going to have a huge amount of money sitting 
around here to pay future rents.
    Mr. Reicher. Clearly, anything that we could do that could 
give us appropriate flexibility and not tie up dollars and not 
create this uncosted issue, we would welcome.

                         fossil energy offsets

    Mr. Peterson. The administration has proposed offsetting 
fossil energy funding by a certain amount of prior-year 
carryover funding. Why the double standard? Why not for energy 
conservation? I don't think any of us want to stop energy 
conservation or accelerate it. But to have money sitting in the bank in 
account after account, throughout all government, prevents us from 
funding things we think should be funded.
    Mr. Reicher. I appreciate the reference to fossil. I would 
say that in fact--and I haven't made this point--that we are in 
fact offsetting our fiscal year 2000 budget request for energy 
conservation. It includes $25 million from prior year balances 
in the biomass energy development account. This is a different 
kind of account. So we have offered a different kind of offset.
    Mr. Peterson. That is accessed receipts. It really has 
nothing to do with it.
    Mr. Reicher. As I said, this is a different kind of offset. 
So what I am saying, you mentioned different kinds of accounts 
sitting in the government. As I mentioned, this is a different 
kind of account. We have offered that up, $25 million to offset 
the request.
    Mr. Peterson. Could I ask GAO--you work with other 
accounts--who determined that if you have a 5- or 10-year 
lease, you set the whole amount aside when you sign the lease? 
I just haven't heard of that.
    Ms. Kladiva. I really don't know.
    Mr. Peterson. Do you recommend changing that? I think we 
all want you to have the funds you need when you need them. But 
to set aside the length of a lease and pay it all, 
theoretically, the first year--I mean, you have set the money 
aside, you have obligated it all--is not appropriate. And that 
is not your fault; you are just running the system.
    I want to get a couple energy issue questions up. Is there 
oil to fill the reserve, the oil reserve?
    Mr. Reicher. I----
    Mr. Peterson. Isn't the reserve full, a 38-day supply? How 
many days supply for America is there?
    Mr. Reicher. I am outside of my area of expertise. Let me 
tell you a few simple things I do know. The reserve is not full 
and we would like to fill it further. I don't know what our 
ultimate goal is.
    Mr. Peterson. There is never a time to fill it any more 
cost effectively than today. I know Congress put a little bit 
of money in last year, and now you are doing----
    Two issues I would like you to share or get for me: the 
percentage for the last 6 years, the percentage of oil produced 
in this country and imported, some kind of a chart, and for 4 
years in the future what you think it will be. So give me a 10-
year graph.
    Mr. Reicher. I can give you a rough--it is an upward trend. 
We are above 50 percent in terms of foreign oil imports. We 
project that we are--I mean, now I am trying to remember this--
that we will be above 60 percent as we go some time into the 
next decade. So it is rising. And there is also concern about 
the concentration of the--of this area of the world that we are 
getting the oil from.
    Mr. Peterson. I guess another figure I might ask for is 
what percentage of the imports come from unstable governments 
or parts of the world that the U.S. considers unstable. I 
really think it is important to us. If we are going to become 
an 80-percent importer, we ought to at least do it from parts 
of the world that we can count on and don't have to go to war 
for every day.
    The second is--I think it is an issue that has not been 
talked about, but I think it is vital to our future--the 
percentage of oil that we are using in this country that is 
refined here. And go back 6 and go forward 4. I happen to have 
a lot of refineries in my district. I am the old oil patch in 
Pennsylvania, the Quaker States, and Kendalls.
    [The information follows:]
           percent of petroleum imports from the persian gulf
    The percentage of crude oil imports to the United States from the 
Persian Gulf in 1998 is approximately 24%.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Skeen. Can I interrupt you for a minute? The Secretary 
will be here on January 24th.
    Mr. Peterson. I would like to have this information so we 
can talk to the secretary.
    Mr. Skeen. You are talking to his assistant here.
    Mr. Peterson. But if I have that data, I can then challenge 
him.
    Mr. Regula. Yes. The DOE hearing is next week. Mr. Skeen 
has it right.
    Mr. Peterson. But I think the refining issue is something 
that I want to talk about. I see us slowly, a decade or two, 
being out of the refinery business in this country if 
everything remains the same. As for our national security, I 
have real concerns about that. We are going to move away from 
oil at some point in time as our major energy source. But if we 
are refining offshore 80 or 90 percent of our oil as well as 
buying it, I think it has huge consequences as well as economic 
consequences.
    Mr. Reicher. Mr. Peterson, if I could, one of the 
activities that, in fact, this subcommittee is providing 
funding for is to work with the oil refining industry to 
improve their productivity, to reduce their energy use, to 
reduce their waste production. And we have reached an agreement 
with the American Petroleum Institute and large companies to do 
cooperative work so that, in fact, we can make U.S. oil 
refineries more competitive, which I think will help in keeping 
them here and keeping them going. So, again, while this is not 
in the fossil energy account, this is in the conservation 
account. We are very focused on the energy-intensive industry 
and oil refinery.
    Mr. Peterson. Because refineries use huge amounts of 
energy. And some have had a lot of foresight and have been in 
the generating themselves with waste and cogenerating and 
saving energy.
    Mr. Reicher. Right. So we are very committed to that kind 
of work funded by the Subcommittee.
    Mr. Peterson. We thank you very much.
    Mr. Regula. Mr. Kingston.
    Mr. Kingston. I apologize for being late. I had another 
hearing. Which one of you is Mr. Reicher?
    Mr. Reicher. I am.

                            special projects

    Mr. Kingston. Okay. On these unobligated and uncosted 
funds, do you use those for special projects that have not been 
earmarked by Congress? How much do you spend on those special 
projects?
    Mr. Reicher. Well, what I said earlier, Mr. Kingston, is 
that all of our dollars are very carefully matched up against 
very specific budget codes so that when we propose to spend 
money, it has to be matched against an appropriate code. And if 
we can't find an appropriate match, we don't spend it. And 
those codes have to line up with the way you give us the 
dollars from Congress.
    So now on the issue of special projects, what I said 
earlier was that from time to time we get requests from 
Congress. We get requests from other agencies. I will get a 
request from the Secretary. I will get a request from the 
industry or the States about some interesting opportunity, some 
big problem. And they will say, ``Can you help?'' We will then 
very carefully go in and look at whether or not we can help. 
And if we do decide we can help, we will make sure we match it 
against a budget code before we spend a dollar.
    So, yes, there are special projects. They tend to be small 
dollars. But where they match up and where they are 
legitimate----
    Mr. Kingston. What is your dollar amount on that that you 
would spend? We are talking $60 million, right, in uncosted and 
unobligated? Is that the number?
    Mr. Zadjura. That is a goal for what we believe they should 
have.
    Mr. Regula. That is the goal. They have $319 million.
    Mr. Kingston. Okay. But $60 million represents 15 percent.
    Mr. Zadjura. It represents 15 percent of the dollars that 
they have available basically in the new budget authority and 
the unobligated carryover from the prior year. So 15 percent is 
the target goal. They actually have more like about 34 percent.
    Mr. Kingston. Okay. So how much of it do you spend in 
dollars?
    Mr. Reicher. In dollars for----
    Mr. Kingston. Special projects.
    Mr. Reicher. It is hard to say because the term ``special 
projects''--to the extent something comes in that isn't through 
the normal solicitation process or something, they tend to be 
quite small, in the tens of thousands or hundreds of thousands 
of dollars.
    Mr. Kingston. What is the aggregate, though? Is it $20 
million, $30 million? What was it last year or the year before 
or the year before?
    Mr. Reicher. We don't break out those kinds of things, but 
it is small.
    Mr. Kingston. Can you give it to us, say, the last 5 years? 
Is that a number you can get your hands on?
    Mr. Reicher. We can do an analysis that looks at those 
kinds--that kind of funding.
    [The information follows:]

                            Special Projects

    The term ``special projects'' can apply to ``Special Project State 
Grants,'' crosscutting support, or the use of funds recovered from 
prior year appropriations from contract close out actions. All of the 
Energy Conservation appropriated funds are executed in strict 
accordance with the purpose of the original appropriations regardless 
of whether the funds support one of these categories. Also, all Energy 
Conservation unobligated carryover balances and uncosted obligations 
are only used within the intent of the original appropriations.
    Crosscutting support generally refers to activities which are 
essentially ``corporate'' in nature. Examples of cross cutting 
activities are: the conduct of technical analyses to evaluate the 
effectiveness of corporate R&D investments, the conduct of technical 
research to provide planning information to evaluate the effectiveness 
of individual program R&D deliverables, and the conduct of reviews of 
EE sector programs to assess the overall management of strategic 
planning objectives when compared to actual program results.
    If there is a need for departure from the manner in which the funds 
were appropriated, the Department complies with the limited flexibility 
provided under the authority provided by the Interior and Related 
Agencies Appropriations Subcommittees for the internal reprogramming of 
funds. For example, in FY 1998 the Office of Energy Efficiency and 
Renewable Energy obtained DOE approval to internally reprogram a total 
of $345,000 from Energy Conservation prior year funds to offset a 
shortfall for Federal employee salaries. In FY 1999, the Department 
approved an internal reprogramming for $288,877 to provide financial 
support for six full-time equivalents for the President's Council on 
Sustainable Development. Subsequently, in FY 1999, EE obtained approval 
from the Interior and Related Agencies Appropriations Subcommittee to 
use FY 1998 unobligated carryover funds for certain crosscutting 
projects which benefit the Energy Efficiency mission requirements.
    Total Energy Conservation funding for crosscutting activities in FY 
1998, FY 1999, and FY 2000 is $6,900,000, $5,972,000, and $8,667,000, 
respectively. It was determined there were no uncosted balances 
available to offset the FY 2000 budget without implementing contract 
terminations, unacceptable workscope reductions, loss of cost-sharing 
opportunities, adverse impacts to effectively integrating complex 
technical paths, and potential cost overruns (from termination) or 
administrative cost increases from renegotiating contracts in the 
future.

    Mr. Kingston. What I am interested in is what are those 
projects and is there a trend in what you do spend the money on 
or obligate--and what goes into those decisions to spend money? 
And is it an end around on Congressional intent or is it--I 
mean, is it used as an end around or is it used for something 
that is just a great opportunity from a business standpoint?
    Mr. Reicher. It is certainly not an attempt to go around 
Congress. And that was my point about being sure that we can 
match the spending to a budget code, because the budget codes 
are based on how you appropriate the dollars. You give it to us 
in certain categories for certain activities. Then the budget 
codes will line up with those, and then we match the dollar to 
a budget code. And if it doesn't match, then we wouldn't spend 
the dollars.
    So I think there is judgment involved in that. And there 
certainly are things that we spend dollars on that reasonable 
people can differ over the utility of, whether it is for 
industry or whether it is for another agency, whether it is for 
a Member of Congress. But we do what we can to make sure that 
it is----
    Mr. Kingston. Accommodate what is reasonable for the big 
picture.
    Mr. Reicher. Right. And one of the things I really want to 
emphasize, Mr. Kingston--before you came, I talked about the 
substantial increase that we are aggressively pursuing and the 
amount of dollars we compete. In other words, for too long, I 
think, we have in fact not put our money out in a competitive 
enough fashion. And instead, we are now putting it out in 
solicitations where we say, anybody who is interested, give us 
your best application and we will consider it. And so 
increasingly you will see a nice trend in our office towards 
competitive solicitations as opposed to noncompetitive 
instruments.

                           inventions program

    Mr. Kingston. Let me ask you this. You give--you have some 
grant programs for inventors.
    Mr. Reicher. Yes.
    Mr. Kingston. Does that come out of this type of fund?
    Mr. Reicher. That comes out of this subcommittee. One of 
them at least is called Inventions and Innovations Program, and 
it is within our industries programs. And this is for small 
inventors who have an idea. They come in, and again this is 
increasingly a competitive process for those dollars, but they 
are very important. They are small dollars, but they are 
exactly what inventors need at the critical moment when they 
can't easily raise money through normal channels.
    Mr. Kingston. Do you try to do a geographic spread on that, 
or is it just science driven on what is the need?
    Mr. Reicher. Let me say it this way. I think that in the 
Inventions and Innovations Program, I think it is pretty much 
technically driven. In some of the other grant programs, 
Weatherization, some of the community-oriented programs, there 
is more of a formula to make sure that the North, where they 
need money for heating, is also taken care of, and that the 
South, where they need money for cooling for poor people, that 
there is an equitable split. So there is more of a geographic 
element to those kinds of programs. We also provide money to 
State energy offices. And, again, that is obviously a 
geographic--more geographic equity to that.
    Mr. Kingston. Okay. Let me yield the balance of whatever 
time I have back. But I would be interested in what you spent 
the money on special projects for. And if you could do it for 
last year, great; the year before, year before, whatever, just 
to try to get a better grip on it. Thanks.

                          reprogramming issues

    Mr. Regula. Mr. Kingston, you might be interested, most of 
the agencies we deal with will submit reprogramming requests 
when they want to transfer dollars to another account. But we 
have not had any from your Department, Mr. Reicher, that I am 
aware of. And it would seem to me that if you are rechanneling 
these funds, that you should submit a reprogramming request to 
this committee.
    Mr. Reicher. First of all, Mr. Chairman, we are not--again, 
we are not----
    Mr. Regula. We are talking about the special projects, Mr. 
Kingston's concerns.
    Mr. Reicher. There are various budget categories that give 
us some discretion in terms of the projects----
    Mr. Regula. I understand.
    Mr. Reicher [continuing]. That we fund. And so what we try 
to make sure is that when we use the discretion within those 
budget categories, again that we can match these up against the 
right budget accounts, to be sure. There is also, as you know, 
a cutoff below which formal----
    Mr. Regula. $500,000.
    Mr. Reicher [continuing]. Formal reprogrammings are not 
technically required.
    I have talked to your staff about a couple of these issues 
in terms of special projects, and I would very much look 
forward to further discussion because I want to be sure that 
you are, in fact, comfortable with the way we are spending 
these dollars.
    Mr. Regula. That is what we are trying do here.
    Mr. Reicher. The last thing I want to do is have a problem 
over this.
    Mr. Regula. A question for both of you: To what extent 
should the committee consider limiting funding for Energy 
Conservation Programs to 1-year availability or 2-year 
availability? Let us start with GAO.
    Ms. Kladiva. I would say from the General Accounting Office 
perspective, we think there are some potential merits to that. 
First of all, DOE is a very unique agency in that the majority 
of its funds are listed as no-year funds, meaning that they can 
go on into perpetuity. There is no end of the fiscal year.
    Mr. Regula. These balances can lay out there for a long 
time.
    Ms. Kladiva. We really kind of lose track and lose identity 
with what is out there. DOE is not unique in that it does R&D. 
There are plenty of other Federal agencies that are engaged in 
R&D activity. And they have imposed upon them, generally 2-year 
funds for R&D, T&E.
    When there is a conclusion to the appropriation year, then 
there is a 5-year period, that is now absolute, that all 
costing or liquidation against that appropriation has to be 
completed. Five years is a very long period of time. We don't 
know--currently, we don't have any kind of aging information on 
how long it takes for obligations in the Energy Conservation 
Program to be liquidated or to be costed. But 5 years is 
certainly a long period of time.
    That, in and of itself, may not have a direct impact on 
improving the timeliness of the costing within the Energy 
Conservation Program. But, again, it certainly will give more 
accountability to the managers, knowing that they need to focus 
on and to be tracking what is happening with costing.
    And if I might also point out that for fiscal year 1998, 
the Energy Supply Program funded by the Energy and Water 
Development Subcommittee, that they got 1-year money in the 
Energy Supply Program. And the costing of that program at the 
end of one year, it was obligated to almost 99.5 percent within 
the year.

                    1-year, 2-year, or No-Year funds

    But, interestingly, the costing was completed to a percent 
of 84 percent. Because that program had been a no-year fund 
program before that, looking at what had happened to the fiscal 
year 1997 appropriation before there was some 1-year money, and 
then tracking kind of on a parallel track the no-year money 
that was continuing in fiscal year 1998, that the costing level 
there at the end of the year was only about 64 percent. So it 
did have an effect of getting an improved efficiency in getting 
the costing done. So I would say that we think that it is an 
idea that has merit.
    Mr. Regula. Two-year or one?
    Ms. Kladiva. One or two-year. Either of those is some kind 
of finite. And we recognize it may not be appropriate for the 
entire program, but there could be elements for the program. It 
makes a lot of sense.
    Mr. Regula. Mr. Reicher.
    Mr. Reicher. Well, Mr. Chairman, we have looked at this 
carefully. Let me first say, as I think we just heard, an 
annual appropriation or 2-year appropriation we don't think 
would actually affect uncosted balances.
    What essentially it would affect is unobligated balances, 
because basically the only thing that it says to the manager is 
be sure you obligate the money by the end of the year or you 
are going to lose it. The whole issue of uncosted obligation 
continues. So the fact that the funds are annual or time-
limited will not result in less or more uncosted balances. It 
will simply eliminate the availability of unobligated carryover 
funds. That is the first point.
    The second point. We provided a report to Congress in 
October of 1998, last year, on alternative systems for 
availability of funds in which the Department estimated that at 
least $30 million would be required to modify departmental 
accounting systems to accommodate tracking appropriations funds 
by a fiscal year; in other words, moving to more of this annual 
appropriation or 1-year funds.
    Additionally, $10 million was estimated for increased 
annual operating costs, a three- to fourfold increase in the 
volume of data to be reported, reconciled, and managed.
    Let me give you the experience under Energy and Water. We 
now have under Energy and Water 1-year money, 2-year money, and 
no-year money. We talked earlier about accounting complexity. 
This has taken accounting complexity to a new high, because we 
have to keep various sets of books now as a result of last 
year, the year before, I think, getting 1-year and then 
recently getting 2-year, and still having no-year money. So it 
is not a cure for the issue.
    Mr. Regula. The only thing is if it is no-year money, you 
can pull it back out of a contract. If it is a finite 1- or 2-
year amount, once that contract is in, it has to go there. So 
you don't get into special projects spending out of that 
account. It restricts your ability to do the special projects 
type of thing, which I think we have had some concern about.
    Mr. Reicher. Right. And I would rather address that through 
a more focused method. To the extent you have concerns about 
that, I would like to figure out a way to address those.
    The flip side of what you just said about not being able to 
pull money out is that, in fact, it also makes it much more 
complicated when, for example, a contract comes in under 
budget, pulling those dollars out. So the benefit to the 
taxpayer in fact may be lost.
    So there are a lot of other disadvantages to operating with 
it. So you will restrict R&D activities to some extent. We 
don't have the flexibility to allocate funding at the pace 
appropriate to the success or failure of the science. Again, I 
completely agree. We are not the only science agency, but we 
certainly are a science agency, and science doesn't work like 
normal kinds of funding cycles. We don't have the flexibility 
in terms of appropriations on the cutting-edge kind of work.
    And as I say, the annual appropriations require additional 
administrative controls, additional accounting.
    Mr. Regula. Mr. Skeen, do you have additional questions?
    Mr. Skeen. I have none.
    Mr. Regula.  Mr. Hinchey.
    Mr. Hinchey. I do not, Mr. Chairman.
    Mr. Kingston. No.

                           potential offsets

    Mr. Regula. One last comment or question. As the committee 
proceeds with the consideration of the fiscal year 2000 budget, 
will GAO and you, Mr. Reicher, continue to examine the issue of 
unobligated and uncosted balances and keep us advised of what 
you consider to be an appropriate amount that could be offset? 
I assume you would say zero, but not much in any event, that 
you would say we could offset the 2000 requirements. And you 
might have a different number. Do either of you want to 
comment?
    Ms. Kladiva. I just wanted to say that what we have found 
in other programs is that once we have raised the flag and 
identified this is the uncosted level, we frequently find that 
by the end of the year, that our projection is larger than the 
actuality, because they get on the stick and they start doing 
some costing and they get behind it. So we may find at the end 
of the year that the uncosted levels may not be what we are 
saying they are now. But we still think there is a lot of 
excess there that is available to potentially offset the budget 
request.
    Mr. Regula. Mr. Reicher.
    Mr. Reicher. First of all, we will continue to work with 
GAO. We had a good meeting with them last week to talk about 
this hearing and to understand where we have similarities and 
where we have differences. I know the gentleman who directs at 
least two of my colleagues very well, and we talk regularly and 
have a very good relationship. So we appreciate GAO's work very 
much and will continue to listen to them very carefully.
    I do want to emphasize that taking any of these dollars and 
applying it against future budgets comes at a cost. And so we 
are going to continue to monitor this closely. And more 
importantly than just monitoring, we are going to continue to 
drive these numbers down to an appropriate level. And we will 
also keep your staff closely informed about how we are doing.
    Mr. Regula. You can understand we have enormous demands on 
this committee. We could double our spending and not really 
waste it because we are dealing with 30 percent of America's 
land, to say nothing of all the other agencies. So we are 
trying to manage it as carefully as possible. And we appreciate 
it if you keep us informed, because as we go to markup, we are 
going to have a lot of things that we would like to do and 
can't that would be productive.
    Any further comments? Thank you very much for coming.
    The meeting is adjourned.
    Insert Offset Folio 279 here
                                          Wednesday, March 3, 1999.

    GENERAL ACCOUNTING OFFICE, ENERGY, RESOURCES, AND SCIENCE ISSUES

                               WITNESSES

BARRY T. HILL, ASSOCIATE DIRECTOR
CLIFF FOWLER, ASSISTANT DIRECTOR
    Mr. Regula. We will get the hearing started. We are happy 
to welcome all of you.
    I think what we are discussing this morning is an important 
subject. It is important to the tune of over $140 million for 
our public lands, and I think it has been very well received.
    Several years ago, the subcommittee discovered that there 
was a serious backlog maintenance problem not only in public 
lands, but in our cultural agencies and for Indian schools and 
hospitals. The backlog number that was commonly used for the 
public lands alone was $12 billion.
    We held several hearings to address this problem. At the 
hearing concerning the natural resource agencies, the GAO 
reported that while there were substantial backlog maintenance 
needs, the agencies were not using a common definition for 
maintenance, and the data to support their backlog estimates 
were not accurate and reliable. Further, there was no 
acceptable tracking system to store the data, update numbers, 
or track the project.
    We reacted in fiscal year 1996 by putting a recreation fee 
demonstration program to supplement, not supplant, major 
appropriations increases. The four land management agencies 
were allowed to collect and keep 100 percent of the funds for 
backlog maintenance and enhancing visitor service.
    To date, the agencies have collected $420 million in 
addition to their annual appropriations; and I might add we 
have not cut the appropriations. In view of the fact that this 
money is available, we want to see it used to enhance the 
visitor experience and address the maintenance problem.
    We have three purposes today: to hear the successes of the 
program, to discuss possible improvements, and to learn whether 
the agencies now have accurate, credible data and whether they 
are able to track the projects to completion and provide 
Congress with accurate assessments of the total backlog needs.
    Mr. Dicks, would you like to make a statement?
    Mr. Dicks. No, Mr. Chairman. Except I want to say that 
basically I think this has been a very successful program, and 
on our trip last year we heard very positive things about it.
    My reaction to it is that people out there are appreciative 
of the parks. They want to see the parks taken care of. They 
see the demonstration program is successful in that the money 
comes back to the park, and that is a very crucial element of 
it.
    I think we need to consider how to make this permanent, and 
I am very supportive of it and I want to commend the chairman 
for his leadership over the years in promoting this. And I 
think it is a good idea that the American people are willing to 
accept.
    Mr. Regula. Thank you, Mr. Dicks.
    Mr. Hill, the Associate Director, General Accounting 
Office, we are happy to welcome you again to our committee 
hearing. And you may proceed. Your full statement will be made 
a part of the record, and you can summarize it as you see fit.
    [The statement of Mr. Hill follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                             GAO Testimony

    Mr. Hill. Thank you, Mr. Chairman. It is always a pleasure 
to appear before this committee. Before I begin, allow me to 
introduce my colleague. With me today is Cliff Fowler, who led 
the work that we will be presenting today on the fee 
demonstration program. We are pleased to be here today to 
discuss the results of our recent review of the recreational 
fee demonstration.
    The testimony we are providing today is primarily based on 
a report we prepared for this subcommittee and others last 
November. The report's overall message is clearly a positive 
one. The program has provided hundreds of millions of dollars 
to improve visitor services and address backlogs of unmet 
needs. In addition, visitors who pay these fees are generally 
supportive of the program and it has not adversely affected 
visitation rates.
    Despite its apparent success, it is appropriate to focus 
today on several areas in which program changes or refinements 
may be needed. Specifically, my statement will focus on three 
areas: first, improving interagency coordination of fees at 
demonstration sites that are close to each other; second, 
finding innovative ways to make fees more equitable; and third, 
permitting greater flexibility in allocating revenues. In 
addition, I will also briefly discuss the impact the program is 
having on the Park Service maintenance needs.
    Let me start by discussing the issue of improving 
interagency coordination.
    The demonstration program is authorized with the 
expectation that the four agencies would coordinate their fee 
collection efforts where it made sense to do so. During our 
review, we found examples of such coordination, such as two 
units adjacent to each other charging a single entrance fee. 
Such coordination provides benefits to both the public and the 
agencies.
    However, we also found agencies that were not coordinating 
their fees. For example, the Park Service and the Fish and 
Wildlife Service manage sites with a common border on the same 
island in Maryland and Virginia. The two sites are Assateague 
Island National Seashore and Chincoteague National Wildlife 
Refuge.
    When the agencies selected these two sites for the 
demonstration program, they decided to charge a separate, 
nonreciprocal entrance fee of $5 per vehicle. The demonstration 
sites may be reluctant to coordinate fees partially because the 
program's incentives are geared toward increasing their 
revenues. However, the increase in service to the public may be 
worth a small reduction in revenues.

                          need for innovation

    Next, let me briefly discuss the need for greater 
innovation to make fees for equitable.
    The demonstration program encouraged the four agencies to 
be innovative in setting and collecting fees. Such innovation 
takes two main forms: Making it as convenient as possible for 
visitors to pay, and making fees for equitable. We found many 
examples of agencies implementing--experimenting with ways to 
make payment more convenient, including selling entrance 
passes, using machines like automated tellers, selling hiking 
permits over the Internet, and selling entrance or user permits 
through vendors such as gas stations, grocery stores, and 
convenience stores.
    However, we found fewer examples of the agencies 
experimenting with different pricing structures that could make 
the fees more equitable, such as basing fees on the extent of 
use or whether the visit occurred during a peak visitation 
period.
    Most of the experiments with pricing have been done by the 
Forest Service and the Bureau of Land Management. By contrast, 
the Park Service has done little to experiment with 
differential pricing. Visitors are generally paying the same 
fee whether they are visiting during a peak period, such as a 
weekend in the summer, or an off-peak period, such as mid-week 
during the winter, or whether they are staying for several 
hours or several days. A more innovative fee system would make 
fees more equitable for visitors and might change visitation 
patterns somewhat to enhance economic efficiency and reduce 
overcrowding and its effects on parks' sources.
    Now I would like to talk about the need to permit greater 
flexibility in allocating revenues.
    The demonstration program required the agencies to spend at 
least 80 percent of the fee revenues at the site where these 
revenues were generated. However, some demonstration sites are 
generating so much revenue as to raise questions about their 
long-term ability to spend these revenues on high-priority 
items.
    By contrast, sites that are outside the demonstration 
program, as well as demonstration sites that do not collect 
much in fee revenues, may have high-priority needs that remain 
unmet. As a result, some of the agencies' highest priority 
needs may not be addressed.
    This is a significant and sensitive issue that involves 
balancing important features of this program. Providing some 
firmer flexibility in the spending of fee revenues gives the 
agencies more opportunities to address their highest-priority 
needs among all of their field units. If this is not done, 
undesirable inequities could occur within agencies if and when 
the current legislation is made permanent. At the same time, 
however, any change in the requirement needs to be done in such 
a way that the fee collecting sites would continue to have an 
incentive to collect the fees and visitors who pay the fees 
will continue to support the program.

                       impact on nps maintenance

    Finally, I will briefly touch upon the impact the fee 
program is having on the Park Service's maintenance needs. 
Given the substantial increase in funding that the Park Service 
will receive under the demonstration fee program, now more than 
ever the agency must be accountable for demonstrating its 
maintenance accomplishments and the improvements made using 
these additional resources. Unfortunately, right now the agency 
cannot do this. It still lacks accurate and reliable 
information on its deferred maintenance and other park 
operating needs and is unable to track progress in addressing 
these needs.
    At a hearing before this subcommittee last year, the 
Interior Department made several commitments to address these 
problems. I am pleased to report that to date the Department 
has made some progress in meeting these commitments.
    In recent years, the Congress has attempted to help the 
Park Service address its deferred maintenance and other program 
needs by providing additional appropriations and revenue from 
the recreational fee program. However, until accurate, 
reliable, and useful data are developed about the size and 
scope of the agency's maintenance needs, the Park Service will 
be unable to determine how much progress is being made with 
these funds and resolution of the deferred maintenance problem 
will continue to elude the agency.
    In closing, Mr. Chairman, while our testimony today is 
focused on improvements that could be made of the fee 
demonstration program, it is important to remember that this 
program appears to be working well and meeting many of the 
law's intended objectives. So far, the demonstration program 
has bought over $200 million in additional revenue to 
recreation areas across the country with no apparent impact on 
visitation patterns. It has created opportunities for the 
agencies, particularly the Park Service, to address, and in 
some cases resolve, their past unmet repair and maintenance 
needs.
    The 2 years remaining in this program represent an 
opportunity for the agencies to further the program's goals by 
coordinating their efforts more, developing innovative fee 
structures, and understanding the reactions of the visitors.
    This concludes my statement. I will be more than happy to 
answer any questions that you or other members may have.
    Mr. Regula. Thank you, Mr. Hill.
    Does your full statement have some recommendations how the 
program could be improved?
    Mr. Hill. We made recommendations in our November reports 
that focused on that, and I believe that the full statement is 
reflective of those recommendations in terms of the 
improvements that we feel are needed.
    Mr. Regula. Your report states that as of March 1998, 76 
percent of the funds available under the rec fee program hadnot 
been spent. Particularly, the National Park Service, the largest 
collector, spent just over 17 percent of its fee money. Agencies have 
several reasons that they offered for the low obligation rate.
    Do you think their explanations are reasonable, and is 
there an indication that they will increase the expenditure 
rate in the period ahead?
    Mr. Hill. Our understanding of the situation is, the Park 
Service obviously, as you know, was under fire in recent years 
for some of the projects, such as the $300,000 outhouse and 
some of the very expensive homes that were built in some of the 
parks, the housing; and because of that, they were very 
sensitive and they are, rightly so, reacting to that.
    I think they want to make sure that the money that is being 
used from this program is being used for the highest priority 
projects and that we do not see any more reoccurrences of that. 
They have instituted some additional levels of review within 
the Park Service, as well as the departmental level, to make 
sure that all the projects that are being funded are supposedly 
being reviewed and approved prior to their going ahead. And by 
the way, we think that additional level of review, although it 
may be creating some delays or costing time, is prudent.
    Mr. Regula. So you do not think the paperwork requirements 
are overly burdensome?
    Mr. Hill. We have not analyzed the process they are using. 
But based on the experiences they have had in the past few 
years, it is probably a prudent thing to be perhaps giving 
these projects some additional levels of review to make sure 
that they are the highest priority projects.

                           80/20 distribution

    Mr. Regula. The other question I have, and we have several 
for the record is: Do you think that there will be a situation 
in 4 or 5 years when the maintenance backlog is overcome and 
that there ought to be a more equitable distribution rather 
than the 80/20? Because obviously the smaller parks get shorted 
under the present formula and the flagships will probably have 
an excessive amount.
    Mr. Hill. Yes. And that is one of the recommendations that 
we made in the record.
    I mean, right now there are only 100 parks that are in the 
demonstration program. That leaves many parks that are not part 
of it and that basically will be relying on the normal 
appropriation process to deal with their maintenance needs.
    In addition, the parks that have the high volume, the Grand 
Canyons and the Yosemites that have a large number of visitors, 
could well be flush with money. In some cases, it is doubling, 
basically, their operating budget, and it will be money that is 
needed to deal with their maintenance problem. But 4 or 5 years 
down the road, they may be in a situation where they are 
basically funding projects that may not be of a higher priority 
than other units.
    On the other hand, you have other facilities like 
Independence Hall or the Lincoln Memorial that did not charge 
any fee at all to the visitors. So there there may be some need 
to kind of reexamine the distribution of the money and the 
maintenance needs and make some adjustment.
    Mr. Fowler. If I could add one important point to that, 
when we did our work and we visited some of these parks, what 
we learned from park managers, from several of them that had a 
good cash flow from the revenue from the fee program, was that 
in a few years they felt they could address their entire 
maintenance backlog, the entire deferred maintenance situation 
of the park. So after a period of time, some of these managers 
are going to be faced, under the current program, with spending 
money either to further develop, add to the park, further 
develop the park, as opposed to using money to address existing 
needs.
    Mr. Regula. Well, do you have a recommendation either in 
your prior report or this one as to how we can more equitably 
adjust this prospectively, to ensure that we get over all the 
backlog? Because the park visitor may go to the small park and 
they are entitled to have a good experience there, as well as 
in the large parks. So I think we have to think of backlog 
maintenance in a macro sense, as a totality in terms of the 
Park Service or Forest Service or whatever.
    Mr. Fowler. I think it would be a matter of adjusting the 
minimum amount that has to stay in the park. What that number 
is, I really do not have a clue. That depends on a lot of 
factors, obviously.
    Mr. Regula. And I would hope that the leadership within the 
agencies would have recommendations because they deal with this 
program on a day-to-day basis.
    Mr. Hill. And we do mention in the report in our testimony 
today, though, that you have to be really careful when you make 
that adjustment that you do not take away the basic incentive 
that these units have to collect this money, and also the fact 
that the visitors to the parks seem to be okay with paying this 
fee as long as the money is staying in the park, that you do 
not take that incentive away for them as well. So there is a 
balancing act here.
    Mr. Regula. Do all of the parks that you visited have a 
sign up that says that the fee money stays here?
    Mr. Fowler. Do all of them? No. Most of them do.
    Mr. Regula. They should have. We are trying to get them to 
do it.
    Mr. Wamp.
    Mr. Wamp. Thank you, Mr. Chairman.
    I very much appreciate where we are on this, the progress 
that is being made, and the need to reexamine the distribution 
of these dollars. And obviously, with the Park Service bringing 
in most of the revenue, I am going to focus on the flip side of 
that for just a minute and talk about the collection of these 
dollars.

                            golden age pass

    I was speaking to a retired couple from South Africa that 
happened to be here in Washington just a few weeks ago, and 
they took a trip out West this fall and they were flabbergasted 
with this Golden Age Pass, what all they had had for what they 
paid access to. And just being from another country, they just 
thought that was the deal of the century that they could 
actually do that and have those benefits.
    And when we took our trip that Mr. Dicks referred to last 
year we were talking about what an incredible educational 
experience these parks are for young people. And I just wonder 
if we might need to, as we are looking at reevaluating the 
distribution of these dollars, take a look at reevaluating--I 
know some of it is statutory, but what we might need to do to 
look at encouraging younger people too.
    This Golden Age Pass seems to be such a good deal. No one 
seems to want to grow old, but the more benefits that are out 
there, I look forward to it. My goodness, it is sometimes 
amazing that we have given people that are on fixed income, 
many of them retirement income, such a deal, yet if you are a 
young child, you have got to pay more with your family. And 
that is really where we need to focus these treasures, these 
incredible educational experiences, on our young people.
    I just wonder when we look at Golden Eagle and Golden Age, 
if you all took a look at the disparity there. With only 100 
points of collection in the park system, I think, now, should 
we take a look at that as we make progress on how the money is 
spent about exactly how we charge people; and is there some 
confusion about what these fees actually include once they get 
into the parks?
    Mr. Hill. Congressman Wamp, you raise a very good point. 
There is a lot of confusion right now with the types of fees 
that are being collected and these Golden Eagles and the passes 
that they have and what they cover.
    I think some people--we have heard of experience where they 
buy a pass and they expect to be able to have access to all the 
Federal parks and forests only to find out that that is not the 
case, where once they get into a particular park or forest, 
they are charged an additional fee to do an activity that they 
assume is covered. There is a lot of confusion, and I think 
that is something that needs to be examined.
    There needs to be a better way, I think, of letting the 
public know what these various passes include. Maybe there 
needs to be fewer of them, but more all-encompassing. Ithink 
that is an issue that the Department has to look closely at and better 
coordinate amongst the various agencies that are involved in this thing 
and as well as the Congress in terms of, do we want to extend these 
types of privileges to the younger generation or things like that.
    Mr. Fowler. Could I add just one point, a recent 
development? Some legislation passed just last session adding 
another pass called the National Park Pass into this mix. So I 
think there is potential there for even more confusion about 
your rates and passes and what they cover and what they do not 
cover and that sort of thing.
    Mr. Wamp. I am sure they are trying to, but I would 
encourage the director to really listen to the superintendents. 
I know when we were in Yosemite last year, I think we were 
surprised that the percentage of the Golden Age Passes--that 
actually the total number of visitors to Yosemite, the Golden 
Age Pass was far and away the number one pass that they saw. 
And I do not think most folks expected it to be that 
disproportionate. That is where a lot of the traffic comes 
from, and actually that is the least revenue that we are going 
to get out of this pass program. So I really just encourage us 
to work internally on that, as well, while we are looking at 
reallocating the actual proceeds of this particular provision, 
which again we should all be very pleased that we took the 
initiative here and that it is working so far.
    Thank you, Mr. Chairman.
    Mr. Regula. I might tell the committee members that our 
next witness will be Mr. Don Barry, the Assistant Secretary for 
Fish and Wildlife and Parks. And then we are going to have a 
teleconference with the forest supervisor in Minnesota. He will 
be in Minnesota and we will be here, and we will have two-way 
communications. This is kind of an experiment. It is the first 
time we have done this and I hope it works, but we will soon 
find out.
    Mr. Cramer.

                        costs of collecting fees

    Mr. Cramer. Thank you, Mr. Chairman.
    Quickly, if I could, and you may have gone over some of 
this before, but the fees that we are collecting, a 
disproportionate amount of the money initially is to cover the 
costs associated with collecting the money itself, right?
    How is that coming down?
    Mr. Hill. I think the phenomenon you are seeing there----
    Mr. Cramer. It is coming down, right?
    Mr. Hill. It is coming down. And the experience has been, I 
think, it was a lot lower for the Park Service because in many 
instances the Park Service already had the ability to collect 
park fees when this program was initiated, whereas, the other 
three Federal management agencies were not generally collecting 
entrance fees per se. So they had to try to get the 
infrastructure in place to actually collect these fees.
    So I think a high percentage of the early revenues from the 
program were directed at basically constructing booths and 
things like that to collect these fees. That percentage is 
dropping dramatically now. I think you will see that really 
come down to a reasonable percentage now that they are 
basically geared up and running.

                         criticisms of program

    Mr. Cramer. With the demo program, what did you find were 
the major criticisms of personnel units managing the program? 
What did they tell your investigators in the field?
    Mr. Fowler. About problems with the program?
    Mr. Cramer. Yes.
    Mr. Fowler. Getting geared up for it. One of the big 
problems was, particularly in the Park Service, dealing with a 
large flow of cash and managing the cash that was coming into 
the parks, and then working on that and working on the 
accounting systems to better handle that. That sticks out in my 
mind as probably the largest concern that was passed on to us 
at that time. They are working on it, and it is getting better.
    I think probably after that the next biggest issue that we 
heard was, and it varied from agency to agency, but the need to 
talk to their sister land units in other agencies to work more 
together to make a more seamless operation for visitors that 
might go from a unit in one agency to a unit in another agency.
    Mr. Cramer. And the flexibility with the passes, the 
National Park Pass that you mentioned, that is a new pass?
    Mr. Fowler. That has not actually hit the ground yet. It it 
authorized and it is going to be done but the agencies are 
working on that. That is just for the parks.
    Mr. Cramer. Would you care to comment on how the fee demo 
program has reduced the backlog on maintenance on public lands?
    Mr. Fowler. We cannot tell. They are addressing maintenance 
needs and other needs, resource management needs, visitor 
service needs with the fee money that they are getting. But in 
terms of what progress is an agency making to address all of 
their maintenance needs, first you have to define what your 
total maintenance need is and the agencies have not done that 
yet.
    Mr. Hill. But there is no question--I mean, there has been 
a large insurgence of money that is now available to deal with 
the maintenance backlog problem. So there are a lot of projects 
going on right now to deal with the deferred maintenance issue.
    Mr. Cramer. And maybe we are not far enough along into it 
to evaluate it?
    Mr. Hill. It cannot be evaluated yet. A problem that we 
have always had and that they are working on right now is 
dealing with how big is the deferred maintenance problem per 
se. They have had a difficult time defining it. There have been 
estimates thrown on the table, but those estimates do not 
really have any sound data behind them that really let you know 
what the total universe of the deferred maintenance problem is. 
And unless you know that, then it is really difficult to say; 
how much progress are we making at wiping out this deferred 
maintenance is the problem.
    But there is no question that with the money they are 
receiving, there has been an increase in the number of projects 
they have been able to get under way that are maintenance-
related, and they are doing more maintenance work than they 
were prior to the program.
    Mr. Fowler. I think the agencies will acknowledge that. I 
mean, we are not saying anything that the agencies do not 
understand, and they are working towards that.
    Mr. Regula. I would like to piggy-back on that.
    You mentioned that in 5 years you think the Park Service 
will be caught up. How about the other agencies, such as BLM, 
Fish and Wildlife Service, and Forest Service?
    Mr. Fowler. If I could clarify something, Mr. Chairman. 
What I said was, some parks--you might call them ``cash cow'' 
parks--are going to be in good shape, but the Park Service as a 
whole----
    Mr. Regula. Has a long way to go?
    Mr. Fowler. Yes. Again, first you have to know how large is 
this bucket we have to fill, and they do not know the size of 
that bucket yet.
    Mr. Regula. So we need to have that information as we look 
at this prospectively?
    Mr. Fowler. Yes.
    Mr. Cramer. That is all I have for now.
    Mr. Regula. Mr. Hinchey.

                         effects on visitation

    Mr. Hinchey. Thank you, Mr. Chairman.
    I was wondering if you had any information on whether or 
not the fee structure is affecting attendance, and I would be 
particularly interested in the parks that are the objects of 
day-trippers in and around metropolitan areas in California and 
Maryland and Virginia, Gateway in New York, places like that.
    Mr. Fowler. We have not looked at that on a park-by-park 
basis. We have reviewed the available studies that were done by 
various groups, and because the program has not been in place 
very long, it is limited data. You would like a longer trend, a 
longer number of years. So the data that are available are 
based on just a year or two of experience. But that data 
suggested that there have not been significant changes in 
visitation patterns since the program's inception.
    Mr. Hinchey. Do you have that information specifically with 
regard to places like, say, the Angeles National Forest or 
Santa Monica Mountains or Golden Gate, California?
    Mr. Fowler. I would have to go back to the studies to see 
if they mention those specifically. I cannot say right now.
    Mr. Hinchey. I ask the question that way because I would 
think that if the fee structure is going to have an impact, it 
is likely to have an impact on people of modest means, and 
people of modest means are more likely those, perhaps, in 
metropolitan areas who are only going out for a day, 
experiencing one of those parks. I think that is something that 
would be interesting to look at, those people who are being 
affected particularly.
    Mr. Hill. If I could say, the agencies have done some 
visitor surveys and gotten reactions from visitors in terms of 
their reaction to paying the fee, and that has generally showed 
that the visitors who are going there are generally favorable 
of the program. And there is more of that type of survey data 
that they are planning to do in the future, particularly for 
some targeted groups like the back country users or the low-
income people and that type of thing.
    But it also raises the question of, they are basically 
surveying people who are showing up at the parks and forests. I 
am not sure to what extent they are planning on surveying 
people who would have gone but are not going. But there is 
additional study going on now, looking at those issues.
    Mr. Hinchey. There has been some criticism of some groups 
that the fee structure would encourage park managers to 
emphasize recreational activities at the expense of other 
activities such as resource conservation. Is there any evidence 
that that is taking place?
    Mr. Hill. I think it is premature to answer that right now. 
I think that is a concern that we have heard that one has to 
keep an eye on.
    Mr. Hinchey. But you have no evidence, at least at this 
point, that that is happening?
    Mr. Fowler. We do not.
    Mr. Hill. Here again, if I might add to that, I think that 
is why we are saying you need to kind of closely watch over the 
years as these parks collect this money and deal with their 
problem. When they get to the point where they have completed 
all their deferred maintenance needs, they may start looking at 
things like that. They may start talking about putting in a 
marina or something to attract more boaters and things like 
that. And you have to question, is that the right thing to do, 
particularly since there are other units that are not getting 
this money and they are still having deferred maintenance 
problems. So I think that is why one has to keep an eye on that 
and examine that over the years.
    Mr. Hinchey. Thank you.
    Mr. Regula. I would add, and I understand what Mr. Hinchey 
is getting at, that this is a demonstration project, and at the 
end of 5 years this committee and the agencies will reassess 
what works and what serves the public in the best possible way.
    Mr. Hinchey. Yes.
    Mr. Regula. Thank you very much. You have done good work, 
and we are very interested in the reports. We will have 
additional questions for the record.
    Mr. Hill. Thank you.
    Mr. Fowler. Thank you.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                          Wednesday, March 3, 1999.

                    DOI, FISH AND WILDLIFE AND PARKS

                          USDA, FOREST SERVICE

                               WITNESSES

DONALD J. BARRY, ASSISTANT SECRETARY
MAUREEN FINNERTY, ASSOCIATE DIRECTOR, NATIONAL PARK SERVICE, 
    PARKOPERATIONS AND EDUCATION
JOHN ROGERS, DEPUTY DIRECTOR, U.S.FISH AND WILDLIFE SERVICE
NINA ROSE HATFIELD, DEPUTY DIRECTOR, BUREAU OF LAND MANAGEMENT
DENNY BSCHOR, NATIONAL DIRECTOR, U.S. FOREST SERVICE, RECREATION, 
    HERITAGE, AND WILDERNESS RESOURCES
JAMES SANDERS, FOREST SUPERVISOR, SUPERIOR NATIONAL FOREST, MINNESOTA
    Mr. Regula. Mr. Barry, good morning. We are pleased that 
you have come. You have heard some of the questions, and your 
full statement will be made a part of the record. You can 
summarize for us as you see fit.
    [The statement of Mr. Barry follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Barry. First of all, I would like to answer the 
question from Mr. Hinchey.

                      impact of fees on visitation

    A table attached to my testimony indicates that there has 
been a continued steady increase in the number of visitors to 
the park, refuge, forestland areas for all of the agencies the 
last couple of years under the fee demo program. That would 
suggest that there has been no drop-off as a result of the 
implementation of the fee demo program.

                          fee program success

    Thank you, Mr. Chairman and the members of the committee. I 
am pleased to announce that public support for this program is 
strong, fee revenues have increased sharply, and most 
importantly, the needed repairs and improvements are being made 
to enhance visitor experiences.
    We now have over two years of experience in implementing 
this experience since Assistant Secretary for Policy, 
Management, and Budget John Berry first came in front of this 
committee, and I think that we are now at full complement, at 
least for the National Park Service, with 100 recreational 
sites operating under the program. There are 77 sites with the 
Fish and Wildlife Service, 68 sites with the Bureau of Land 
Management, and 67 with the Forest Service. Thus, over 100 
demonstration projects were added during fiscal year 1998.

                           witnesses present

    I am here on behalf of the three participating bureaus of 
the Department of Interior. I also have with me agency 
witnesses who will come up to the table as soon as I am 
finished. We have John Rogers, the Deputy Director of the U.S. 
Fish and Wildlife Service; Maureen Finnerty, the Associate 
Director for Park Operations with the National Park Service; 
and Nina Hatfield with the Bureau of Land Management. They will 
be able to answer more specific questions regarding the 
programs in their respective agencies.

                   experience reported by gao and doi

    I think basically that the agencies have learned a lot and 
are working much more closely together. We found the GAO report 
fair, effective, and very helpful, and we expect to see 
increased program effectiveness.
    The annual Interior Subcommittee report for fiscal year 
1998 to Congress contains much information on both the progress 
we made and the problems we are still facing.

                           program extension

    I would have to say we are also very pleased with the 
extensions that Congress has given us in the program. The only 
problem that we have with it, of course, is that it still is an 
extension to a temporary program, and we believe that we are 
ready to begin the process of converting this into a permanent 
program. The President's fiscal year 2000 budget is based on 
that assumption, and we look forward to working with Congress 
to try to develop permanent fee legislation.

                            visitor reaction

    We are also very pleased with the benefits that we are 
seeing on the ground now for the agency program and for 
recreational visitors who are visiting these sites. I just came 
back from the Virgin Islands National Park. For the first time 
in 12 years, all 22 miles of their trails are cleared as a 
result of the hurricane damage and so on. I had a person 
sitting on the bus next to me, and I asked her what her 
experience was in the park; she said she really had looked 
forward to hiking the trails, but she heard they were closed. I 
said, well, as of last week, with the fee demo money, they just 
cleared the last mile of trail and all of the trails now are 
open for the first time in 12 years. And she said, great. I 
gave the fee demo project all the credit for it and said that 
Congress had wisely allowed the park to keep the money. She was 
very happy and said that was great, and she is looking forward 
to coming back again.

                      additional revenue from fees

    I think what we have noticed is that for all of the 
agencies, we collected about $180 million in revenues for 
fiscal year 1998. This represents a doubling of the recreation 
fees over the levels that existed when the program began. We 
expect additional increases in the years ahead. We also expect 
more efficiency in the operation of the program.
    Again, as I said, the report from GAO we found to be very 
helpful and accurate. In the words of GAO, spending has been 
limited, but there are significant opportunities for addressing 
the needs, and the agencies are faced with enormous resource 
and infrastructure needs as well.

                            expenditure rate

    Mr. Chairman, I know there has been some talk about the 
pace at which we are spending the money. I can tell you and 
commit to you that we will spend every dollar, to be sure, but 
we are intent on spending it wisely. We know that you share 
that goal and that desire. As the public makes its direct 
contribution at the entrance stations for the improvement of 
parks and refuges, it is imperative that we use the funds in a 
good way that gives the public a feeling of good value for 
their money, and that is our commitment to you.

                           review of projects

    To ensure the best use of the funds, at least within the 
Department of the Interior, the Secretary of the Interior has 
directed us to institute a system to carefully review at both 
the National Park Service level and also the departmental level 
the various projects that are being proposed. We have found 
that to be a very helpful process.
    I, in particular, have reviewed every single park fee demo 
project, and I have asked questions about it, and I feel like I 
have gotten a fairly good feeling for the range of projects 
that are out there.
    Mr. Regula. How many would that be?
    Mr. Barry. I measure the stacks in inches, and I could not 
give you off the top of my head the number of projects. Maureen 
Finnerty might be able to. But I know the last wad that I 
walked through and worked through was several inches thick. So 
it is a real smorgasbord of things, ranging from clearing 
trails to increased signage, interpretive materials, direct 
benefits for the public that are really going to make their 
experience in the park so much better.
    I would like to also note that we, of course, are working 
very closely with the Appropriations Committee for the very 
large projects. Any projects over $500,000 we will be sending 
to you for your approval. We are expecting to have a new list 
coming up very soon with some of the large ticket items. I 
think there are maybe 11 or 12 projects on that particular 
list. We are committed to looking for ways of expediting the 
clearance process within the Department as well.

                    public acceptance of higher fees

    With regard to the question about the popularity or 
unpopularity of the program, we have conducted some studies. 
The public acceptance of the fee program remains amazingly 
high, particularly with the provisions for retaining the 
majority of the fee revenues for the unit creating the 
revenues.
    The visitor surveys conducted in 1998 by the Park Service 
indicated that about 83 percent of respondents felt that the 
fees they had paid were either just right or that the fees were 
too low; 86 percent of the respondents to the Fish and Wildlife 
Service survey considered the fees they paid about right; 60 
percent of the respondents in the U.S. Forest Service survey 
indicated high to neutral acceptance of fees on public lands.
    So what we are noticing is a very high acceptance, 
particularly as soon as people realize that the fees are going 
to stay in the park. The woman in the Virgin Islands was a case 
in point.

                          fee collection costs

    Again, we have had a number of experiences in terms of 
costs for collection of the fees. There are up-front costs that 
have been expensive for us to absorb, but once we absorb those 
we are on our way, and we feel that we will be able to watch 
those costs begin to drop.
    Let me provide current information regarding a couple of 
the suggestions that GAO made in their report. One is the need 
for greater coordination among the agencies.

                          agency coordination

    In January this year, John Berry, the Assistant Secretary 
for Policy, Management, and Budget, issued a directive 
requiring the three agencies that we have under the Interior 
Department roof to get together and look for ways of 
consolidating and coordinating their fee demo activities.
    One example that you use on Assateague and Chincoteague, I 
was informed yesterday the Park Service and the Fish and 
Wildlife Service have reached agreement. It has not been fully 
unveiled yet, but they believe that they have reached agreement 
in principle on how they can now use a consolidated coordinated 
fee program for Assateague and Chincoteague. And we have 
expectations that there will be other examples like this as the 
agencies sit down at the maps, look at where their respective 
units are and look for ways of coordinating.

                         permanent legislation

    We mention in our testimony some of the key elements that 
we think are essential for permanent legislation. Those will be 
included in the record with part of my formal statement. I 
would also draw your attention to the tables that are at the 
back of my testimony that summarize both visitor activities, 
cost of implementation, and the flows themselves.

                         reprogramming request

    Let me just summarize, if I could, with a couple of quick 
thoughts. The Department sent to the committee a request for a 
reprogramming to help cover and defer costs for the fiscal year 
1999 shortfall that we are experiencing because of the change 
in the cost collection authorizations that we had relied upon 
in the earlier days of the program.
    I would just encourage the committee to respond favorably 
to that request. This is a one-time problem. When Congress 
first authorized the fee demo program they did authorize up to 
15 percent of the fees to be used for fee collection. The 
general authorities have changed as the program has been 
extended. We are now finding that the Park Service has a 
shortfall, and we would like permission to reprogram some of 
the fees to cover the shortfall.
    In particular, the shortfall will be most severe in the 
agency review in Washington, and our concern is that if we are 
to provide the type of oversight which GAO felt was helpful, 
funding is needed to pay for project review in Washington. I 
think that is where you will find your greatest cost accounting 
and scrubbing of projects to make sure that the projects that 
are funded are the ones that are the most useful.
    I think the only issue that I would probably differ with 
GAO about is in the need for a more equitable adjustment in the 
fee structure and that the Park Service needs to be more 
creative in the way that they set their fees.
    There is a part of me that thinks this might be a solution 
looking for a problem. Given the high range of acceptance the 
public has expressed for the fees, I am personally not 
persuaded that people are going to change their overall 
vacation schedules if they might get a $15 entrance fee at 
Grand Canyon if they go in December versus a $20 entrance fee 
if they go in July. I am not persuaded the average American is 
going to make that much of an adjustment in their travel 
schedules based on a small adjustment like that, but overall we 
could not be more pleased with the assistance from GAO. We 
think they have done an excellent job in really helping us with 
the management of the program.
    I know you need to have me keep moving so we can get the 
agency folks up here unless you have any specific questions.
    Mr. Regula. We intend to do our video conference at this 
point. Then we will bring the rest of the team up. And if you 
will stay Mr. Barry, and also GAO, then we can offer the 
questions, and we will have some other members probably joining 
us.
    Mr. Barry. Mr. Chairman, if I could also just mention, we 
also have John Trezise with us today from the Departmental 
Budget Office in case there are any specific questions that you 
care to direct to John.
    Mr. Regula. Okay. Well, we are experimenting today and, I 
think that this is something we hope to use in the future. 
Debbie says it is Star Trek. We are getting the Congress in the 
21st century.
    Mr. Sanders, you are first for us in doing this. We are 
going to hear brief testimony from your field unit, and you 
have had success with your rec fee program.

                 boundary waters canoe area fee project

    Mr. Sanders is the Forest Supervisor of the Superior 
National Forest in Minnesota. He will discuss the Boundary 
Waters Canoe Area Recreational Fee Permitting Project. Each 
member here should have a folder with information. After he 
makes a brief statement, we will take a couple of minutes to 
ask questions.
    So welcome, Mr. Sanders. We appreciate your summarizing 
your experience with the rec fee.
    Mr. Sanders. Good morning Chairman Regula and members of 
the subcommittee. It is a pleasure to be with you today here 
from Minnesota's Superior National Forest helping pilot test 
this new technology.
    The Superior National Forest is a 3-million acre national 
forest in northeastern Minnesota, with Canada to the north and 
Lake Superior to the east and to the south. The Boundary Waters 
Canoe Area Wilderness is a unique wilderness with the water 
based wilderness located in the northern portion of the 
Superior National Forest. It is over a million acres in size 
and it extends for 150 miles along the international boundary 
with Canada.
    It has about 1,200 miles of canoeing waters, some hiking 
trails, and 2,400 campsites. The Boundary Waters are visited 
annually between May and September 30 by over 200,000 people. 
That equates to a conversion of about 1\1/2\ million visitor-
days annually. So it probably is the most used wilderness in 
the United States.
    Our management plan for the Boundary Waters calls for a 
budget of about $2\1/2\ million annually to keep up with this 
use but our allocation since the mid-nineties has averaged 
about $1.6 million.

                            fee collections

    We talked to users about how much they felt they should 
pay, how to collect the fees, and how the dollars should be 
used. What we ended up with is a fee schedule for overnight use 
only. May 1st to September 30th is the season for Boundary 
Waters; we charge $10 per person per trip into the Boundary 
Waters for adults; charge for youths up to 17 years of age is 
$5; and for senior citizens 62 years and older it is $5.
    We also have a seasonal fee for those who make multiple 
visits: $40 for adults; half that for youths 17 and younger; 
and half that for senior citizens 62 and older. We wanted to 
focus on overnight so that, if they came in for the day and 
left for the day, they did not have to pay a user fee.

                             overnight use

    Again on collection, our fee is collected for overnight use 
only for May through September 30th. Last year being our first 
year, we collected a little over a million dollars for 
overnight use in the Boundary Waters. And as you talked about 
with others this morning, of that allocation, we can use 15 
percent of that for the fee collection. Eighty percent of that 
fee is maintained on the Superior National Forest for use in 
the Boundary Waters.
    As far as fee collection, we spent about $115,000 for the 
first year for fee collection. We expect that fee collection 
costs will go down over the next couple years. As far as the 
$800,000 we had available to us in 1998 for the Boundary 
Waters, we spent 75 percent of the fees that were collected in 
1998.
    Our major objective was to demonstrate to users of the 
Boundary Waters where those fees are going, such 
asrehabilitation work in the Boundary Waters. We extended our office 
hours so that folks could have easier access to our people. We have the 
Wilderness Education Program and we take rangers into the classroom.
    I guess I could summarize the accomplishments by one of our 
seasonal wilderness rangers, who has been in the Boundary 
Waters for years. He said that the excitement was that he could 
finally focus on improving things he had been paddling by or 
walking by for years. He could identify them and go and get the 
job completed. That is satisfaction from our folks who live in 
the Boundary Waters as well as the users themselves.

                           user fee brochure

    What you have in front of you in that packet is a brochure. 
And every person that gets a permit to go in the Boundary 
Waters will have a copy of that brochure entitled ``Your User 
Fees at Work!'' The front cover of that brochure, the picture, 
was donated by a local, renowned photographer, Jim Brandenburg. 
We spent no appropriated or fee demo dollars to complete this 
brochure.
    Also in that package, you have before-and-after pictures 
that will give you a sense of what the trail sites looked like 
before improvements were made as well as what they look like 
when they are done. Part of getting ready for the fee demo 
program in the Boundary Waters began with a user evaluation. We 
continued that again last summer throughout the first year of 
implementation. The majority of the people felt that the fees 
were about right. About 70 percent said they were about right; 
15 percent said they were too low. You can equate that with 82 
percent who said they were happy with the fees. So about 13 
percent said they felt they were too high. But our objective in 
setting the fee, rather than to hit the market value, is to use 
the fee demo along with appropriated allocations to meet both 
user needs and annual maintenance needs in the Boundary Waters.

                           public involvement

    In your packets there are articles and also news reports of 
how successful the general program was in the Boundary Waters. 
It established and demonstrated early on a need for additional 
funding. Folks understood that and accepted that. We took our 
time; we involved the public before we implemented the fee 
program; and third, our highest priority was to demonstrate to 
users that their fees were at work. They saw that in numerous 
ways.
    From my perspective, my thoughts for the future would be to 
make the fee demo program permanent. Allocations or 
appropriated dollars are not dropped off or decreased because 
of the fee demo. We feel that the two appropriations and fees 
need to go together. They need an appropriated allocation, user 
fees--a million dollars worth annually in the future from user 
fees--to meet those needs for the Boundary Waters.
    Program flexibility: there needs to be flexibility in the 
program. One size will not fit all. I am accountable for making 
sure that what I do fits and is appropriate for the particular 
setting I have. We need to make sure that the dollars come back 
to the area collected. That is a big factor in people's 
acceptance, if they know the dollars are coming back here to 
the Boundary Waters. It is not only a challenge for us. As we 
have the fee program, we will continue to demonstrate that 
those dollars are at work and that the public can really see 
how their fees are being used.
    The other thing is how to broaden the program to include 
projects, as well as different types of projects. But again, it 
is a pleasure to be with you here. It is really exciting to be 
back in Washington, DC. If you have anyquestions, I would be we 
happy to take some.

                          permit availability

    Mr. Regula. Well, thank you, Mr. Sanders. It sounds like 
you have involved the public pretty thoroughly in constructing 
your program as to what they felt would make a good approach on 
fees. Is that an accurate statement? You had a lot of public 
involvement?
    Mr. Sanders. We did. We had a different setting with the 
Boundary Waters community in that permits have been required 
for users to go into the Boundary Waters since the mid-1970s, 
tied to the legislation creating the Boundary Waters. We have 
had a funnel point for the users to go in, and have had that 
funnel point for years. They could go directly to the mainland 
to pick up the permit, or they can come to our offices or some 
of the other locations where they can pick up their permit. We 
use the University of Minnesota to help us with focus groups, 
questionnaires, to talk to users as they came in as well.
    We expanded to the Internet for people to be able to pick 
up their permit. The user fees are built right into the permit 
fee. They can get that over the telephone, use the Internet, or 
they can get it from our office, before they go into the 
Boundary Waters.

                              improvements

    Mr. Regula. Would you just give us an example or a few 
examples of the kind of improvements you made with this money 
that will enhance the visitors' experience?
    Mr. Sanders. We focused a lot on--like I said, we have 
about 1,500 miles of trail, different trails between the 
different lakes--improving those trails. We have something for 
that, before and after, in the packet. We also went to 
campsites themselves where we have fire grates--about 2,400 of 
those campsites within the Boundary Waters. We have latrines, 
wilderness latrines, at each of the campsites. We could begin 
replacing latrines and the fire grates, and continue with that.
    We also have user education. We have litter bags with 
wilderness ethics written on the bags that we give to people to 
help encourage education on the use of the Boundary Waters.
    We completed our annual maintenance work in July last year. 
Because of the increased fees in the Boundary Waters, we 
completed that in July of last summer. In previous years, we 
finished this in October. And so the amount of annual 
maintenance work we can do is almost twofold because of user 
fees.
    Mr. Regula. Mr. Cramer.
    Mr. Cramer. Thank you, Mr. Chairman.

                             survey results

    Mr. Sanders, I am very impressed with your enthusiasm and 
oversight of this demonstration project. I know you have had a 
lot of input from the public. You contracted with the 
University of Minnesota to do a survey of public attitudesand 
response to the fee project. What changes have you made as a 
consequence of that survey?
    Mr. Sanders. What we have found so far from the survey is 
that people are happy with the fee demonstration projects in 
place, and the fact that over 75 percent of the fees go right 
back out on the ground. It did not really point out a lot of 
areas that we needed to change and how we used the fees. What 
they can see is how we are using the fees to increase or 
improve the facilities that they were already using.
    Mr. Cramer. All right. Thank you, Mr. Chairman.
    Mr. Regula. Mr. Kingston.

                         discretion in fee uses

    Mr. Kingston. Thank you, Mr. Chairman.
    Mr. Sanders, what is the balance between the money that you 
have and the discretion to spend it the way you see fit or your 
survey directs you to and congressional oversight in terms of 
our role, or the Department of Interior, the National Park 
Service's oversight? You see what I am asking?
    Mr. Sanders. I understand the question. I used those funds 
for facilities operation and maintenance within the Boundary 
Waters. We have complete discretion to use those fees, and the 
allocation, for the wilderness program. The answer is combining 
user fees and our allocation together to meet overall 
management needs. User fees cover costs over and above fixed 
costs. Our allocation covers fixed costs including salaries for 
full-time employees. I do not know if I addressed your question 
or not.
    Mr. Kingston. Let me make sure I understood what you said. 
You have your full discretion to spend it locally? Where does 
the buck stop?
    Mr. Sanders. The buck stops with me as far as how those 
funds are used. I have full discretion for how those fees are 
used and how the appropriated dollars I get are used in that I 
take my appropriated dollars for the wilderness areas and they 
are spent on the wilderness areas. I cannot take those 
appropriated dollars or user fee dollars and spend them outside 
the wilderness area for other programs.
    Mr. Kingston. Your user fees, and I know I have the 
statistic, but you collected about $2 million; is that right? 
Did I see that?
    Mr. Sanders. We collected over, a little over $1 million.
    Mr. Kingston. Okay. So within $1 million, you have the 
ability to spend it any way you want; is that correct?
    Mr. Sanders. Yes, we focus on operations and maintenance 
within the Boundary Waters.
    Mr. Kingston. My question is getting to, it doesn't have 
anything to do with your parks, but the question is a bigger 
picture as we explore legislation to make this program 
permanently part of the law, how--what is your recommendation 
in terms of the parks' autonomy versus the goals of the 
Department of Interior or the Park Service, or Fish and 
Wildlife, or Congress, how do you ball park autonomy with what 
may sometimes be in conflict with what the parks want to do?
    Mr. Sanders. From a national perspective, I would defer 
that to Denny Bschor, who is here for the hearing today.
    Mr. Kingston. He might not be in Washington, but he sure 
knows the Washington game, Mr. Chairman.
    All right. I understand. I know that generally this is 
reserved for smaller maintenance-oriented projects, and I am 
not looking for anything at all with this question; I am not 
digging. I am just thinking down the road there does come a 
point where you have to have local autonomy in line with the 
national objectives for the park, and that is the only reason I 
am asking the question, just something to ponder.
    Mr. Regula. I might say, Mr. Kingston, anything over 
$500,000 has to come to this committee for review and approval. 
So we have tried to have some oversight ability.
    Well, any further comments you would like to make, Mr. 
Sanders?
    Mr. Sanders. I will sit in on the rest of your hearing and 
I appreciate this opportunity to test the video 
teleconferencing. It is a unique way. What I really appreciate 
is you folks being able to put into place the program to allow 
us to meet the needs and the responsibilities I have and our 
employees have for the unique resources like the Boundary 
Waters. I really appreciate it. The enthusiasm that this 
program brought to employees and users within the Boundary 
Waters is greatly appreciated.
    Mr. Regula. Well, thank you. I have one question. Can you 
see us? We can see you and hear you well.
    Mr. Sanders. Yes, I can.
    Mr. Regula. So we have a two-way--I beg your pardon? You 
can see the committee. Well, we saved the taxpayers some money 
by not bringing you down here.
    Mr. Sanders. It was great to----
    Mr. Regula. Thank you very much. You have made our maiden 
voyage in this new technology a success thus far, and thank you 
for your time and for your enthusiastic support of the program.
    Mr. Regula. Now we will have joining us Maureen Finnerty, 
the Associate Director, NPS, Park Operations and Education; 
John Rogers, Deputy Director, U.S. Fish and Wildlife; and Nina 
Hatfield, Deputy Director of BLM; and Denny Bschor, National 
Director, U.S. Forest Service, Recreation and Wilderness 
Resources.
    So if you would like to come to the table and you will all 
be available for questions.
    I think before we start questions, I will give each of you 
an opportunity if you would like to make any comments. You have 
had a chance to observe this program and hear the testimony. We 
will start just the way it is listed here.
    Ms. Maureen Finnerty.
    Ms. Finnerty. Mr. Chairman, I will just submit my statement 
for the record and be pleased to answer any questions that you 
have. We are highly pleased with the program the way it is 
going and certainly are working on a lot of the recommendations 
that GAO has made to us. We agree with a lot of them, so we 
just want to keep improving.
    [The statement of Ms. Finnerty follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Regula. So as we move toward permanent legislation we 
could anticipate that you will have recommendations that would 
make the program more effective?
    Ms. Finnerty. Yes, sir.
    Mr. Regula. Mr. Rogers.
    Mr. Rogers. I would just ditto what Maureen said. We are 
very supportive of the program. Happy to be involved with it, 
and we will submit the brief statement for the record.
    [The statement of Mr. Rogers follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Regula. Nina Hatfield.
    Ms. Hatfield. Likewise, Mr. Chairman, we are very 
supportive of the program and we have a statement for the 
record, and we are ready to answer any questions.
    [The statement of Ms. Hatfield follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Regula. Denny Bschor.
    Mr. Bschor. Thank you, Mr. Chairman. I will do the same. I 
think you have heard from one of our forest supervisors already 
and there are a bunch more out there that are just as excited 
about the program. I will submit my statement for the record, 
too.
    [The statement of Mr. Bschor follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                signage

    Mr. Regula. Let me raise a couple of questions. Are you 
getting signage on the parks so that the public, when they come 
to the booth and pay their fee, know that money, or at least a 
great part of it, is going to stay there? Are most of your 
units signed or will they be shortly?
    Ms. Finnerty. We certainly strongly encourage and have 
actually asked parks to display signage. We did some past 
purchasing of signage and banners and brochures several years 
ago and sent them all out. We keep reminding them that they 
need to get these signs up. I am not sure we have 100 percent 
compliance, but we are getting better and we will keep working 
on that.

                             universal pass

    Mr. Regula. I would like each of you to comment on the 
possibility of getting at least one universal pass, because I 
think particularly for seniors, because they travel a lot, and 
if they could buy a pass that would go for any public lands 
facility for let's say a period of a year, would that make 
sense? Could it reasonably be accomplished?
    Mr. Bschor. Mr. Chairman, Maureen and I have already been 
meeting together on this, on that possibility, and feel that we 
need to move in that direction.
    Mr. Regula. I think that most people don't make a great 
differentiation. To them, the public lands are the public 
lands, and this would move well. Would anyone else like to 
comment on that?
    Mr. Rogers. I do think it makes ultimate sense and it would 
be something we would be happy to be involved with.
    Mr. Regula. And you are working in that direction?
    Mr. Rogers. Yes.
    Mr. Regula. I heard the testimony, and I think the----
    Ms. Finnerty. Mr. Chairman, we have had, as Denny 
indicated, a lot of--several discussions and will soon be 
joining with our two sister bureaus in the Department, now that 
we have authority for the national park pass. It is more 
important than ever that we simplify the system, streamline it, 
have it be clear to the public and also clear to the people 
that are collecting these fees out there on the frontline, 
because we can have such a complex system that everybody is 
confused all the time, not just the public. So we are working 
on that. We think it is a good opportunity to maybe streamline 
and maybe get a national public land pass.

                          deferred maintenance

    Mr. Regula. One question and then I'll go to Mr. Cramer. Is 
it possible that each land management agency could give us a 
current and a fairly complete list of backlog maintenance 
needs, and if not, how soon could we anticipate getting that? 
We will just go down the line here.
    Mr. Bschor. We are currently working on that in conjunction 
with Mr. Topik here. We should have some very good information 
by the end of the fiscal year. It is an awesome job to try to 
get this maintenance backlog----
    Mr. Regula. I am sure it is.
    Mr. Bschor [continuing]. Pinned down because you really 
have to verify what is out on the ground. It takes quite a bit 
of time. We will have a very good, a much better, estimate than 
what we have ever had in the past.
    Mr. Regula. I can understand. I haven't even verified 
everything on my farm that I hadn't anticipated.
    Ms. Finnerty. We too, Mr. Chairman, are working on it 
within the Department. The Department has been very 
aggressively looking at deferred maintenance throughout the 
Department, and a consistent streamlined definition of the 
term. We are starting to improve our project management 
information system in the Park Service and get all of this 
database up, and it is improving daily and I think too by the 
end of the fiscal year we will have a much better idea. Our 5-
year program for repair rehab is a beginning, but it is an 
enormous task in the Park Service because we have a wide 
variety of facilities. But we are working on getting that.
    Mr. Rogers. Mr. Chairman, we do have a list of backlog 
needs that we are fairly confident in, but what is missing, as 
you well know, is the kinds of things that Maureen just spoke 
to, the consistency of definitions so that our list will be 
comparable to BLM's list or the Park Service list. But we 
currently have a list and we have some rough estimates of cost, 
but it is not comparable to what anybody else would have.

                        interagency cooperation

    Mr. Regula. This is an aside question. Where you have 
adjoining facilities like a park and a forest, do you ever 
share maintenance equipment back and forth? I guess it is based 
on my experience as a village solicitor where the board of 
public affairs wouldn't share their backhoe with the council in 
a town of 1,500 people. I mean to me it never made any sense, 
but we have two fire departments even now. So I am just curious 
whether in the interests of efficiency you provide or allow or 
do cross work in maintenance.
    Mr. Rogers. Yeah, I think it is quite common. Certainly 
among the sister bureaus in the Department of Interior, we do 
it very commonly.
    Mr. Bschor. Mr. Chairman, I can speak from past experience, 
having recently come to Washington D.C. from a job as forest 
supervisor of the Mount Baker-Snoqualmie National Forest. We 
shared offices in several districts on that forest with Park 
Service employees. We also shared trail crews with the North 
Cascades National Park, and shared visitor information services 
there also.
    Mr. Regula. Well, I am pleased to hear that, because we are 
all serving the same taxpayers and it certainly adds efficiency 
if you can share equipment, facilities and so on. Nina?
    Ms. Hatfield. Likewise, we have a very active program and 
we are sharing facilities and employees. We have, as you know, 
a couple of pilot projects going in Oregon and Colorado which 
we call Service First, and we are very customer-oriented in 
terms of trying to improve our use of resources. We actually 
share facilities in those pilots with the Forest Service and 
the State Fish and Wildlife Service. So we are doing it all 
over the country.
    Mr. Regula. I understand that staff at BLM and the Forest 
Service have quite a bit of overlap really and do this pretty 
effectively.
    Mr. Cramer.
    Mr. Cramer. Thank you, Mr. Chairman. The representatives 
here today, I am very interested, Mr. Sanders here is the 
perfect witness and the way we have done it is----
    Mr. Regula. Can you hear us, Mr. Sanders?
    Mr. Cramer. We are praising you.
    But what kind of checks and balances, and how do the lines 
of communication work with the fee program? Mr. Sanders sounds 
very much in control from the brochure that he is very proud of 
that reflects for the users what the money is going to, the 
before, after. It sounds to me like that heas a forest 
supervisor is making decisions about which, what I might call 
maintenance programs, to carry on with the monies that are collected, 
the almost $1 million, that maybe $800,000 has been available in the 
last fiscal year for him there.
    Is that typically the way it works?
    Mr. Bschor. Yes, that is typically the way it works on a 
National Forest. We have a planning procedure for all of our 
projects that has to be submitted to the Washington Office. We 
make sure that the basic criteria are in there and the basic 
objectives are in line with what we want on a national level 
also. But the managers, local managers, in the Forest Service 
have a lot of autonomy to spend those monies within the units 
as they see fit. As Mr. Sanders said, the money for that 
particular project has to be spent in the wilderness, the 
Boundary Waters Canoe Area Wilderness.
    Mr. Cramer. And then you catalog and maintain information 
about what has been accomplished by the spending of those 
monies, of course?
    Mr. Bschor. Yes.

                   passes available through internet

    Mr. Cramer. He made reference to the pass or permits that 
are available through an Internet site. Is there--do each of 
you have an Internet site? Is there a master site I mean that 
reflects the permits, the passes that are available and how is 
that going and how long has it existed?
    Ms. Hatfield. Well, we have a joint recreation.gov website 
that provides information, and I think each of us have some 
pilot projects. For instance, we have one in Arizona where you 
can actually get the permit and pay your fees over the Internet 
and do it as an Internet transaction. As a matter of fact, that 
was part of the innovation in terms of this particular pilot 
program.
    Mr. Cramer. When was that begun?
    Ms. Hatfield. The rec.gov I think went in about a year ago.
    Ms. Finnerty. Last year.
    Ms. Hatfield. And we are continuing. I think all of the 
participants are continuing to add information about our 
recreation sites to that, so it is a more robust informational 
system to the public. And then, of course, the Internet sites 
that we are doing the permits are coming off of some of these 
pilot programs.

                           setting fee rates

    Mr. Cramer. And that makes perfect sense and has enormous 
potential in this day and time.
    How is it determined what fees are charged say for an 
overnight camper or for climbing, and how do you determine that 
when one park is 5 bucks, but in another place it is maybe $15, 
and what oversight goes on to make sure that that makes sense?
    Ms. Finnerty. Congressman, when this program came on line, 
we set some parameters and we actually set tiers of different 
parks, depending on visitation and facilities and what was 
there and that kind of thing. So we set ranges and then parks 
came in within those ranges, again, depending on the number of 
amenities, facilities, visitation, and those kinds of things. 
We will be reviewing this again this year. We are going to 
bring a lot of our folks together a little bit later in the 
spring to look at how the program is going, and see if we need 
to make some adjustment in the tier structures.
    Mr. Cramer. Do you look at trends? I mean how much revenue 
are you producing when you charge 5 bucks versus $15.
    Ms. Finnerty. Yes. We are really going to get into an 
evaluation and possibly make changes based on what we are 
learning.
    Mr. Cramer. I encourage you on that.

                            brochure package

    Mr. Regula. Mr. Sanders, I want to congratulate you. That 
is an excellent folder, and I hope this will be a pattern that 
many of the other units will follow, because it clearly says to 
the public this is what we are doing, and gives them an 
opportunity to share in what is happening to their fees. So I 
think you have done well, and I hope the other agencies will 
use something like this as a model. As I understand it, you had 
a private source to print this. And I know we are probably not 
hooked up, but if you want to comment, we will see if we still 
are.
    Mr. Sanders. I still hear you. Thank you very much. We 
appreciate that. We used a local foundation that we worked with 
here on the Superior National Forest to accomplish that 
printing. And that support and the public's support for the 
program are demonstrated by the fact that they donated the 
printing to us. Also, on the front of that, we have a world 
renowned photographer here in northern Minnesota. He donated 
that as well.
    Mr. Regula. You are in Mr. Oberstar's district, are you 
not?
    Mr. Sanders. That is correct, yes.
    Mr. Regula. Well, I am going to tell him that you presented 
a great program for him this morning. I know he has been a big 
fan of the Boundary Waters in the past.
    Mr. Dicks.
    Mr. Dicks. Well, thank you very much. As I said earlier, I 
want to welcome you all here, but I just want to say, I think 
this program can work, and I think there does need to be some 
adjustments.
    One area, and maybe you have gone into this, Mr. Chairman, 
is this question about the back country hiking and this kind of 
thing, where some of the hikers have complained about the fees. 
Can you tell us anything about that, why that is?
    Mr. Bschor. I might take that one.
    Mr. Dicks, the Forest Service has had an experience with 
this program that I think has been somewhat unique in that we 
have charged fees in areas that we have never charged fees 
before because we never had the authority for that sort of 
thing. And where we have done a good job, like Mr. Sanders has 
explained, of doing the front-end public involvement work and 
really getting ahead of what the issues might be, we find that 
the acceptance has increased. Over time--especially once we 
find that the public sees that the money is going to good use 
on the ground, going back to the fees were collected--we see a 
lot more acceptance.
    Initially, in several of our projects, we had some problems 
in really trying to get out ahead of the issues. We tried to 
get out ahead too fast. That caused some initial reaction. We 
are finding that with time, though, that is calming down.
    Mr. Dicks. But let me ask you about this, even if it may 
have been asked. I hope that you will bear with me here.
    Last month, in testimony before this subcommittee, a Forest 
Service official indicated that the reduction in the Service's 
road and trail budget wasn't a major concern because rec fee 
demo funding could make up some of the shortfall. As designed 
by the Congress, money generated by the recreation fee 
demonstration program is supposed to be inaddition to, not in 
lieu of, other resources. Unfortunately, comments such as presented 
here last month give credence to those who say the program will not 
provide additional resources.
    How do you respond to that?
    Mr. Bschor. Our position is that we--these funds are not to 
be used to offset any other appropriations.
    Mr. Dicks. I have had a little experience with the Forest 
Service, and with--you know, their financial systems are to say 
it best, unique, and not lending to, you know, very good 
accounting, okay?
    But you know, we had the same problem with--we put some 
money in the President's forest recovery plan, and the money 
was in there for watershed restoration, you know, to do work on 
the watersheds. And I asked them, what are you doing with this 
money? And they said 80 percent was being used for roads. And I 
said, well, why is that? And they said well, because that is 
the biggest threat to the watersheds are the roads, so we are 
going to take all this watershed money and use it to fix the 
roads.
    So what I worry about here is that we are--the Forest 
Service is going to do some smoke and mirrors on us and because 
you got $11 billion backlog on your roads, and all of a sudden 
the rec demo money is going to be going into the roads because 
the roads are the most important thing in terms of access to 
the Forest Service trails.
    Now, can you assure me that we are not going to go through 
this game?
    Mr. Bschor. I can assure you----
    Mr. Dicks. Can we put him under oath, Mr. Chairman?
    Mr. Bschor. Your point is well taken.
    Mr. Regula. The kind of witnesses we have, we don't have to 
put them under oath.
    Mr. Dicks. All right. Well, I just hope not. Because the 
Forest Service is very creative and when the money comes in for 
one area, diverting it into another area. I just hope that 
doesn't happen here. Because this is the good faith of the 
people out there who think that you are going to play with a 
level deck on this one, and I think the Park Service by the way 
has set a very good example here. Their financial systems 
aren't any better than yours, but at least I think so far we 
see them taking this money and using it.
    Now, the other thing in the testimony that I wanted to know 
about, why is it taking so long when we know what these 
backlogs are to get this money obligated?
    Mr. Bschor. Mr. Dicks, the Forest Service has had about 60 
percent of the funds that we have collected already obligated 
and spent on projects, and we do not----
    Mr. Dicks. The Park Service, Maureen?

                          expenditure controls

    Ms. Finnerty. Mr. Dicks, we obviously are getting an 
incredible amount of money through this program because of 
concerns with this committee and others of the expenditure of 
large sums of money in the past, and the history of some 
projects and those kinds of things, the Secretary determined 
that he wanted to carefully look at----
    Mr. Dicks. Secretary Babbitt?
    Ms. Finnerty. Secretary Babbitt. And so those lists, they 
are all park lists, but they come through the regions and into 
Washington and the Department and we look at them, and we want 
to be absolutely sure that the projects meet the criteria and 
that they are the highest priority projects in parks. That has 
taken some time, and we hope to improve that significantly this 
year, because the process is getting better. We have better 
databases now.
    Mr. Dicks. The military does. When they have to have 
preliminary design work done, 33 percent has to be accomplished 
before you can start. Is part of the problem here that you 
didn't expect to get all of this money and you are not prepared 
for it?
    Ms. Finnerty. That is a concern, and there are not the 
staffing levels needed in the regions and in Washington to some 
extent. This is really a three-pronged project. Certainly the 
budget piece needs to be carefully looked at and the 
accountability of the money. Secondly, the projects. I mean we 
have approved 1,200 projects, in answer to your question, Mr. 
Chairman, and then there is the overall accountability for the 
fee program. So it is almost like a three-legged stool and you 
really have to spend a lot of time in reviewing the projects.
    We do review projects over a half a million dollars that 
must come up to this committee for approval; we have a very 
strict review process. They have to have a class B estimate, 
they have to have schematic design, they have to go through 
value analysis, so we are really paying very serious attention 
to particularly the big ticket items, and we have a lot of 
those.

                       recreation site brochures

    Mr. Dicks. Are you doing a brochure like what we just saw 
for every park?
    Ms. Finnerty. I don't know. I can't say that we have them 
in every park.
    Mr. Dicks. Well, is it up to the park to decide whether 
they want to do this or not?
    Ms. Finnerty. Do what, the brochures?
    Mr. Dicks. Yes.
    Ms. Finnerty. We gave them boilerplate language about what 
the park was about and we asked them to use that locally. Some 
have used it in brochures, some have used it in newsletters and 
that kind of thing, some maybe aren't using it at all, but we 
have strongly indicated to them that they need to publicize the 
program to the people to show them where the money is going.
    Mr. Dicks. As we get more of the money obligated, there 
will be more of a story to tell.
    Ms. Finnerty. Absolutely.

                          administrative costs

    Mr. Dicks. How much are you taking for administration? Can 
we go to each agency here? How much is being used for 
administration, and how much is getting out on the trail? I 
mean how many people are we paying for? What is the Forest 
Service?
    Mr. Bschor. The Forest Service has held 5 percent of the 
money for, basically, program management, nationally; 95 
percent of the money goes out to the field.
    Ms. Finnerty. Well, 80 percent, of course, stays in the 
parks, the collecting, and the 20 percent, we have spent less 
than $1 million of that. So it is $1 million of about $25 
million to $28 million for oversight of the program. It is not 
enough, and we have a reprogramming request in front of this 
committee to increase that so we can get the staffing we need 
at the regional offices and in Washington. It is a minimal 
staff.
    Mr. Dicks. You can't use this money for staffing?
    Ms. Finnerty. Not for central offices.
    Mr. Dicks. You can do it out in the regions.
    Ms. Finnerty. No, not in the regions either. The parks can 
use their 80 percent money to fund the cost of collection in 
the parks and to fund personnel that are directly related to 
fee collection. There is no authority for us to spend money out 
of the 20 percent pot, which is the only remaining source we 
have for central office oversight; hence, we have a 
reprogramming request here to get us through this year, and we 
understand there is a base increase in the 2000 budget to 
provide central office oversight of this program. We hope the 
committee will look favorably upon that.
    Mr. Rogers. The Fish and Wildlife Service is not spending 
any of the money collected in the program for the 
administration of it. In four of our regions, 100 percent of 
the money collected stays at the unit where it is collected. In 
three regions, the 20 percent has come into the regional 
office, but that has all been spent on support of the program, 
that is production of brochures, maps, and the like.
    Ms. Hatfield. Likewise with the Bureau of Land Management, 
all of the money remains on site, 100 percent of it. We have 
expended about 74 percent of what has been collected at this 
point in time. About half of that money has gone to doing 
maintenance to help public health and safety types of 
responsibilities. Some of it has been in terms of trying to 
develop the infrastructure for getting the fees collected in 
the first place, because we didn't have that in most of the 
areas in which we are now collecting fees. But as we look 
forward to the expenditure of these, we think it will go more 
and more to operational maintenance-type needs.
    Mr. Dicks. How much are you collecting in this?

                              fee revenues

    Ms. Hatfield. Last year we collected about $3.5 million, 
which increased the amount of fee collections about 50 percent 
in the--I am sorry, it would be more than that. Before that, 
before the fee pilot, we collected about $3.5 million across 
the bureau. With the fee pilot itself this last year, we 
collected $3.5 million. And you know, our operating maintenance 
program for rec fee types of rec sites is annually about $9 
million. So you can see that even though the dollars are 
relatively small for the bureau, the importance of them are 
very important to us in terms of our overall program.
    Mr. Dicks. What about Fish and Wildlife? How much did you 
collect?
    Mr. Rogers. Last year we collected $3 million in rec fees 
and estimate about $3.5 this year.
    Ms. Finnerty. Last year we collected about $145 million.
    Mr. Dicks. Wow.
    Ms. Finnerty. $136 million of it under the fee demo 
authority.
    Mr. Bschor. $20 million last year, and we are expecting $24 
million this year.
    Mr. Dicks. This is on direct demo?
    Mr. Bschor. Yes.
    Mr. Dicks. Thank you, Mr. Chairman.

                    non-demonstration site projects

    Mr. Regula. A question on the Park Service particularly. 
Have you done any projects in smaller park units that do not 
have the ability to collect fees out of the 20 percent?
    Ms. Finnerty. Yes. We pretty much have made a policy call 
that that 20 percent pot essentially will go to the 
noncollecting park, sort of the small players, and that has 
been pretty much our position. The big players already have 
their source of funding.
    Mr. Regula. Mr. Kingston.
    Mr. Kingston. Thank you, Mr. Chairman.

                       incentives for small parks

    Let me ask this of the National Park Service. There are a 
lot of smaller parks that are quaint and nice as is. Will this 
push some of them into, you know, building some things and 
doing some things that they really don't need to do, but they 
want to get the money? It would appear to me that a parks 
superintendent who wants to move up the ladder is going to be 
more aggressive and more assertive, and that one of the things, 
if I was starting at, say, Capulin Volcano, are you familiar 
with it?
    Ms. Finnerty. I have not been there, no.
    Mr. Kingston. It is a great little park, but it is little. 
You just get out of the car, walk around the volcano, go to the 
visitor's center, you are done in two hours.
    Now, if I was park superintendent there and, you know, in 
my 30s or whatever, I would want to be ambitious and I would 
want to move up the road to the Rocky Mountain National Park or 
whatever. So I would want to start the fee service because I 
know that would be a feather in my cap. Even though it is not 
very necessary, you can say well, I will just put in a few more 
bells and whistles here, do a trail this way and do a trail 
that way and sort of be a little more aggressive than has been. 
Will this have that adverse unintended consequence?
    Ms. Finnerty. You mean as far as the parks charging the 
fee?
    Mr. Kingston. Yes, trying to both charge it and do 
something with it. The reason why I ask that, I would say I 
really think the National Park Service is pretty good about 
this, but in the State, I have seen State park services really 
like to do little projects and trails and stuff where you don't 
need trails, and you know, just kind of be a little aggressive 
because it is good politics for the park superintendent.
    Now, I am saying that on the State level. You guys are a 
lot better about it. But I still would see that it would 
happen.

                 limit on number of demonstration sites

    Ms. Finnerty. Mr. Kingston, under pilot fee we have 100 
projects and that is automatic, so there is no slot available 
for a park to get in, although we are constantly evaluating. We 
may drop some areas to get some other areas in. We very 
stringently look at who gets into the program as far as is it 
really cost-effective to even collect fees. If you are paying 
more to collect the fee and you don't have about a two-to-one 
break, there is no sense in instituting the fee in that area, 
and we have a lot of areas that fall into that category. So 
that is the process that we are following and somebody getting 
into the program assuming a slot comes vacant.

              deferred maintenance is expenditure priority

    As far as the expenditure of the fee money, we have given 
very rigid instructions to the parks, based on the direction of 
the fee demo authority, but this is to go to backlog, that that 
is to be the highest priority. It is to be things that are 
visible to the visitor. Any new construction, any building of 
anything new has got to come in for review, and also come to 
this committee. We have gotten specific instructions that we 
are not supposed to be using this additional money to build a 
lot of new things. We are to be using it to get at the backlog.
    Mr. Kingston. You are saying that you only have it in 100 
parks?
    Ms. Finnerty. 100 projects.
    Mr. Regula. The law limits it.
    Mr. Kingston. And that would be permanent. That is not just 
the pilot?
    Ms. Finnerty. This is under the pilot.
    Mr. Kingston. But once it goes permanent, it would be more 
than 100.
    Ms. Finnerty. Oh, absolutely. We would hope.

                         fee program incentives

    Mr. Kingston. You know, what I am getting at again is the 
push within the park system of you know, let's do it and let's 
be aggressive about it. And you know, quite often the Park 
Service, as would any other government agency, you may maybe be 
a little super luxurious on some of the things they do.
    Ms. Finnerty. We will look into that.
    Mr. Kingston. Will this encourage that? And again, I say 
that more in the human nature context. It really doesn't have 
anything to do with management, but it is just going to be a 
push to hey, you know, I will do this.
    Ms. Finnerty. There is always that possibility and I think 
that is why we put the procedures in place that we have to 
really look at every one of these projects very carefully and 
apply criteria and see if they meet the test. Is this really 
what should be done with this money or is this going beyond 
really what is important. That is one of the reasons we have 
put a lot of the reviews in that we have now.
    Mr. Kingston. The reason why I say that is, you know, and I 
don't know if this is--if there is a problem with Yellowstone 
wannabees, but you can understand that there are a lot of nice, 
quaint, sleepy little national parks and that is the way they 
should be, and not everybody should be Yellowstone. But I could 
see within the system that hey, now I can do something to get 
me on the map and work for my next promotion, next assignment.

                           golden eagle pass

    Let me ask you this question. In terms of the Golden Eagle 
Pass, it is really one pass per vehicle, correct? I mean you 
can get the entire family in on one pass? It is per vehicle, 
not per family?
    Ms. Finnerty. Yes.
    Mr. Kingston. Mr. Sanders had talked about $5 per child, 
and I don't know how he is splitting that up, because they are 
all getting out of the canoe, but one of the things that I wish 
you would be sensitive to, and you are when you charge per 
vehicle, is if you have a family of 6 kids, and you are talking 
$5 per child, you know, it is pretty hard. I mean, you know, we 
are always saying well, let's do something for the seniors, 
let's do something for the veterans. We always forget about the 
sandwich generation, and those people with small children 
really need to be considered in whatever kind of Park Service 
you have that you can buy a family pass and if you have 23 
kids, we want to give you that tax break you need very badly. 
And so I don't know if you will consider that, but I would love 
to see that in the formula.

                      fee collection arrangements

    The other thing is, are any of the gates privatized, the 
entrance gates?
    Ms. Finnerty. You mean as far as fee collection?
    Mr. Kingston. Yes.
    Ms. Finnerty. We have some cooperative relationships with 
cooperating associations that do some fee collection with us in 
a number of areas, and yes, we have some of that. But for the 
most part----
    Mr. Regula. If you will yield, I bet you use volunteers a 
lot of times in the Park Service for that.
    Ms. Finnerty. That is correct, yes.
    Mr. Kingston. Because it would appear to me that as the 
park rangers are professionals, Forest Service professionals 
and botanists and so forth, and most of them are well educated 
and so forth, that the gates could be done on a bid basis by 
concessionary in that sort of arrangement.
    I don't know, Mr. Chairman, if the committee has ever----
    Mr. Regula. Well, Mr. Kingston, I will say in my experience 
in visiting parks that oftentimes the gates are staffed by 
volunteers and in my chats with them they love it. It gives 
them a mission, and they feel like they are part of it.
    Ms. Finnerty.We are also experimenting with automated fee 
collection in a number of parks and hope to get many more parks 
on line with the use of credit cards and that kind of thing so 
we don't have to have the labor-intensive expenditure in 
building gates and that kind of thing. We are trying some of 
that, and we are going to look at more of that.
    Mr. Kingston. Do you know how many--of your parks, how many 
use the volunteers versus----
    Ms. Finnerty. You mean for fee collection?
    Mr. Kingston. Yes.
    Ms. Finnerty. I don't have that with me, but we would get 
that for you certainly.

                  Use of Volunteers in Fee Collection

    The majority of fee collection personnel in the National Park 
Service are seasonal, term, or permanent employees. Many parks utilize 
volunteers to sell permits and passes at information centers, or to 
collect campground fees. In general, Volunteers-in-Parks are not 
assigned primary collection duties at entrance stations. Volunteers 
used for fee collection activities must be covered by surety bond and 
have adequate training and supervision.
    Six percent of the National Park Service fee demonstration projects 
involve collection by cooperating associations or concessionaires.

    Mr. Kingston. It would just appear to me that that would be 
a great potential savings for parks.
    Ms. Finnerty. There is a lot of it, I can assure you.
    Mr. Kingston. I am interested in that.

                             project review

    Also, do you want to comment about the question I asked Mr. 
Sanders earlier about the autonomy versus the mission. Do you 
feel that the 100 item list of enumerated items is specific 
enough that that is going to handle it, the $500,000 limit is 
in there as a threshold? Are the checks already in place in 
terms of the autonomy question?
    Ms. Finnerty. Well, we are bringing all of these projects 
into Washington for review, which from what I hear, the Forest 
Service is not doing, because I think that is largely because 
of some past difficulties we have had. Also, it's because of 
the size of our program and the scope and complexity of a lot 
of these projects.
    As the system becomes refined and we get better at the 
accounting and accountability question and get better lists and 
we see some real progress, I would hope maybe we can delegate 
this back out, at least at the regional levels, and providing 
they have the staff in place to conduct these reviews. Right 
now it is all coming in here for review.

             demonstration end date and permanent extension

    Mr. Kingston. Mr. Chairman, when does the pilot end?
    Mr. Regula. 2001.
    Mr. Kingston. And at that time, if it is successful, which 
it seems to be, will all Park Service and all----
    Mr. Regula. That will be dependent on us and the 
authorizers. In theory at least the authorizing committee ought 
to do the permanent language, because we have done the pilot 
program and they or this committee will have to decide whether 
to make it permanent and expand it beyond the 100 in the 
demonstration. It is a demonstration project. That is, I guess, 
the important element I would inject. And we just sort of 
picked 100 arbitrarily.

               additional revenue under permanent program

    Mr. Kingston. Is it safe math to say just for the National 
Park Service, $145 million, you multiply that times 3\1/2\, and 
that would be what----
    Mr. Regula. Are you saying how much they will get over the 
next 3\1/2\ years?
    Mr. Kingston. No. Once you go off the pilot. Are there 
around 365 parks? I know not all of them would fall in.
    Ms. Finnerty. We won't, I don't think, ever be collecting 
fees at all of our parks. It is just not feasible for many 
reasons, and most of the big fee parks are now in the program. 
Certainly if we had more slots, we could add more parks and try 
some different things. But we still have I, think, 50 or 60 
other parks that are outside the fee demo program collecting, 
so it is conceivable they would come into a broader program 
with unlimited authorities.

                      fee collection improvements

    Mr. Regula. I was just thinking, you could do the trick at 
the gasoline pumps now where you stick the credit card in and 
out comes your pass. Really it would be a very efficient way, I 
think.
    Ms. Finnerty. Well, I think as the GAO indicated in their 
statement, we have some real concerns about the cash handling 
and exposing our people to vast amounts of cash, and we are 
really trying to get as automated as we can in a lot of areas.
    Mr. Kingston. As the chairman said, if you go through a 
toll bridge now and you have that decal, the Golden Eagle pass 
is on your window, then you just drive right through if you 
have one.
    Mr. Regula. I guess that is why it is a demo project. You 
are starting out with all of the experiences you have had, and 
Mr. Sanders likewise with the Boundary Waters, in making the 
system efficient and avoiding any future cases where cash 
disappears. This would be not a good reflection.
    One question. Some Forest Service recreation fee demo 
projects have received more criticism than projects from other 
agencies. Give us a little background. I think I understand 
that it is because people historically have been so used to 
running in and out of the forests without any kind of fees. I 
know in southern California at Venture Pass, you have had some 
problems. You might like to comment on that.
    Mr. Bschor. Mr. Chairman, the situation is just what you 
said. A lot of our areas, most of our areas, never had a fee. 
That has been the source of some of the problem. We have also 
had a couple of areas where, as we have gone through the pilot 
phase, we have determined that there are some things we should 
do differently. The Sawtooth is an area where rather than have 
a fee for anybody who enters the forest, we are looking just at 
parking areas and that sort of thing. The same thing on the 
White Mountain National Forest. The forests of Southern 
California present a fairly unique situation due to very, very 
heavy use. There have been fees in that area before at the 
county level. Just the logistics of trying to--an entry station 
does not work there because it backs up traffic clear into Los 
Angeles. We have to look at some sort of a broader fee. There 
is opposition to that from some sectors. If you look at some of 
the statistics, though, once again, we had at least 3,300 
response forms returned. We still see favorable responses 
overall. We just need to continue to work with those local 
publics on ways we can work out the differences.
    Mr. Regula. I think safety is an increasing challenge on 
the public lands. Are you using any of the fee money to beef up 
your security forces in the areas in question?
    Mr. Bschor. Yes, we are in the Forest Service. I cannot 
remember the exact figure, but about, I think around 5 percent 
of the money has gone to law enforcement improvement. Also, 
just having our people out in the field--it doesn't have to be 
law enforcement people----
    Mr. Regula. Just being there.
    Mr. Bschor. Just having our recreation folks out in the 
field just having that presence, adds a lot to the security 
too.

                  impact of higher fees on visitation

    Mr. Regula. Mr. Hinchey was questioning whether the fees 
are inhibiting the usage especially for [low-income people]. Do 
you have any evidence of that? Do any of you want to comment? 
Have fees changed the mix of your users?
    Ms. Finnerty. Our visitation figures have remained about 
stable service-wide. We have had, as has been reported here, 
good public acceptance to the program from those visiting 
parks. The question that we can't answer and we are going to 
try to get an answer to is the fee structure, keeping people 
from coming to parks, and we are going to be doing----
    Mr. Regula. You are exploring that?
    Ms. Finnerty. We are exploring that this year. We are going 
to do some Gallup poll type surveys in communities outside of 
parks and that kind of thing so we have a little better idea if 
it is actually a deterrent to people coming into the parks.
    Ms. Hatfield. Mr. Chairman, the Bureau of Land Management 
participates in a national survey with a group of other 
organizations, and we have begun to ask some questions about 
that so we would get some more nationalized information. But I 
think that will probably be this next year.
    Mr. Regula. Well, I think in places like Los Angeles where 
you have a huge urban population and it is probably one of the 
major outlets. Yet when I was there I saw some horrible 
vandalism of a new picnic facility. Obviously somebody came in 
on one of these trucks with huge tires and just drove over top 
of everything. That is something I can never rationalize as to 
why anyone does it. But I think the safety issue, we have this 
experience in Yosemite which has been in the news and I don't 
think that that was the lack of safety standards. It is just 
that no one seems to know exactly what happened to those three 
people.
    But do most of the States that have sizable parks charge 
fees for their units? Does anyone know?
    Mr. Bschor. I assume so. All of the States I have worked in 
do. But once again, maybe not all of the units charge a fee, 
but predominantly----
    Mr. Regula. Pretty common?
    Mr. Bschor. It is pretty common.
    Mr. Regula. Yes. Well, I think we will have some questions 
for the record, but I appreciate very much your being here, and 
Mr. Sanders, for your contribution.
    Let me close with two points. Please, get your units to 
have signs so the public knows that when they pay that fee, it 
is benefiting their experience, their safety, and their 
enjoyment. Secondly, I like the brochure idea. I think Mr. 
Sanders has a very good example of that, and I would hope that 
every public land when they pay their fee that they get a 
brochure that tells them what is happening. But I have to say 
in my interface with the public and when we were out last 
summer just talking casually, people are very supportive. As 
soon as they know the money is staying there, that alleviates 
any concerns.
    We felt so strongly that we took a $90 million hit on our 
budget from the Congressional Budget Office because the fees 
that have been going to Treasury are now going to the parks, 
and so we had to make up the shortfall to Treasury, which I 
thought was a bit unfair. But it was worth absorbing it to get 
a program that I believe in the long term will be very 
beneficial to the enhancement of the public land experience.
    So thank you again, and thank you gentlemen from GAO. It 
is, I think, a good example of a team effort where we all have 
an objective to trying to make the service that we give the 
public better.
    Thank you. The committee is adjourned.
    [The following questions and answers were submitted for the 
record:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                          Thursday, April 22, 1999.

                       GENERAL ACCOUNTING OFFICE

                               WITNESSES

VICTOR S. REZENDES, DIRECTOR, ENERGY, RESOURCES, AND SCIENCE ISSUES
SHERRY McDONALD, SENIOR GAO EVALUATOR
CHET JANIK, ASSISTANT DIRECTOR
    Mr. Regula. We will call the committee to order and get the 
hearing started.

                   Opening Remarks of Chairman Regula

    I think we have a very significant topic this morning, with 
far-reaching consequences. It is rather interesting, perhaps 
very appropriate, that this is Earth Day. Certainly what we are 
talking about has a lot to do with the future of Earth Day in 
Florida and down there in the Everglades--and the water 
problems are Earth Day everyday.
    In 1993, the administration initiated the South Florida 
Restoration Project intended to restore the Everglades by 
diverting substantial amounts of water from central Florida to 
the National Park and South Florida Bay. These areas have 
experienced significant environmental deterioration over the 
years because of reduced water supply and agricultural 
pollutants.
    So far, Congress has provided, $1.3 billion for this 
project since 1993, $665 million of which was appropriated 
through the Interior and Related Agencies appropriations bill 
and the balance in other committees.
    Because of the large number of Federal, State, tribal and 
local partners involved with this project--the complexity of 
the issues, the Federal expenditures to date and the future 
costs, which are estimated to be $11 billion, the Committee 
asked the General Accounting Office to review several issues: 
One, how effectively has the $1 billion provided to date been 
spent? Because we do have a responsibility to be accountable.
    Two, how well has the restoration effort been coordinated 
and managed? There are a lot of players here, and that is a 
real challenge.
    Three, are there any issues which left unresolved could 
significantly impede the progress of this effort in the future?
    Aside from these key issues, there is another related 
project which has attracted national press attention. That is 
the draft Army Corps of Engineers restudy proposal. This is the 
document that provides the details of how the man-made plumbing 
system, which will eventually determine how water is delivered 
to the natural areas, will be constructed. Initial reaction 
from the scientific and national environmental community, as 
well as the Department of Interior officials, was that the plan 
emphasized urban water supplies at the expense of environmental 
goals.
    This problem developed because key agencies involved in the 
restoration effort have multi-purpose missions that differ and 
sometimes conflict. While the Interior Department's goal is to 
preserve the natural resources of the national parks and 
wildlife refuges by restoring water flow, both the Army Corps 
of Enginneers and the South Florida Water Management District 
have several missions, including water supply and flood control 
in addition to restoration of natural resources.
    This oversight hearing is intended to focus on both the 
positive accomplishments of this initiative as well as areas 
where improvements need to be made to ensure that the goal of 
restoring an adequate water supply to the Everglades is met as 
well as ensuring that the American taxpayers' dollars are being 
wisely and effectively spent.
    I may be summarizing. There are really--good morning, Mr. 
Cramer--three missions. One is to ensure that there will be 
fresh water in the aquifer on the east coast, and there is an 
enormous demand will be obviously exist in the future years, 
and there is a danger of the salt water moving in and against 
the fresh water. So to ensure an adequate supply of fresh water 
for the estimated 12,000,000 people is a goal. The second goal, 
of course, is to restore the flow of water in the so-called 
River of Grass in the Everglades to ensure that the ecological 
values there and the environmental characteristics are 
maintained. Thirdly, of course, are the agriculture interests 
which are a very significant part of the Florida economy. To 
balance all these things is the challenge of this time and what 
we have asked the GAO to look at.
    We are pleased that the chairman of the full committee 
could be here this morning, and be part of this hearing. And, 
Mr. Chairman, if you would like, you might want to make some 
comments because it is your State, and you have some interest. 
And, as you were telling me earlier, you started on this type 
of topic as a member of the State legislature.

                   Opening Remarks of Chairman Young

    Mr. Young. That is exactly correct. Mr. Chairman, thank you 
very much for inviting me to be here this morning for your 
hearing. I want to thank you and the members of this 
subcommittee for the interest that you have already expressed 
in this problem in the Everglades area of Florida. Water has 
been a big issue in Florida. Sometime we have too much and 
sometime we do not have enough. And the Everglades are a great 
example of that. So, I agree with Mr. Regula on the need to 
look at where we should be going. I think the report that you 
all have done for us is very, very helpful. I would like to 
emphasize the points that Mr. Regula made and also suggest that 
somewhere along the way, we have to figure out how we are going 
to bring some management to this issue because there are so 
many interests involved--State, local, Federal, agriculture, 
environmental. With all of these interests, we need to have 
some kind of a cohesiveness in managing the problems with the 
Everglades system. Mr. Miller and I are planning to have a 
congressional visit to the region very shortly after this 
hearing takes place. Hopefully, Mr. Chairman, you will be able 
to go with us.
    I wanted to welcome you here, and thank you very much for 
the work that you have done. I would be very happy to hear your 
recommendations.
    Mr. Regula. Great. Thank you, Mr. Chairman. Do you want to 
make a quick comment, Mr. Cramer?
    Mr. Cramer. Just a quick comment. I am substituting and 
glad to be here for Mr. Dicks. He will be here shortly. He is 
very concerned and interested in the issues and wants to raise 
some issues on his own. But we look forward to your testimony. 
Thank you, Mr. Chairman.
    Mr. Regula. Mr. Miller.
    Mr. Miller. I am glad you are having the hearing. And we--
    Mr. Regula. We are glad to have you back. Do you want to 
rejoin the committee? You will be welcomed.
    Mr. Miller. Thank you.
    Mr. Regula. This may not be as exciting as the Census, 
but--[Laughter.]
    We are pleased to have representatives from the General 
Accounting Office with us today. Welcome Mr. Rezendes, Director 
of Energy, Resources, and Science Issues, and you are 
accompanied by Sherry McDonald and Chet Janik.
    And from having read the report, I think you have done some 
good work. We appreciate your comments for the committee 
members.
    Mr. Rezendes. All right. Thank you, Mr. Chairman. I will 
submit my whole statement for the record.
    Mr. Regula. Yes, your entire testimony will be made a part 
of the record.

                             gao testimony

    Mr. Rezendes. As you know, we are releasing our report 
today what we did for you and several other members.
    Mr. Regula. Right.
    Mr. Rezendes. Basically, let me summarize two of the 
objectives that you asked us to address. One, how did the 
Federal Government spend their money? And what did--and how 
much was spent? And the second relates to how the project was 
coordinated and managed.
    Let me deal with the first one. As you know, there is no 
single source of appropriation for this project. Congress has 
provided some direct appropriation as well as the agencies 
themselves have used their appropriations to help fund some of 
the operations there. Since there is no consolidated financial 
statement on this, we had to work with the agencies involved 
and try to come up with an estimate as to how much has been 
spent.
    Over the last six fiscal years, $1.2 billion has been spent 
on the project. And they have spent the money as you would 
expect they would. Most of it has gone to land acquisition, to 
managing the federally-owned facilities which impact the 
initiative. Some of the other things they spent their money on 
is science activities, water quality, habitat protection, and 
information management assessment, such as coastal mapping--
those sort of things.
    I would like to point out that the $1.2 billion is only a 
down payment. While there is not a comprehensive estimate as to 
how much the project is going to cost, the replumbing piece, 
which you mentioned is the restudy, is $7.8 billion. That cost 
will be split, 50-50, with the State.
    In addition to that, there will be another $2 billion more 
needed to acquire additional lands, construct other 
infrastructure projects and also to eradicate exotic plant 
species.
    Mr. Young. Did you say $2 billion or $2 million?
    Mr. Rezendes. Two billion. Two billion. That is a ``B.'' 
That is correct.
    In total, we expect this to take at least 20 years and cost 
at least $11 billion.
    Let me deal with the second question which was, how was the 
project coordinated and managed. Our big concern here is that 
they do not have an overall strategic plan for the restoration 
effort. I want to point out that they have a lot of plans and 
documents in place, and they are still working on some others. 
However, none of these, either separately or collectively, 
contain all the key elements that we believe are necessary for 
a good strategic plan.
    Restoring the Everglades, as you mentioned, is a vast 
undertaking and is unprecedented in cooperation. The task force 
is a first partnership of its kind and coordinates restoration 
activities with the Federal, State, local, Indian Tribes, not 
to mention the general public.
    However, the task force is a coordinating, not a decision 
making body. We found that even with the coordination of the 
task force and others, two ongoing infrastructure projects that 
were integral to the restoration of the effort are taking two 
years longer and costing $80 million more than planned, in 
part, because the agencies involved have not been able to agree 
on key components of the project.
    Federal and State officials told us that agencies involved 
in the restoration effort have multi-purpose missions, and 
these often conflict with the restoration effort. As a result, 
we are making two recommendations. The first is that they need 
an overall strategic plan that outlines how the restoration 
effort will occur, identifies the resources needed to restore 
the Everglades, assigns accountability for accomplishing those 
tasks, and links the strategic goals to outcome-oriented annual 
goals.
    The second recommendation deals with the need to develop 
and agree upon a decision making process to resolve disputes.
    That is pretty much the summary.
    [The written statement of Mr. Rezendes follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                             strategic plan

    Mr. Regula. It boils down to having an overall strategic 
plan so that money does not get frittered away and to have 
somebody in charge, is that a fair summary?
    Mr. Rezendes. That is pretty close. The only thing that I 
would say is we are not looking for the Federal Government to 
try to usurp its authority over the State and the local Indian 
tribes.
    Mr. Regula. Well, I understand.
    Mr. Rezendes. What we are looking for is some agreed upon 
process, so when there are conflicts, everybody knows ahead of 
time how those conflicts are going to be resolved, either with 
time frames for resolution or mediation or whatever the process 
is going to be reach closure.
    Mr. Regula. Mr. Chairman.
    Mr. Young. Mr. Chairman, thank you very much. And I think 
your one comment basically answered all of my questions, and 
that is that we do need a plan. We do need some coordination 
between the various interests. But now the Corps of Engineers 
restudy is intended to modify the existing Southern Florida 
Project to improve the Everglades and the Florida Bay Ecosystem 
and other water-related needs. Is this restudy going to become 
the master plan for restoring the Everglades?
    Mr. Rezendes. It is part of it. It is probably the biggest 
and most expensive piece, which is getting the water right and 
getting the replumbing working. But there are two other aspects 
to the restoration effort. There is also the environmental 
piece here, which is restoring the actual species and the plant 
life in the Everglades.

                          cost of restoration

    Mr. Young. Your report indicated that one goal of the 
restoration effort was expected to cost $7.8 billion. You have 
already addressed that in your statement. My question was going 
to be how much additional cost would there be? You have already 
answered that, because you have got up us to $11 billion.
    Mr. Rezendes. Correct.
    Mr. Young. Over what period of time would that $11 billion 
need to be spent in your opinion?
    Mr. Rezendes. That is 20 years--over a 20-year period.
    Mr. Young. And how much of that would be required for 
Fiscal Year 2000?
    Ms. McDonald. The agencies, I believe, in total are 
requesting $312 million for next year. The restudy itself is 
scheduled to be presented to Congress on July 1st for approval, 
and then after that point, it would be in increments over the 
next 20 years.
    Mr. Young. Okay, now. Is $312 million, is that the Federal 
share or is that the total?
    Ms. McDonald. That is the Federal share.
    Mr. Young. That is the total share. And that is--that would 
be on 50-50 basis with State?
    Ms. McDonald. The $312 million would be what the Federal 
agencies are requesting for the year 2000 for their activities 
to restore the ecosystem.
    Mr. Young. So would the State be asked to----
    Ms. McDonald. The State will also be----
    Mr. Young. Fund an addition or similar level----
    Ms. McDonald. Providing money as well. And we can provide 
that amount.
    Mr. Rezendes. We tried to compute how much the State has 
spent. They are on a different Fiscal Year than we are. But 
over a five-year period that we looked at, it was about $1.5 
billion.
    Mr. Young. Is there a formula of State-Federal funding? 
Does the formula include local participation or is that 
considered part of the State's participation?
    Ms. McDonald. We would include that in what the State is 
putting in.
    Mr. Young. So basically it is 50-50.
    Mr. Rezendes. Right. Exactly.
    Mr. Young. In your statement, you make a point that 
consolidated financial information is not available. Why do you 
think that information is not available? Is there a reason?
    Mr. Rezendes. It is the way the project is being funded and 
managed. There are a lot of Federal agencies involved--five key 
departments. Each has their own appropriation accounts; their 
own way of accounting for things. The funding spent on the 
project has never been presented to Congress as a consolidated 
statement in terms of managing the project as a line item. 
Rather, it is pieced in the Corps of Engineers, in Interior's 
budget, EPA's budget, Commerce's budget.
    Mr. Young. Who would be the right person or the right group 
to make that presentation to Congress or does that group not 
exist yet?
    Mr. Rezendes. Well, I think the task force, through the 
Department of Interior, which chairs that task force, is 
responsible for coordinating the project. And they do put 
together a cross-cut budget every year. Excuse me. But we found 
some problems with the budget itself in terms of not being 
consistent, and not identifying all the money that needs to be 
in there.
    Mr. Young. So to sum it up, in your opinion, we have a lot 
of work to do to get a more manageable coordinated, cohesive 
effort so that we are speaking with one voice and developing 
one workable approach?
    Mr. Rezendes. We would agree with you on that. We would 
like to see some clarity. We think it would make your job 
easier as the funder of this project to know exactly what all 
the requirements are, not only for what you fund out of this 
subcommittee, but in general from the Federal level and how 
that needs to be done on a Fiscal Year basis. The funding 
should also be tied to the goals they are trying to achieve on 
the project so you will know what you are paying for.
    Mr. Young. We like that.
    Mr. Rezendes. Right.
    Mr. Young. We would like--I think we have that 
responsibility to our constituents and our taxpayers to know 
what they are getting for their money.
    Mr. Chairman, thank you very much for the opportunity to 
ask these questions. Would you mind if I submitted some 
additional questions in writing?
    Mr. Rezendes. We would be happy to answer those.
    Mr. Young. Could you respond to those for the record?
    Mr. Rezendes. Fine. Fine.
    Mr. Young. I want to do that, and thank you very much.
    Mr. Rezendes. All right. Thank you.
    Mr. Regula. Mr. Chairman, I do not know how long you can 
stay, but we do have representatives from Interior here, 
Department people who are responsible for Interior's portion. 
You may want to question them if you are here, or submit 
questions to them for the record.
    Mr. Young. Well, Mr. Chairman, I was just handed a note 
that they need me in the front office, at least within the next 
five minutes.
    Mr. Regula. Well I do not think we will get to them by 
then.
    Mr. Young. I have an idea that another leadership meeting 
has been called on the subject of the supplemental.
    Mr. Regula. Nothing to do with the Everglades?
    Mr. Young. I hope that the Kosovo activity would not have 
any repercussions to the Everglades. [Laughter.]
    But thanks--and I apologize for having to leave--I did have 
it--planned to stay. But I think I had better go and see what 
they need.
    Mr. Regula. Well, we appreciate your coming, and by all 
means, I would like to join you and Mr. Miller and any others 
in getting an on-the-ground look. We were down there about a 
year ago. It is a challenging problem to meet the water needs, 
to meet the ecological needs, to meet the agriculture needs, 
and do it in a balanced way without wasting money. So, thank 
you for coming.
    Bottom line question: do you think this project is well 
managed?
    Mr. Rezendes. When we looked at two individual projects, we 
saw problems. We saw delays. We saw cost overruns. We do not 
see a good way to resolving conflicts. However--and I know 
Interior is going to make this point themselves--they have come 
a long way. They have done a lot of things already. I do not 
want to paint too negative a picture here, but we see problems. 
We see the future fraught with danger. But we think that it can 
be cleaned up.

                   modified water deliveries project

    Mr. Regula. I think you mentioned two projects that you 
looked at. Would you give us a few specifics on what you saw in 
those projects which are probably endemic to some of the 
other----
    Mr. Rezendes. Sure. Right.
    Mr. Regula. Pieces of this.
    Ms. McDonald. The two projects that we looked at were the 
Modified Water Deliveries project and the C-111 project. Both 
of those projects are intended to help restore more natural 
hydrological conditions to the Everglades National Park. In the 
case of the Modified Water Deliveries project, there is a 
residential area adjacent to the east Everglades addition to 
the park, which the agencies have been unable to, for a period 
of time, agree on whether they should fully acquire that land, 
partially acquire that land, or exactly what they should do. 
The Corps and Interior----
    Mr. Regula. When you say agencies, are you talking across 
the board?
    Ms. McDonald. The agencies primarily involved in this 
project are the Corps of Engineers, the Department of the 
Interior----
    Mr. Regula. Right.
    Ms. McDonald. And the South Florida Water Management 
District.
    Mr. Regula. And they have not had a consensus on how to 
deal with this challenge?
    Ms. McDonald. In 1992, they agreed on a mitigation plan 
that included a levee around the residential area. Subsequent 
to that agreement, it became apparent to the Everglades 
National Park that this solution was not a sustainable one; 
that at some point the residents of that area were going to 
want full flood protection, which they currently did not have. 
However, it was not until 1998 that the decision was reached to 
fully acquire the area. However, that issue is still not 
settled. The Miccosukee Tribe is challenging that decision. 
There may be some unwilling sellers and the NEPA process is 
ongoing. So it is still not quite certain at this point what 
the outcome is going to be.
    Mr. Regula. Will the strategic plan address that?
    Ms. McDonald. A strategic plan I believe if it were put 
together would lay out exactly what had to be done, and there 
would be time frames for accomplishing these things. We believe 
if such a plan was put together that these problems would be 
identified early, and perhaps could be resolved in a more 
timely manner than what we are seeing at this point.
    Mr. Rezendes. Especially if they are tied to annual goals. 
If you are giving the money and we know that the completion of 
the eight and half mile track here that Sherry is talking about 
was going to be completed, you would know what to expect by the 
end of that year.
    Mr. Regula. You are saying that we are appropriating 
without knowing exactly where the money is going to be spent or 
in what way it is going to be spent, is that correct?
    Ms. McDonald. The money has been appropriated for land 
acquisition, and it will be used for land acquisition. The 
problem is that it tends to take longer than one would normally 
expect to resolve these issues and the projects themselves are 
being impacted by that.
    Mr. Rezendes. Well, this is more than just land 
acquisition. Originally, the Corps of Engineers' solution was 
to actually build canals around the area and some kind of dam--
--
    Ms. McDonald. Levee.
    Mr. Rezendes. Levees around the system to mitigate any 
flood that would occur as a result of the project. But then I 
think it became obvious that this area had routinely been 
flooded regardless of whether they were doing on the project.
    Mr. Regula. Is there not a levee on the east side of this 
area in question? I was down there, and I recall overflying 
that.
    Mr. Rezendes. Right.
    Mr. Regula. And the natural barrier is that levee that runs 
down----
    Mr. Rezendes. Right, and the properties on the east of 
that.
    Ms. McDonald. West of the levee.
    Mr. Rezendes. West of that. Sorry.
    Mr. Regula. Are the conflicts in the missions part of the 
problem in determining how to address this type of situation?

                            agency missions

    Ms. McDonald. I think certainly the differing missions and 
responsibilities of the agencies have an impact. I think that 
is without question. The agencies do have different missions. 
The National Park obviously is to protect the park and put its 
interests, as one would expect, foremost. While the South 
Florida Management District and the Corps have multi-purpose 
missions of not only supply water but also flood protection. So 
I think that definitely has a role, and impacts their inability 
or causes difficulty in reaching a consensus on how to resolve 
these issues.
    Mr. Regula. I assume--well, let me not assume. Has there 
ever been a definitive program established as to where the 
water is going to go; how much is going to go to the 
environmental and the ecosystem and the park; and how much is 
going to go to replenish the aquifer? Has that decision been--
--
    Mr. Rezendes. I believe that is part of the restudy.
    Ms. McDonald. The restudy.
    Mr. Regula. So the restudy----
    Mr. Rezendes. Which will be completed in July.

                          conflict resolution

    Mr. Regula. So the restudy theoretically will answer that. 
Is there any way--is there any conflict resolution board or is 
there some ``Supreme Court,'' if you will, that will adjudicate 
when there is differences of opinion?
    Mr. Rezendes. Well, there is a task force, which brings 
together all the various key players.
    Mr. Regula. Yes, but do they have the ability to say, 
``okay, this is the way it is going to be?''
    Mr. Rezendes. No, they do not.
    Ms. McDonald. The Task Force facilitates conflicts.
    Mr. Rezendes. They coordinate.
    Mr. Janik. The two projects that we are talking about.
    Mr. Regula. Do you think they need something like that to 
make this thing really work?
    Mr. Rezendes. Yes, again, I am really sensitive. And I know 
Interior will make the point also is that we are not looking to 
provide the Federal Government dictator authority over that.
    Mr. Regula. Oh, I understand.
    Mr. Rezendes. But we are looking for a process. We want to 
see the task force bring the participants together and say, 
hey, when we do reach a conflict, how are we going to reach 
closure?
    Mr. Regula. There has to be----
    Mr. Rezendes. And not wait until the actual issue is on the 
table and then just deal with it.
    Mr. Regula. Well, it seems to me that if you are going to 
make these decisions on the way you are going to handle the 
water, and the pollution, and the rights of the Indian tribes, 
as well as agriculture, developers, you name it, there has to 
be some board of some type to resolve it and say this is the 
way it is going to be.
    Mr. Rezendes. Especially with the number of participants 
and the number of different subobjectives that they all have in 
trying to maximize their own needs.
    Ms. McDonald. And with the various groups and entities 
involved, there are going to be disputes. There are going to be 
conflicts----
    Mr. Regula. Of course.
    Ms. McDonald. That goes without saying. And what we are 
looking for is some way to be very proactive in resolving 
conflicts so that the project itself is not affected 
negatively.
    Mr. Janik. And one of the things the comprehensive--the 
strategic plan will do is if you lay out what you want to 
accomplish and who should accomplish it, then you can look at 
what is coming up. And you may have agencies who need to be 
involved who do have conflicting missions and you can address 
that and be proactive rather than, as we have found in the two 
projects, waiting until disputes occur and then taking two, 
three, four years to take care of them.
    Mr. Regula. So you get ahead of the curve instead of behind 
it.
    Mr. Janik. Right. Exactly.
    Mr. Regula. And it seemed to me that they have been flying 
a little bit blind here in the absence of an agreed upon 
strategic plan, is that a fair statement?
    Mr. Rezendes. They do have a lot of plans and pieces in 
place.
    Mr. Regula. Well, I understand.
    Mr. Rezendes. It is not as comprehensive and as detailed or 
linked as we would like to see them.

                             c-111 project

    Mr. Regula. You mentioned the project involving the 
housing, and then was there a second project you looked at?
    Ms. McDonald. The second project is the C-111 project. And 
what we found in that case is that the Corps of Engineers, the 
Department of the Interior, and the South Florida Water 
Management District agreed to expedite the construction of a 
pump, called the 332D pump, which would help restore water 
conditions again to the Everglades National Park and eventually 
to the Florida Bay. The pumpwas constructed and that 
construction was completed in late 1997. However, the pump has not been 
operated because they cannot agree on the water level and canals 
associated with that project. In addition, lands that need to be 
acquired have not yet been purchased, although we understand that 
progress is being made in that area, to allow that pump to operate.
    Mr. Regula. It would seem to me that is getting the thing 
in reverse. You put the pump in at the end of the project, not 
at the beginning, once you have determined what you want the 
pump to do.
    Ms. McDonald. Well, normally, what they try to do is have 
the land acquisition ongoing while the pump is being 
constructed so that when the construction is complete, you are 
ready to go.
    Mr. Regula. Right.
    Ms. McDonald. In this case, the land acquisition, 
particularly in the Everglades addition, has proved to be 
somewhat problematic because there are so many parcels of land, 
and there have been title problems. And so the park has had, in 
some cases, to come in and get condemnation and taking 
authority.
    Mr. Rezendes. But I think your basic point is well taken. I 
mean, here we are building a pump to pump water into a canal. 
We should know what level we want that water at before we start 
that.
    Mr. Regula. Well, it affects the agriculture, does it not?
    Ms. McDonald. Yes.
    Mr. Regula. You cannot grow plants with wet feet or dry.
    Mr. Rezendes. Right.
    Mr. Regula. And to strike a balance needs some substantial 
planning, I would think. And I assume the Miccosukee Tribe is 
affected because they have some of the land down there. I think 
we visited with them, and they had some real questions.
    Ms. McDonald. They are concerned about this project as 
well.
    Mr. Regula. Well, I have a lot more questions, but Mr. 
Cramer?
    Mr. Cramer. Mr. Chairman, I will try to be focused with my 
questions, but I lack an overall understanding of this project. 
It is an enormous project. It is an extraordinary project. You 
are coming here saying that there is no strategic plan, and you 
are recommending that there be a strategic plan.
    Ms. McDonald. Yes.
    Mr. Cramer. And you are saying there needs to be a process 
for resolving conflict.
    Mr. Rezendes. Right.
    Mr. Cramer. How many Federal agencies are there involved in 
this project?
    Mr. Rezendes. Five major Federal agencies--Department 
levels.
    Mr. Cramer. And with what has gone on so far, there are 
issues that they are charged with responsibility for that they 
have not been able to necessarily settle with the State 
government agencies as well, is not that right?
    Mr. Rezendes. Right.
    Mr. Cramer. The Army Corps has an issue with the flow of 
water.
    Mr. Rezendes. Right.
    Mr. Cramer. And they have been working on that for a long 
time. So when you say there is no strategic plan, I want to 
make sure I understand it. Are you saying there is no plan?
    Mr. Rezendes. Oh, no, they have lots of plans. I want to 
make very, very clear. They do have a lot of plans. They have a 
lot of documents and a lot of reports, and they are still 
working on more. But what we have not seen and what we are 
looking for is an overall strategic plan, that would identify 
specifically what has to be done when, by who, with what 
resources, what is the outcome once you spend that money, how 
much do you need each year, and what is the goals you expect 
every year when you spend that money.
    Mr. Cramer. Right, and how many counties are involved in 
this in the State?
    Ms. McDonald. Sixteen counties.
    Mr. Rezendes. Sixteen.
    Mr. Cramer. Sixteen counties. And then how many arms of 
State government are involved in this?
    Mr. Rezendes. Several.
    Ms. McDonald. There are seven State commissions and 
agencies involved. But what we are looking for is something 
that pulls together all of the plans and all of the strategies 
that the task force and the various agencies have developed and 
are developing to ensure that when this restoration effort is 
complete it is integrated and that it works as a whole and not 
in pieces.
    Mr. Rezendes. I think the difficulty here is what you are 
pointing to. You have a lot of key players with different 
sources of funds, with different budget priorities. What we 
want to make sure is we know specifically what everybody is 
coming to the table to commit to and what time frame and what 
we expect that commitment to be.
    Mr. Cramer. And the South Florida Task Force, is that a 
coordinating entity?
    Mr. Rezendes. Correct.
    Mr. Cramer. What are they charged with?
    Mr. Rezendes. They coordinate the activities of various 
Federal, State, and local agencies involved in this.
    Mr. Cramer. And what would be your solution for some sort 
of binding mechanism to resolve the disputes between all of 
those entities?
    Mr. Rezendes. We really do not have a specific solution. It 
could be a number of things. But we do want them to talk about 
this ahead of time. It may be mediation. It may be through 
conciliation. It may be they have discussions for a certain 
period of time and they cannot reach resolutions within a 
month, or two, or three months, that it would be elevated to 
another group. There are a wide variety of things. We do not 
want to dictate one or the other, especially since there needs 
to be a consensus process of the group involved.
    Mr. Cramer. Yes, I guess part of my point in trying to get 
you to help me walk through this is to say that this project is 
extremely complicated and any issue of conflict resolution or 
an overall strategic plan is easy to talk about, but it will be 
very, very difficult to implement.
    Mr. Rezendes. Absolutely. We agree with that.
    Ms. McDonald. But we also believe because this restoration 
effort is so complex and so difficult, that there really does 
need to be something that guides everyone through this so that 
we can ensure that at the end of this we have succeeded.
    Mr. Cramer. And it would seem to me with what I can absorb 
from this that the agencies that are involved are clearly 
attempting to be responsible and focused in their approach.
    Mr. Rezendes. Absolutely. That is correct.
    Ms. McDonald. There is no doubt about that.
    Mr. Cramer. For the enormity and the uniqueness of the 
project itself.
    Mr. Rezendes. No, you are right.
    Ms. McDonald. Yes.
    Mr. Rezendes. We agree. Right.
    Mr. Cramer. Mr. Chairman, that is all I have.
    Mr. Regula. Following up on Mr. Cramer's comments, will the 
strategic plan have as a component, a recommendation, on how to 
establish a conflict resolution agency, or overall board?
    Mr. Rezendes. It could.
    Ms. McDonald. It certainly could, particularly if the plan 
is developed along the Results Act's guidelines. Certainly, 
when they consider external factors that would affect the 
restoration effort, that might be an appropriate place to look 
at the conflict resolution, because certainly external factors, 
such as individuals or groups outside the task force and 
working group, might be those that they have to deal with in 
resolving conflicts.

                            money in fy 2000

    Mr. Regula. Tough question. Do you think they will be ready 
to spend money wisely in Fiscal Year 2000 if weappropriate it?
    Mr. Rezendes. Wisely is the really key word in that 
question.
    Mr. Regula. Well, we want the people that we appropriate 
money to to spend it wisely.
    Mr. Rezendes. They have a lot of projects going on. I think 
these agencies and each of them are committed to doing the best 
job that they can.
    Mr. Regula. I do not question that.
    Mr. Rezendes. What we do not know is whether each of those 
pieces, as sincere and dedicated as the agencies are in how 
they are doing their pieces, will fit together and whether when 
you put them together whether it will be the best thing for the 
Federal Government.
    Mr. Regula. Well, that is what troubles me. You have a lot 
of agencies. You have a lot of projects, some of which have not 
been resolved, such as the acquisition versus the dike. And if 
you put money in, there is an inclination to spend it. Maybe we 
need to step back and take a breather to make sure that this 
strategic plan is developed, I assume there will be a comment 
period on that. There will be a lot of people who want to input 
after it is announced. Maybe that is the thing that needs to be 
done in the next several months.
    Ms. McDonald. Interior is currently in the process of 
developing an integrated strategic plan. They are in the early 
phases now. However, their plan is not scheduled to be complete 
until at least 2001. And we are not certain at this point, 
based on our conversations, that it will include all the 
components that we have recommended in our report.
    Mr. Regula. Well, then it would not appear that they are 
quite ready to expend funds in the absence of this ``strategic 
plan'' that Interior is doing?
    Ms. McDonald. The task force is doing this.
    Mr. Regula. Yes.
    Ms. McDonald. But for the entire restoration effort.
    Mr. Regula. Oh, beyond just Interior's piece of it?
    Ms. McDonald. Yes.
    Mr. Rezendes. Yes.
    Mr. Regula. Well, I know in our last appropriations bill, 
we requested them to submit a comprehensive acquisition plan by 
March 31, which identifies priority parcels and the rationales 
as to why these parcels are critical. But we do not have it 
yet. March 31 has passed. A letter in response to our inquiry 
says we will get the report to you as soon as possible. I do 
not know how long that may be.
    It just concerns me to appropriate money in the absence of 
a comprehensive direction as to the goals and how they will be 
achieved.
    Mr. Rezendes. We share the same concerns. I think the only 
thing on the other side is that on a project of this scope and 
this magnitude, with so many players and commitments from the 
State and local level, that any delay at our level could 
escalate this cost even more.

                           army corps restudy

    Mr. Janik. I think a lot of people thought the restudy was 
going to be the comprehensive plan. But that restudy only 
addresses one of the three major goals of the restoration 
project.
    Mr. Regula. You mean the one that will be due on July 1st?
    Ms. McDonald. Yes.
    Mr. Janik. Yes.
    Ms. McDonald. And that is a huge part of the restoration 
effort, but it is not the complete restoration effort.
    Mr. Regula. Well, you are saying even when we get the 
restudy, we won't have a complete plan.
    Ms. McDonald. No, you will not have a complete plan.
    Mr. Janik. Right.
    Mr. Regula. Well, when do we get a complete plan?
    Mr. Rezendes. Their estimate is----
    Ms. McDonald. Two thousand and one. (2001)
    Mr. Rezendes. Two thousand and one.
    Mr. Regula. But do you not need to have a complete plan 
before you start? You cannot build the automobile just by 
having a design for the wheels.
    Mr. Rezendes. We would like to see it in place, and you are 
preaching to the choir.
    Mr. Regula. Okay. Mr. Skeen.
    Mr. Skeen. I think we need a steering wheel, first. I had 
the opportunity to visit that area down there, and I want to 
say that it is a very complex issue. You can well imagine when 
you start putting one of these plans together, you have got as 
many entities involved with this thing. I want to tell you 
this, though, you got one of the best water engineering systems 
I have ever seen in the Lake Okeechobee, and that was done I 
think many years ago. And how many entities are you working 
with. I am primarily interested in the agricultural--how close 
are you to having any remedy to offer these folks in the 
agricultural business, because I know that they are very upset 
with the----
    Mr. Rezendes. I do not know. I think Interior could 
probably give you a better answer than we could. They will be 
testifying next.
    Mr. Skeen. How many entities are you working with now?
    Mr. Rezendes. Well, on the Federal level, we are dealing 
with five--
    Mr. Rezendes. Five Department-level----
    Mr. Skeen. I have been praying for rain.
    Mr. Rezendes. Five Department-level agencies on the Federal 
level.
    Mr. Skeen. You have got a lot of private land involved in 
this thing, agricultural production land?
    Mr. Rezendes. Yes.
    Ms. McDonald. A lot of agricultural land borders----
    Mr. Skeen. Where is that?
    Ms. McDonald. The Everglades National Park. And certainly, 
agriculture is involved throughout this.
    Mr. Skeen. Now, you have got a lot of agriculture probably 
used to going on in that particular area--that water--that 
water system is a real monument to good engineering, but it may 
not be----
    Ms. McDonald. It is successful.
    Mr. Skeen. It has been so far. Other than that, I think 
that the--you have touched on what the problem is. If we do 
not--you are not sure this is a huge undertaking and not--and 
we do not have any precedent----
    Mr. Rezendes. Absolutely.
    Mr. Skeen. To work with.
    Mr. Rezendes. You are absolutely correct.
    Mr. Skeen. And now the last question is will it work when 
you put it together?
    Mr. Rezendes. That I do not think anybody knows yet. I 
think they know how well the water will flow, but they are not 
sure whether, in fact, how the environmental aspect of that is 
going to work out.
    Mr. Skeen. Well, thank you for your comments.
    Mr. Rezendes. Thank you.
    Mr. Skeen. So I could understand it. I am sitting here 
rooting for you on the sidelines, but I do not know how much 
help that is going to be. Thank you.
    Mr. Regula. You point out a significant comment--thank you, 
Mr. Skeen. You are not sure how well the environmental aspects 
are going to work out.
    Mr. Rezendes. That is right.
    Mr. Regula. Which of course, is our committee's primary 
responsibility----
    Mr. Rezendes. Right.
    Mr. Regula. In this whole thing. And it seems to me that is 
one of the things that triggered this whole decision to go 
forward. Isn't that fundamental--you would have to know how 
this is going to end up as far as the Everglades National Park?
    Mr. Rezendes. Well, what I meant by that is the project is 
so big, and there are so many uncertainties yet. Assuming that 
we get the water right, there are still the other concerns 
about the various wildlife and plants that are there, not to 
mention the exotic plants have already taken over because we 
did not have the water right to begin with.
    Mr. Regula. Well, don't you have a new dimension since the 
Lord put this together and that is that the water that does 
come in here, that you want to impound, may have pollutants 
because of agriculture activity----
    Mr. Rezendes. Well, that is right.
    Mr. Regula. Because of building construction.
    Mr. Rezendes. Right.
    Mr. Regula. That did not exist in the original.
    Mr. Rezendes. A good amount of this water coming into there 
is going to be from urban run off.
    Mr. Regula. So you have to figure out how to, in some way, 
purify that or filter it----
    Mr. Rezendes. That is right.
    Mr. Regula. Before you move it on into the Everglades, is 
that right?
    Mr. Rezendes. That is right. Yes. And there are plans to do 
that.
    Mr. Regula. That is a part of the overall objective?
    Mr. Rezendes. Yes.
    Mr. Regula. Mr. Kingston.

                             strategic plan

    Mr. Kingston. Thank you, Mr. Chairman. Let me first ask--I 
was not quite sure how you answered the Chairman's questions in 
terms of having the strategic plan in place. Is it not in place 
now?
    Mr. Rezendes. Correct, it is not in place now.
    Mr. Kingston. Okay, is the GAO on record today saying that 
it should be in place before we allocate more money?
    Mr. Rezendes. No, we are not saying that. We would like to 
see this being done as quickly as possible. We would like to 
see all the key elements that we have recommended. I do want to 
emphasize, as I mentioned earlier, they have a lot of 
strategies and a lot of plans already in place. However, none 
of the individual plans, alone or even taken collectively, 
include all the components that we would like to see addressed 
in the strategic plan, which are who is going to do what, when, 
what resources commitments are going to be made to these, what 
are the goals and objectives, how do you tie the expenditure in 
any given year to the annual outcome that should occur in that 
year as a result of those expenditures. That is what we would 
like to see.
    Mr. Kingston. Okay, a billion has been spent?
    Mr. Rezendes. Correct.
    Mr. Kingston. And usually, any time you have, you know, a 
lot of agencies who are spending a billion dollars, there is 
waste, but I did not see any reports of waste in your study. It 
might be in there, and I only scanned it.
    Mr. Rezendes. No, we did look at two projects, and we found 
delays in two specific projects that we looked at--that is all 
we looked at. We are not attesting that there is no waste. We 
have not--we really did not go out and do that.
    Mr. Kingston. Should not that be included in the GAO study?
    Mr. Rezendes. We had rather limited amount of time and 
objectives of what we were asked to do. We did not do a 
comprehensive review of how all the money was spent and what we 
get for all of that.
    Mr. Kingston. Is there any oversight to see that waste is 
minimized?
    Mr. Rezendes. Well, I think, you know----
    Mr. Kingston. And I am not trying----
    Mr. Rezendes. Sure, I understand.
    Mr. Kingston. To spit in the punch bowl.
    Mr. Rezendes. Right.
    Mr. Kingston. But let us not kid ourselves. When the 
Federal Government gets involved in a project and a billion 
dollars is at stake, particularly one that is emotionally 
driven as much as it is in substance, there is going to waste. 
And it would have--you know, kind of bothers me that we are not 
saying, look, here is an area where some money is being wasted, 
some people are being enriched, and it should be better 
allocated to environmental protection.
    Mr. Rezendes. It is still early on in the process. We are 
talking about only $1.2 billion spent of the $11 billion that 
will be probably spent over the next 20 years. The big part of 
this $11 billion is the replumbing that is going to take place, 
and that is $7.8 billion.
    Mr. Kingston. Well, are you going to address the waste down 
the road?
    Mr. Rezendes. We will respond--the Chairman has already 
indicated he expects us to have a presence there for quite some 
time.
    Mr. Kingston. I would be real disappointed if you cannot 
find waste in that. [Laughter.]
    And I just want you to know--I mean, you say--I mean, just 
to--not to pick on you, but you said only--and it is true the 
way you say it, and I know you did not mean it--that is why you 
have said only a billion has been spent of the $11 billion--I 
am thinking you can do a heck of a lot of money with that--you 
know, but, you know, how the land is valued that you are buying 
out and so forth, and that act of it.
    Mr. Rezendes. That is going to be a big area, one that we 
have not looked at very closely--the whole land acquisition. A 
major piece of this is the various parcels that they have to 
procure.

                         restoration definition

    Mr. Kingston. The other thing is the definition of 
restored. Is that universally agreed upon? Is that water 
distribution? Is that acres reacquired? Is that water flow? Is 
that wildlife?
    Mr. Rezendes. The restudy piece which is the $7.8 billion 
is just the water flow. In addition to that, there still are 
other needs to be addressed--the water quality and the 
environment--the plants and the actual ecosystem itself there. 
That needs to be addressed separately.
    Mr. Kingston. So, but we have a--do we have a clear 
assessment of what is being--what has been damaged?
    Ms. McDonald. They are still conducting science studies to 
establish baselines of what they want to achieve----
    Mr. Kingston. But do we have a clear assessment of what is 
being--what has been damaged?
    Ms. McDonald. They are still conducting science studies to 
establish baselines of what they want to achieve. They have 
done quite a bit of work in that area, but they are still 
working on establishing baselines, what are quality standards, 
those sorts of things, and those are ongoing and will continue. 
One of the things that we would hope that the strategic plan 
would do would be to pool the science, which is a key integral 
part which the task force recognizes, together with the 
infrastructure that is being operated and being designed, so 
that it all works together to achieve the restoration.
    Mr. Kingston. Because I would hope that if we are saying we 
need $11 billion, then I would think we would have a clear 
picture as to where we are and where we need to be, and that 
goal should be universally known to all parties at the table,so 
that--hey, what if they only had to spend $7 billion? And it would be 
nice to know that this is driven by that focus on what is restoration 
rather than the end of the flow of money.
    Mr. Rezendes. We agree with that. We think that strategic 
planning would give you just that.
    Mr. Kingston. Mr. Chairman, thank you.
    Mr. Regula. Bottom line, at the end of the day, we want a 
good system for the money we are going to spend.
    Mr. Rezendes. Absolutely.
    Mr. Regula. And how to get from A to B is the challenge 
that this committee and others have, and that is why we are 
here today. Mr. Miller, our member emeritus. The colleagues 
from the minority side agreed to defer to you out of respect 
for your knowledge about this issue.
    Mr. Miller. Thank you, and since I am no longer a member of 
this particular subcommittee, I switched offices, 
unfortunately, if am on this issue--and we did have the 
pleasure of visiting last January down there, Mr. Ring and Mr. 
Salt and others were very gracious to be able to show us 
around, and, hopefully, we can organize one and get as many 
members of the subcommittee down there, because you have to 
almost see it and feel it and smell it and do it all to really 
appreciate it, and you have to do it by air. It is such a 
massive undertaking.
    Is there anything of this magnitude that has ever been 
attempted?
    Mr. Rezendes. Not that we are aware of.

                 multiple appropriations subcommitties

    Mr. Miller. There are so many different agencies, and I 
noticed just in Congress, I don't know if there is any way 
that--how many different appropriation bills are here? There 
are at least four. There are five appropriation bills--
Interior, Agriculture----
    Mr. Rezendes. Commerce, EPA.
    Mr. Miller. I am on the Commerce. And VA-HUD.
    Mr. Regula. The Indians are under the Interior 
Subcommittee. There's Energy & Water, the Corps of Engineers.
    Mr. Miller. And the Corps of Engineers. So, there are five 
different appropriation subcommittees. From a congressional 
responsibility area, and I know there are authorizing 
committees that would have that responsibility, how is the 
appropriate way for us to make sure as we are spending billions 
of dollars that we have for the oversight--? I mean, you all 
can do that, but, as I say, we have five appropriations 
subcommittees. I have seen the book that they have put out in 
appropriations--the spreadsheets, and such--is there anything 
like this from a congressional oversight responsibility that 
you have seen how we should handle it?
    Mr. Rezendes. We have not seen anything like that. We would 
like to see that. We have looked at the cross-cut budget and we 
have some problems with how it is put together. Getting back 
to--and I don't want to sound like Johnny One Note here with 
this plan--but I do think it would give you sort of what you 
are looking. The plan we recommended would lay out who is to do 
what, through which appropriation account, what you would 
expect as resource commitments to be on a yearly basis, and 
what the goals you would expect to achieve with that annual 
appropriation, and then I think you folks can make conscience 
decisions as to whether you have the money, whether you want to 
expedite, cut back or move any of these pieces around, but, 
first, you need the whole picture all together.
    Mr. Miller. The Interior Department, do you oversee the 
total appropriation budget, the request? Who is coordinating 
the request of the appropriation subcommittees?
    Mr. Rezendes. I believe the Department of Interior does 
that.
    Mr. Miller. Is that right?
    Mr. Rezendes. The Chair of the Task Force.
    Mr. Miller. Okay. Well, we will get more clarification of 
that. And, so you don't know of any precedent as far as how do 
we provide the coordination? That is something that just 
bothers me a little bit.
    Mr. Regula. You mean among the subcommittees?
    Mr. Miller. Among the subcommittees.
    Mr. Regula. Well, that is part of the problem and one of 
our concerns. The total is $312 million this year; our piece is 
$151 million. The Corps of Engineers, which would be Energy and 
Water, is $128 million; the EPA, $5 million; National Oceanic 
and Atmospheric Administration, $17 million; Agriculture has 
$9.7 million. At this juncture, there hasn't been coordination 
of this effort, and that is one of our concerns.
    Mr. Miller. It is our problem as much as their problem with 
coordination.
    Mr. Regula. Well, it is ours, but we have got to have a 
strategic plan to work with. It is hard for us to coordinate in 
the absence of a blueprint.
    Mr. Miller. Right, that is a real concern. One of the 
questions I know you raised, Mr. Chairman, when we were on our 
trip is, is there enough science being put forward? And I see 
that we have spent over $100 million on science already. Are 
you comfortable with the amount of science that we are 
investing in; that we are--comfortable that we are getting the 
information we want to properly design the strategic plan?
    Mr. Rezendes. We didn't look at that specifically, although 
one of the questions the chairman did ask is what other 
concerns are out there? And we did talk to a lot of the 
participants in the project, and one of the concerns they had 
was the science, the quantity and quality of the science.
    Mr. Miller. By concern, did they have an answer? I mean, 
was there just--I am just asking the question.
    Ms. McDonald. That is an area that we really haven't done a 
great deal of work in. It was simply a concern that when 
talking to individuals in south Florida, they raised. There is 
a lot of science ongoing, and the task force is committed to 
having a sound base of science, but it was a concern raised by 
some that we talked to in south Florida, and it is an issue 
that we highlighted in the report as something that we might 
want to do additional work in in the future.
    Mr. Miller. Because I think we want to make sure the 
science is keeping up with it. And this is somewhat of an 
evolving plan; the plan has changed since we have been there--
--
    Mr. Rezendes. Right.
    Mr. Miller [continuing]. I mean, the eight and half square 
mile question I think is one of the ones where it was the best 
solution.
    Now, you are saying the strategic plan is not there. The 
restudy is only refocusing on the goal of water, and it is not 
on the restoration, and you are saying--now, is there a plan 
coming up for the restoration also? Is that in the works?
    Ms. McDonald. The task force is working an integrated 
strategic plan----
    Mr. Miller. Okay.
    Ms. McDonald [continuing]. That is scheduled for completion 
in 2001, but based on our conversations, we do not think it 
will include all of the components that we have recommended in 
our report.

                            land acquisition

    Mr. Miller. On agriculture, are we reducing--we are doing a 
lot of land acquisition already, and I know we just bought the 
Talisman Tract and I know there is a lot of that--and a lot of 
it is individual little pieces of property. I think down in the 
southwest part of the Everglades where they have to rebuy whole 
subdivisions is what they are going through. It is an 
unbelievable undertaking. Who supervises land acquisitions, is 
that State or Federal?
    Mr. Rezendes. It all depends on who is doing the 
acquisition. The State is doing some land acquisition, and some 
of it is being done on the Federal level.
    Mr. Miller. How is that decided?
    Mr. Rezendes. Which tracts?
    Mr. Miller. Whether State or Federal? Well, let me get to 
an issue, because last year in the legislature there was some 
debate as to what the State legislature was going to do, and 
they wanted to have the ability to veto the individual sections 
on most and approve it, which could have really been a problem. 
Have you followed that issue of how the State--how we are 
working with the State? Is there any problems there? I want to 
make sure that is----
    Ms. McDonald. Land acquisition is also one of the other 
areas that we did not do a lot of work in but that we 
highlighted as an area of potential concern that we may wish to 
do more work in in the future.
    Mr. Miller. How about working with the State?
    Ms. McDonald. The State is very involved, and we have 
talked to the South Florida Water Management District, who is a 
key player in the restoration effort. We have done some work 
with the State and will anticipate as our work continues that 
we will do more.
    Mr. Rezendes. But there is some concern, and I want to 
address your question. We know there is a lot of land that 
needs to be bought, and most of it is some general areas, but 
the more specific that you get about the parcels, you drive up 
the price. You want to have some flexibility, including working 
with the State in terms of which pieces to buy and who is 
buying them. I think in some cases there is an issue as to 
whether the Federal Government could do this faster and cheaper 
through condemnation in the State. Some of those issues still 
are being worked on.
    Mr. Miller. Thank you, Mr. Chairman.
    Mr. Regula. Thank you. Mr. Moran.
    Mr. Moran. Well, thank you, Mr. Chairman. I don't have a 
dog in this fight, a horse in this race, or whatever any of 
those phrases are.
    Mr. Regula. You are a taxpayer.
    Mr. Moran. Well, that is it, and it just strikes me that 
most of what I read of articles in the New York Times or the 
Post or once in a while you pick up something, and it seems to 
be a lot of money, but the disturbing part is that it doesn't 
really seem to be a whole lot of restoration. Cynics might 
suggest that what we are doing is guaranteeing water supply for 
the sugar growers, and the scientific community seems to be 
much less than enthusiastic about the whole process, and, of 
course, I am familiar with these consensus approaches. The only 
thing you can reach consensus on is not something you are 
particularly proud of in the final analysis. We took a 
consensus approach on the Woodrow Wilson Bridge, and--
[Laughter.]--and it hasn't been built, and I am not sure when 
it is ever going to be built.
    To what extent are the sugar growers, the sugar industry 
contributing to this, and, in your judgment, do you think it is 
an adequate and an appropriate level of participation?
    Mr. Rezendes. We didn't really look at that. That's really 
mostly because of the cost being split with the State. The 
State is the one that will collect from the sugar growers on. I 
think they have a couple of ways of doing that. We do not know 
right now how much is coming from the sugar growers or how much 
the State is going to tax them on this yet, but that will be 
the State's issue.
    Mr. Moran. So, it is entirely up to the State. We put up 
the Federal money, but whether or not there is any compensation 
is up to the States.
    Mr. Rezendes. Well, most of the cost of the restoration 
will be done 50/50 with the State.
    Mr. Moran. Same ratio as Medicaid. We put up the Medicaid 
funding, and then when the States get some reimbursement from 
the tobacco companies, it is up to them whether they use any of 
it for Federal priorities or not.

                         increased water flows

    Now, again, another layman's question--obviously, these are 
off the cuff; I don't have a fraction of the knowledge that Dan 
has, and so I am sure these must seem like awfully naive 
questions--but, unless you can find or create new water, how 
does a restoration project succeed at increasing the water 
flows to the Everglades while at the same time accommodating 
all the future demands created by increased population which is 
burgeoning and guaranteeing adequate water supplies to 
agriculture, which is going to stay at least at the level that 
it is now but probably would like to grow as well. Where does 
the water come from?
    Mr. Rezendes. Actually, two sources. Some of it is coming 
from urban runoff, which is sort of a new source, and some of 
it actually comes----
    Mr. Moran. From urban runoff.
    Mr. Rezendes. Right. Some of it actually is already going 
directly into the ocean, and that would be diverted back into 
these other purposes.
    Ms. McDonald. Increasing the water supply is really what 
the restudy will do. It will redo the plumbing; it will create 
additional reservoirs to store water that is now currently 
going out to sea and is being wasted. So, the whole purpose of 
the restudy is to enlarge the water supply so that there is 
more water available for the urban and agricultural communities 
as well as the natural environment.
    Mr. Moran. So, you are retaining water that is now coming 
from----
    Ms. McDonald. They are creating huge storage areas as part 
of the restudy that will enlarge the water supply in the 
future.
    Mr. Moran. And that is for the benefit of the agriculture?
    Mr. Rezendes. Urban areas as well as----
    Mr. Moran. For the urban areas.
    Mr. Rezendes. Right.
    Ms. McDonald. Agricultural and----
    Mr. Moran. So, six million new homes----
    Ms. McDonald. It has really three purposes: it will 
maintain the flood control that is currently provided in South 
Florida; it will increase the water supply available for urban 
and agricultural areas, and it will provide water for the 
natural environment. That is what the restudy is intended to 
do, all three.
    Mr. Moran. Well, I am sure it is a laudable goal. I see 
some parallel--I was just looking at a study that showed that 
we have reduced the amount of land in this area that used to 
have trees, from about 50 percent to about 17 percent, and in 
the process we spent $28 billion, through dams and canals and 
other canals, trying to get back the water that can't be 
absorbed, because we don't have the tree base, so it all runs 
off. We don't have porous surfaces, they are concrete, and so 
they flow right into the water, and so we have got to figure 
out infrastructure in order to get the water back in an 
unnatural manner. And this seems to be a little bit like that. 
It is the 750,000 acres of sugar cane that is between Lake 
Okeechobee and the ocean, I guess, that basically is the 
problem, and so now--the Federal Government is going to spend 
this money to create a manmade process to get the water back 
that the growing has interfered with--or has blocked from 
getting into the Everglades. Is that--that is wrong, I guess.

                         historical perspective

    Ms. McDonald. The central and Southern Florida Project, 
which was approved back in 1948, built a series of levees, 
canals, and water control structures that did divert water from 
the Everglades, and part of what the reason----
    Mr. Moran. This is water that was in Lake Okeechobee, and 
this was naturally flooding the Everglades.
    Ms. McDonald. Flowing down.
    Mr. Moran. And so then we grew--Florida wanted to build. 
They wanted agriculture, and they wanted homes.
    Ms. McDonald. So, the area was drained, and what the 
restudy is doing is removing canals, removing levees to restore 
a more natural water flow and create areas to store the water 
in order to enlarge the water supply for all three in south 
Florida.
    Mr. Moran. Okay, so you are going to undo what was done 
back right after World War II.
    Ms. McDonald. Undo a portion of what has been done; not 
totally, but we are going to undo some of it.
    Mr. Rezendes. Not totally, but a smaller version of what it 
was.
    Ms. McDonald. I think about 500 miles of canals and levees 
will be removed as part of the restudy.
    Mr. Moran. Okay. Well, I know there are a whole lot of 
questions to ask about the actual use of the Federal money and 
whether it is being used effectively, but then there seem to 
some questions about the whole purpose of the project, itself. 
I am glad that the chairman has held this hearing. Those of us 
who know very little about it are going to understand a little 
more about it. So, thank you, Mr. Chairman.
    Mr. Regula. Thank you. Mr. Hinchey.
    Mr. Hinchey. Thank you, Mr. Chairman. Thank you very much. 
Along with my friend, Mr. Moran, I am trying to understand the 
situation better too. I think it is fair to say that most of 
the ecological engineering that has gone on in Florida has been 
from the point of view of draining the swamps and creating more 
land for agriculture and urban development and things of that 
nature, and as I listen to you I get the sense that you are 
trying to put a different flavor on this. The project is called 
the South Florida Ecosystem Restoration Project, and I am 
wondering to what extent that title is accurate?
    Mr. Rezendes. It will be in the long run. In the short run, 
right now, the objective is--with the Restudy is mostly to get 
the water right which is get it flowing back into the 
Everglades, but, eventually, it is restore the South Florida 
ecosystem.
    Ms. McDonald. The restoration initiative has three major 
goals: one is to get the water right, the second is to restore 
the natural habitat, and the third is to transform the built 
environment. The ecosystem is considered not to be just the 
natural environment but also to be the people in the 
communities that are in south Florida. So, it is not just an 
environmental restoration.

                       environmental restoration

    Mr. Hinchey. Well, environmental restoration has to be 
central to it, and the critics, of course, are saying that that 
is at the bottom of the list, in effect. They are saying that 
you are not going to see any real, essential environmental 
restoration for another quarter of a century. Are they right in 
saying that?
    Mr. Rezendes. I don't know if we have an answer to that. We 
know that it is going to take a while to get the water flowing 
back in, and I am not sure that everybody knows--Interior may 
have a better answer to this on how long it will take that 
water flowing back into that Everglades before it starts to 
restore the environment.
    Mr. Hinchey. What used to happen, from what we have been 
reading on this, is the Everglades constituted a vast sheet of 
water that flowed freely from Lake Okeechobee south to the 
Florida Bay at one point.
    Ms. McDonald. That is correct.
    Mr. Hinchey. That was all changed beginning back in the 
1920's, and that no longer happens. Does the Ecosystem 
Restoration Project envision the actual restoration of that 
free flow of water from Lake Okeechobee south to the Florida 
Bay?
    Mr. Rezendes. The free flow of water will be flowing into 
the Everglades. I am not sure how much of it will be free 
flowing----

                         controlling water flow

    Mr. Hinchey. From where?
    Mr. Rezendes [continuing]. Or how much will be manmade and 
controlling of spigots into it, but there will be much more 
water flowing into there.
    Mr. Janik. I think they want to get it back to about 90 
percent of what it was.
    Mr. Hinchey. Ninety percent.
    Mr. Janik. Of the water flow.
    Mr. Hinchey. But that will flow in, what, a channelized way 
rather than a free flowing way?
    Ms. McDonald. It will be managed by man; it will not be as 
it was before man became involved. What they are hoping to do 
is replicate or restore more natural hydrological functions to 
the area.
    Mr. Hinchey. Well, how do you--I mean, what you just said 
in one or two sentences seemed to contradict itself. How can 
you have a natural free flowing system and in the same breath 
say that it is a managed system?
    Ms. McDonald. They will use manmade structures--
canals,levees, pumps--to assist in putting the water where it needs to 
be.
    Mr. Hinchey. And who makes that judgment as to where it 
needs to be?
    Ms. McDonald. That is what the restudy is designed to do, 
and that is what we are hoping the strategic plan will do, is 
to pull everything together so that the restoration works.
    Mr. Rezendes. The restudy is expected to be done in July.
    Mr. Hinchey. I think there is a legitimate concern that the 
decisions will be made from the point of view of water needs 
for urban needs and agricultural needs.
    Mr. Rezendes. That is a concern.
    Mr. Hinchey. And if you have growing water needs in urban 
communities and you have growing water needs for agriculture, 
then we know where the politics of this will be. The politics 
will be to provide the water for the urban and the agricultural 
needs, and the natural ecosystem will get short shrift. That is 
what will happen unless you have a plan that requires, 
absolutely requires, a program that is going to bring about as 
much of a natural flow as possible so that when decisions are 
made they are made with some equity from the point of view of 
the resource, because you are on a trail, once you start. We 
started down this trail in the 1920's, and I don't think that 
what we have heard today is in any way a departure from that, 
and if we continue on that trail, ultimately and inevitably, 
the resource will be completely degraded and the quality of the 
environment there will be reduced to a situation where, 
perhaps, there will be no longer a desire for the people in the 
urban areas to be there anymore. Everybody seems to be shaking 
their head, yes.
    Mr. Rezendes. Well, we think that is a concern. I don't 
have an answer for you other than holding the various Federal 
agencies involved to make sure that this happens, I can't give 
you the assurance that they are going to do that.
    Mr. Hinchey. No, I don't suppose you can nor can any of us.
    Mr. Rezendes. Right.
    Mr. Hinchey. And the only way that we can try to provide 
some kind of positive answer in that regard for future 
generations is to adequately address the problem of 
restoration, because what we are doing now is mislabeled; it is 
not restoration. What we are doing now is a continuation of the 
artificial manipulation of the resource in ways that are 
designed to benefit specific constituencies at the expense of 
the broader resource itself. That is my conclusion.
    Mr. Regula. It really boils down to who controls the 
spigots.
    Mr. Rezendes. Absolutely.
    Mr. Hinchey. Yes, that is right, Mr. Chairman, but the 
threshold question before that is how many spigots are there 
going to be and should we have a lot of them or should we rely 
more on natural flow than on people turning spigots on?
    Mr. Regula. What you are saying, you want to be sure there 
are spigots there for the restoration as well as for the urban 
development, and then, secondly, that there is an equality in 
terms of people who control the spigots.
    Mr. Hinchey. That is right, and, before that, I would like 
to have as few spigots as possible. [Laughter.]
    Mr. Regula. It is an interesting plumbing problem we are 
dealing with here. [Laughter.]
    We have Patty Beneke from the Department of Interior and 
accompanied by William Leary. I think what we will do--no, we 
want you to stay at the table--I think what we will do is 
suspend the subcommittee and vote. Then we will hear from the 
Department of Interior. However, Mr. Dicks, you might have a 
question or two before we have to go over and vote.

                            scientific input

    Mr. Dicks. Just a quick one, Mr. Chairman. Let me ask you 
about the scientists that have made these criticisms. 
Apparently, there was a scientific panel that looked at this 
and said that they had some doubts about whether the plan would 
work as advertised. What do you think of that? Is there enough 
scientific input into this project?
    Mr. Rezendes. We didn't look at that directly; it wasn't 
one of our objectives. We did ask a lot of folks down there 
what their comfort level was with that, and I think there was a 
consensus. There were concerns about the science, but we don't 
have anything specific on it.
    Ms. McDonald. I believe what the scientists were 
particularly pointing to was the restudy and the fact that it 
had not yet been peer-reviewed. I understand that Secretary 
Babbitt has plans to have an independent peer review set up to 
review the restudy. As Mr. Rezendes says, science is an issue 
that we have identified as an area of concern that we have not 
really done very much work in but that we would anticipate 
doing more work in the future to determine how the science is 
really being integrated, not only into the restudy but into the 
entire restoration effort.
    Mr. Dicks. Well, I would assume that if we did what the 
scientists wanted, the project would then be more expensive? 
But, of course, you want it to work. I mean, at some point, 
this is obviously a trade-off.
    Ms. McDonald. It would be difficult to say at this point 
what impact the science would be. I can say that as science has 
progressed, if the science is not integrated as the projects 
are being designed it could cost more when the science is 
there, because you would have to go back and redesign the 
projects to provide the benefits that you want. So, science is 
very key and very integral to this whole effort.

                           endangered species

    Mr. Dicks. Are there endangered species involved?
    Ms. McDonald. Absolutely, about 68 endangered and 
threatened species, I believe, in south Florida.
    Mr. Dicks. So, in essence, the project has to be 
scientifically credible or it would fail the ESA test.
    Ms. McDonald. Science is essential.
    Mr. Rezendes. Right, absolutely.
    Mr. Dicks. Thank you.
    Mr. Regula. We are going to suspend the hearing, and then 
as soon as we come back, we will hear from the Department of 
Interior. It would be my intent to go straight through and hope 
we can finish in good time, between 12:00 and 1:00 o'clock, If 
you will stay at the table, we will very much appreciate it. 
So, we are suspended for the moment.
                                          Thursday, April 22, 1999.

                       DEPARTMENT OF THE INTERIOR

                               WITNESSES

PATRICIA BENEKE, ASSISTANT SECRETARY FOR WATER AND SCIENCE, DEPARTMENT 
    OF THE INTERIOR
WILLIAM LEARY, SENIOR COUNSELOR TO THE ASSISTANT SECRETARY FOR FISH AND 
    WILDLIFE AND PARKS, DEPARTMENT OF THE INTERIOR

                            Opening Remarks

    Mr. Regula [presiding]. Ms. Beneke, and Mr. Leary. Okay, we 
will reconvene the meeting, and we look forward to hearing from 
you. Ms. Beneke?
    Ms. Beneke. Mr. Chairman, my name is Patty Beneke, and I am 
the Assistant Secretary for Water and Science at the Department 
of the Interior. I also have the privilege of serving as the 
Chair of the South Florida Ecosystem Restoration Task Force, 
which you have heard about already this morning.

                      establishment of task force

    Mr. Chairman, when we started on this effort back in 1992 
and 1993, many Federal agencies were already doing work in the 
Florida Everglades, and we decided that----
    Mr. Regula. Is that coordinated work?
    Ms. Beneke. We decided that we needed to do some 
coordination. And for that reason, the administration formed 
the Task Force. Over the period of the next few years, the 
membership was expanded and is part of the Vice President's 
Ecosystem Restoration Plan. He recommended that the Task Force 
be made statutory. In 1996, the Task Force was made statutory 
by the Congress as part of the Water Resources Development Act 
and the membership was expanded. It is the mission of the Task 
Force to guide the restoration of the Everglades and the 
sustainability of the south Florida ecosystem. We think the 
Task Force has been an extremely effective mechanism, and I 
would be happy to elaborate on that further.

                      overview and accomplishments

    This effort has been one of the administration's highest 
environmental priorities, as evidenced by the leadership of 
both the President and the Vice President. And I am pleased to 
be here today to testify on behalf of the administration and 
also to provide comments on the GAO report.
    But, first of all, I would like to thank you, Mr. Chairman, 
for your leadership and your support. This subcommittee has 
appropriated some $494.6 million to Interior agencies for 
Federal and State land acquisitions, for very important science 
that is key to our efforts, for construction of the Modified 
Water Deliveries Project, and for park and refuge operations in 
Florida. And you have done this at a time when fiscal resources 
were very limited and demands upon your subcommittee were 
great.
    We sincerely appreciate your support. This has been a 
remarkable bipartisan partnership, a true partnership among the 
Congress, the administration, and the State of Florida, and 
many other interested parties.
    Let me also just briefly underscore this morning that in a 
very short time, we have accomplished much by way of success in 
south Florida. Highlights include:
    Establishing the unprecedented partnership among the 14 
Federal bureaus and agencies involved, two sovereign tribal 
governments, seven State of Florida agencies, many cities, 
counties, regional governments, to guide our collective 
efforts. And, again, being guided through the auspices of the 
Task Force.
    We are moving forward with very significant land 
acquisitions, crucial to the restoration effort. We have 
coordinated closely with the Army Corps of Engineers and the 
South Florida Water Management District.
    Mr. Regula. Is this land acquisition by the State or by the 
Federal Government?
    Ms. Beneke. This is both, and, of course, the Federal 
Government is doing direct land acquisition in the east 
Everglades addition and also in other units of the park and 
refuge system in Florida that is very important to these 
efforts. And, in addition, we are providing important grant 
money to the State of Florida, the South Florida Water 
Management District through appropriations provided by this 
subcommittee. Also, we have been acquiring land with the $200 
million provided by the farm bill. And, indeed, we were very 
pleased that just last month, the Talisman acquisition was 
completed. In itself, I think a very remarkable achievement. It 
was an acquisition and land trade agreement.

                           strategic planning

    Mr. Regula. Well, let me ask you, how do you know what land 
to acquire in the absence of a strategic plan?
    Ms. Beneke. Well, Mr. Chairman, I would like to turn to the 
issue of strategic planning----
    Mr. Regula. Okay.
    Ms. Beneke [continuing]. Because that has been raised by 
GAO. First of all, we have done an enormous amount of planning 
in south Florida. If I could refer you to documents that we 
provided to the subcommittee, we have a document entitled ``An 
Integrated Plan for South Florida Ecosystem Restoration and 
Sustainability: Success in the Making.'' This plan enumerates 
specific goals for the restoration effort. These goals were 
developed in close consultation with our partners in Florida. 
There was extensive outreach undertaken in the formulation of 
the goals. They are agreed upon goals for the ecosystem 
restoration effort. The plan also sets forth the many component 
parts for ecosystem restoration. It enumerates strategies.
    Mr. Regula. Well, that only deals with the ecosystem, not 
with the other element of supplying water?
    Ms. Beneke. No, this is the over-arching plan.
    Mr. Regula. On the ecosystem?
    Ms. Beneke. Water is integral to the ecosystem.
    Mr. Regula. I understand that.
    Ms. Beneke. So it does include getting the water right as 
well. It enumerates many, many of the very many moving parts 
and components to this effort.
    In addition, we prepare, the Task Force has prepared a 
biennial report, as required by the Congress. And, again, it 
sets forth goals. It sets forth strategies. It sets forth and 
highlights accomplishments in many areas.

                                restudy

    Mr. Regula. Now will the strategic plan that is due on July 
1 include the components of those plans?
    Ms. Beneke. Now the plan that is due July 1st to the 
Congress is the Restudy. And that is the plan that by statute 
the Secretary of the Army is to provide to the Congress. The 
Restudy is basically the blueprint for the restoration effort. 
It is a centerpiece. It provides the plan for re-plumbing south 
Florida.
    Mr. Regula. Those are broad goals, but they don't get into 
the specifics of the plumbing system?
    Ms. Beneke. I have with me today a draft of the Restudy 
plan.
    Mr. Regula. Okay.
    Ms. Beneke. And it is back here and it shows you the kind 
of detail and kind of specifics that we get into when it comes 
to planning how you are going to re-plumb the south Florida 
ecosystem.
    The Task Force is working on a plan which will be completed 
in 2001. It will provide more detail, but it will continue to 
be an over-arching strategic plan.

                       integrated strategic plan

    Mr. Regula. This concerns me, and I am glad you mentioned 
this plan that is due in 2001. If we are going to have the plan 
out here, why are we making decisions at this point? How do we 
know they are going to fit the 2001 final plan?
    Ms. Beneke. Let me, if I can, try to characterize the 
strategic plan that is being worked on for 2001. It will be a 
refinement of the items in these documents. And it will 
continue to be an over-arching plan, Mr. Chairman. There are so 
many parts to this and this is such an enormous and complex 
undertaking that many specific agencies are working on their 
own specific plans that will contain milestones and goals and 
ways of measuring success.

                                restudy

    If I could turn back to the Restudy for just a minute and 
give you a little bit better description of what will be 
contained in it. It will serve as a centerpiece planning 
document for this entire restoration effort. It has as part of 
it literally hundreds of specific targets, hundreds of 
performance measures, things like the population density of 
alligators in a certain location in the ecosystem. Or specific 
water depths in specific places in the ecosystem. And we will 
go out, the Army Corps of Engineers working with others, and 
measure progress towards meeting those very specific goals on 
an annual basis.
    Mr. Regula. Don't you need the goals before you start doing 
the work? Yes, but that is 2001.
    Ms. Beneke. No, this is the Restudy.
    Mr. Regula. Oh, this is the Restudy.
    Ms. Beneke. And this will be July 1st of this year. And 
there has been an enormous amount of work that has gone into 
creating this plan. It has been an unprecedented effort in 
terms of the Corps working with multiple agencies, including 
the resource agencies, to craft this plan. The National Park 
Service and the U.S. Fish and Wildlife Service have been 
heavily involved. The Army Corps of Engineers has relied on 
science generated by the U.S. Geological Survey and many other 
agencies in crafting this plan.

                       integrated strategic plan

    Again, it will be a centerpiece. But if I could paint a 
picture for you of this 2001 plan, it will be over-arching. It 
will incorporate the specifics of the restudy in it. It will 
incorporate the specifics of a Multi-Species Recovery Plan that 
is being put in place by the Fish and Wildlife Service and soon 
to be complete in the next month or two. It will incorporate 
the specifics of an Exotic Species Control Plan that is being 
worked on by an interagency group. So we have plans. We have a 
cross-cut budget. I will tell you I have the privilege of 
getting to work on several ecosystem restoration efforts across 
this country, and I don't know of any other effort that 
produces a document comparable to this. It is a document where 
all the Federal agencies involved use it. We coordinate our 
requests. We make sure that the dollars we are asking for----
    Mr. Regula. Well, that tells the dollars, but does that 
tell us that those dollars are begetting success?

                                restudy

    Ms. Beneke. Well, again, we have plans that are very close 
to completion that provide for measuring success. And the best 
example that I have for you is the restudy. I don't know what 
more one would want by way of performance measures. I have a 
list here in this notebook of 200 or 300 specific performance 
measures, density of wading bird rookeries at a particular 
location in the ecosystem. And that is going to be measured and 
success is going to be measured and progress reported on an 
annual basis.
    Again, part of the restudy contemplates an adaptive 
assessment process. It is a key component, key element of our 
efforts in south Florida. We have plans. We start to implement. 
We monitor the response of the natural system, and we make 
modifications and adjustments accordingly. It is an adaptive 
process that evolves over time.

                 government performance and results act

    One other aspect of planning, if I could, Mr. Chairman, my 
sense is from reading the draft GAO report that what they were 
looking for was some sort of plan akin to what is required 
under the Government Performance and Results Act (GPRA).
    Mr. Regula. True. We are supposed to comply with that.
    Ms. Beneke. Indeed, and I just do want to assure you, Mr. 
Chairman, that we have complied with it. The Department of the 
Interior has produced a GPRA plan, which includes south Florida 
ecosystem restoration as part of it. The components of that 
that were included in our plan were actually developed by this 
interagency working group and task force in south Florida. So 
we had input from all of the agencies, but we did produce both 
the longer term GPRA plan and also an annual GPRA plan that has 
specific annual goals and measures of success.
    So I really would hate for the subcommittee to leave here 
today thinking that there has not been planning done on this 
effort because from where I sit there has been more planning 
done on this ecosystem effort than--well, at least as much as 
anywhere else in the entire Nation; and I think we are doing 
very well on planning. I think we deserve good marks for the 
efforts that have been undertaken. So I must say I have been 
concerned with the discourse this morning.

                                restudy

    Mr. Regula. Well, of course, here is an article that 
appeared in The New York Times, February 22nd, and it says that 
this study is under fire and we now can see that the proposal 
will actually do little in the way of restoration. The critics 
say that the Federal/State plan does not go far enough in re-
establishing the natural flow of shallow water. There is very 
little restoration and most of it doesn't come for the next 25 
years. Now I am sure you have seen that article.
    Ms. Beneke. I see all the articles about south Florida, Mr. 
Chairman. If I could take a moment to respond to that, I would 
like very much to have that opportunity. The Army Corps of 
Engineers put out a draft restudy last October.
    Mr. Regula. On their own?
    Ms. Beneke. No, everybody worked very closely with them. 
There was a huge, tremendous interagency effort. They put out a 
draft and that draft was subject to some criticism. Comments 
were provided by the Fish and Wildlife Service. Comments were 
provided by the Park Service that were critical of aspects of 
the plan. Since that time, we at Interior and the resource 
agencies have worked closely with the Army Corps of Engineers 
to make recommendations for improvements to the plan. And we 
are very pleased that the Corps has agreed to make significant 
improvements based on our comments and based on comments of 
many members of the public. For example, they have agreed to 
recapture additional water, 245,000 acre feet.
    Mr. Regula. You are implying that the Corps is the lead 
agency?
    Ms. Beneke. With respect to the restudy by statute, Mr. 
Chairman, the Corps is the lead agency under the Water 
Resources Development Act (WRDA). But what is important here is 
the Corps has worked closely with us and they have made many 
substantial modifications to the draft. The final plan is 
undergoing interagency review right now and is on schedule to 
be submitted to the Congress July 1st. But we are fundamentally 
very pleased with the final plan and think that it is going to 
provide significant benefits to the natural system. It sets up 
the opportunity to provide 90 percent of the flows, of the 
original flows, back through the Everglades. That is an 
extremely important accomplishment.
    Mr. Regula. Well, I would ask you to comment on this 
statement in the New York Times, from April 16 of this year. It 
says: ``Indeed, the sugar companies not only survived the just 
concluded battle over the Everglades restoration plan, but 
guaranteed their future water supplies.'' Is that a fair 
statement?
    Ms. Beneke. I think that what that is referring to is the 
notion of providing assurances, whether or not the plan will be 
able to provide assurances to both the natural system and to 
water users. And it's certainly our goal as part of this effort 
that there will be assurances provided, not only for current 
users but also for the natural system. A fundamental aspect of 
this plan is that we are going to be able to enlarge the water 
pie. For me, it is a pleasure to get to work in a system like 
that because I spend a lot of my time out West where it is not 
really possible. But here we are going to take some two million 
acre feet of water that is currently shot out to tide, and we 
are going to recapture it, and we are going to store it, and we 
are going to use it for timing flows and restoring hydroperiod.
    Mr. Regula. Do you see as your primary mission the 
restoration of Everglades National Park or do you see asyour 
primary mission restoration of the total package, which would be water 
for the East Coast, agriculture and restoration? And if your primary 
mission is restoration, are you satisfied that that is on track?
    Ms. Beneke. I will try to take those one at a time. And I 
may distinguish between the hats that I am wearing. As someone 
from the Department of the Interior, certainly we are vitally 
interested in ecosystem restoration. And I think that we feel 
quite confident that the track that we are on is going to yield 
very positive results for the ecosystem in south Florida.
    With respect to the restudy plan itself, Congress directed 
the Corps of Engineers to devise a plan that would not only 
yield ecosystem restoration, but would also provide flood 
protection and water supply benefits to south Florida. They are 
under a statutory mandate to do that. But we think that that is 
very consistent, providing water supply benefits and flood 
control is very consistent with ecosystem restoration. We think 
that the plan that they have crafted can accomplish all three.

                          Allocation of water

    Mr. Regula. Do you think the conceptual plan, which is what 
you are operating under now, will guarantee water allocations 
to ensure that the project achieves its environmental 
objectives because you have a lot of conflicting interests 
there and the pressure from development and from agriculture 
will be great?
    Ms. Beneke. Well, you are asking a very important question.
    Mr. Regula. Well, that is what it is all about.
    Ms. Beneke. Absolutely.
    Mr. Regula. That is why our committee is involved.
    Ms. Beneke. And it is an issue that we at Interior are 
looking at very hard. It is something we are going to be 
wanting to coordinate closely with our partners in the State of 
Florida. And certainly something that between now and the 
authorization of the restudy, we are going to want to look at 
very carefully and work with you on. We think that it is 
important that current water users not have their supply 
threatened, but by the same token, of course it is important 
that the natural system achieve benefits and have some 
assurances in terms of deliveries in the future because that is 
what this Federal investment is all about.
    Mr. Regula. Mr. Hinchey had essentially asked the same 
question. I wonder if you would give him the assurance that he 
was seeking since he missed your response?
    Ms. Beneke. Mr. Hinchey, one of the issues that we were 
talking about was one of the real benefits of the restudy plan 
for re-plumbing south Florida, the plan that is going to be 
submitted by the Corps of Engineers in July of this year to the 
Congress is that it provides for us to enlarge the water pie. 
We have the happy prospect in south Florida of being able to do 
that because something like two million acre feet of water is 
being lost to tide through this very efficient system that the 
Army Corps of Engineers built back in the 1940's and 1950's. We 
are able in this plan to recapture that water, to store that 
water, and to use that water for environmental benefits, to use 
that water for urban water supply, now and in the future, and 
also for other water uses such as agriculture.
    The question the chairman was asking me was a very 
important one and that is what kind of assurances are we going 
to have so that the natural system will receive the benefits 
that it needs to have and can we be assured we are getting a 
return on this very large investment of Federal dollars? And I 
guess my response to that was it is a very important issue. It 
is an issue that we are working on actively at the Department. 
We are going to want to work closely with our partners in the 
State of Florida. We intend that the resource agencies will 
continue to have a strong voice in this effort, as the restudy 
plan moves forward. And it is something I think we need to look 
hard at between now and when the restudy is actually authorized 
by the Congress, hopefully in 2000.
    Mr. Hinchey. The answer is there is no guarantee?
    Ms. Beneke. The answer is we are very mindful of the issue, 
and we think that there are certainly are going to be 
guarantees.
    Mr. Hinchey. But in spite of the fact that you are mindful 
of it, there are no guarantees?
    Ms. Beneke. We think that there will be guarantees, sir.
    Mr. Hinchey. When will those guarantees come about and how 
will that happen?
    Ms. Beneke. Well, water allocation is a function partially 
of State law and we are going to be working with our State 
partners.
    Mr. Hinchey. Yes, I understand that, but from our point of 
view?
    Ms. Beneke. I guess I am not entirely sure how I can 
further respond to that question.
    Mr. Hinchey. Well, you can respond to it directly and 
straightforwardly.
    Ms. Beneke. Well, what I am saying is we have every 
anticipation that there will be assurances for the natural 
system by the time this plan is authorized by the Congress.
    Mr. Hinchey. And on what do you base that belief?
    Ms. Beneke. I think that we are going to be working on 
this--it is a complicated issue. We are going to be working 
with our partners in the State.
    Mr. Hinchey. Do you have any basis to believe that?
    Ms. Beneke. Yes, I think----
    Mr. Hinchey. And what is it precisely?
    Ms. Beneke. What is the basis precisely? The basis 
precisely is that I think there is a recognition that if the 
natural system doesn't have assurances, this process will not 
move forward.
    Mr. Hinchey. Well, no, that is not clear. The process will 
move forward. That is the problem. If there are no assurances, 
the process will move forward because the process will have its 
own inertia that will carry it forward, and it will do it 
whether or not there are guarantees. And if there are 
guarantees, then, of course, that will create a much better 
project. But we have no guarantees and the process is moving 
forward in any case.

                    Water Loss and Restoration Goals

    Now you stipulated a moment ago that a certain amount of 
water is being lost. I am not sure that that is accurate. Water 
is being flushed in and out, but you can't say that water is 
being lost?
    Ms. Beneke. It is being flushed out to tide through canals, 
a very intricate canal and levee system, so that it cannot be 
used for urban water supply or for the Everglades ecosystem or 
for irrigation. So it is being flushed out to tide and lost 
during the wet season.
    Mr. Hinchey. Well it is flushed out to tide and that is a 
natural flushing that has existed there for God knows how long.
    Ms. Beneke. It is not natural.
    Mr. Hinchey. No, no. I know that the part that you are 
talking about, the canal system, is not natural. But to the 
extent that you continue to impede the natural flow, that 
exacerbates the essential problem. And I am not so sure that 
what you are doing is going to really address that. The basic 
problem is salvaging the ecosystem, restoring the ecosystem. 
And the point that I tried to make earlier, although we are 
using the word ``restoration,'' that really isn't what we are 
doing. There is no restoration involved here. It is additional 
channelization. It is additional control. It is additional 
manipulation.
    Ms. Beneke. I am probably not the best person to address 
this. We have several engineers in the room, and I would be 
glad if the chairman would permit it, to ask them to describe 
this in more detail or we would be happy to come up and give 
you a briefing or to submit material for the record. What we 
are doing is--the plan presently contemplates removing 240 
miles of canals and levies, features that impede the sheet flow 
of water through the system.
    Mr. Hinchey. To remove those?
    Ms. Beneke. To remove them entirely. We have literally an 
army of engineers and scientists working on this plan in 
Florida, and it is their belief that this is going to do much 
to restore the sheet flow of water. When you talk about 
restoration, 50 percent of the spatial extent of the Everglades 
has already been lost. And to restore all of that would mean 
wiping out the urban population areas in southeast Florida and 
obviously nobody is doing that. But with respect to the 
remaining 50 percent, we are going to work to get as close to a 
naturally functioning system as it was before as we possibly 
can. We think this Restudy plan gets us well along that way.
    Mr. Hinchey. Well, that is good if it does. I am skeptical, 
but if it does, that, of course, is fine. And no one expects 
that you are going to wipe out any of the urban population that 
is there.
    Ms. Beneke. No.
    Mr. Hinchey. But what I think we ought to be concerned 
about is that what you may be doing is going to exacerbate the 
problem and will increase the growth of urban populations and 
therefore increase the water demand that those populations 
require and also at the same time increase the demands that 
agriculture may need. That, of course, would not be good for 
the ecosystem, it would be injurious to it.
    Ms. Beneke. Sure.

                     Restudy Authorization Process

    Mr. Hinchey. But let me read a question to you which goes 
to what I was trying to get at before. What specific action can 
the administration and the Congress take to ensure that the 
goal will be met? For instance, would the administration 
support Congress' including language in the restudy 
authorization to formally include the Secretary of the 
Interior, along with the Army Corps of Engineers (ACOE) and the 
South Florida Water Management District in the decision-making 
process. Should we have the Secretary of the Interior 
intimately involved in every aspect of the decision-making 
process?
    Ms. Beneke. Well, sir, I think that that is an issue that 
we need to look very carefully at. I can't give you an answer 
today as to exactly what formulation we would support, but 
certainly there needs to be an ongoing role for the Interior 
Department resource agencies and other resource agencies in the 
implementation of this restudy. And I think everybody who has 
been involved with that contemplates it. Exactly what form that 
takes, I don't think we have devised yet, but we would 
certainly welcome your thoughts and input on it. I think it is 
a very important issue, and we are going to be working on it.
    Mr. Hinchey. I would be happy to state my thought on it 
right now.
    Ms. Beneke. Okay.
    Mr. Hinchey. My thought is that the Department of the 
Interior should be intimately involved and that no decision 
should be made absent a contribution from the Secretary of the 
Interior and that the Secretary of the Interior should be an 
equal party in the decision-making process.
    Mr. Regula. Would you yield?
    Mr. Hinchey. Yes, sir.
    Mr. Regula. As a follow-up to that, what if we were to 
condition any funding that we make on the Secretary of Interior 
being made part of this?
    Ms. Beneke. Well, we would want to work closely with you on 
exactly how that was formulated.
    Mr. Regula. Well, you give some thought to it because we do 
not have the bill ready yet. [Laughter.]
    Ms. Beneke. Like so many other issues, the devil is in the 
detail on a lot of this. But certainly the concept is something 
that we at Interior have been talking about, and we are going 
to be working very actively on that issue.
    Mr. Regula. Well, this is the Interior subcommittee.
    Ms. Beneke. Right.
    Mr. Regula. And we have a very substantial interest that 
any funding we do is directed toward the goal of restoration. 
It would seem to me that instead of bipartite, it should be a 
tripartite overseeing body here if restoration is one of the 
three goals; agriculture, urban development, and restoration. 
And, therefore, the Secretary of the Interior should have a 
place at the table. This is what Mr. Hinchey is suggesting.
    Mr. Hinchey. Yes, Mr. Chairman.
    Mr. Regula. And I certainly concur with that objective.
    Well, Mr. Miller, we have to give you another shot at 
things here.

                        Task Force Coordination

    Mr. Miller. Thank you again for allowing me to participate 
in this. It is such a complex thing and we all want to move 
forward. But I am back to the question I asked earlier. 
Fortunately, under the WRDA, the Task Force that Rock Salt 
chairs is providing the coordination. Is that working to your 
perspective?
    Ms. Beneke. I am chairing the Task Force and working very 
closely with Rock Salt, and from my perspective, it has been 
tremendously successful. I think it constitutes an 
unprecedented effort and an unprecedented process unlike 
anywhere else in the entire country.
    Mr. Miller. You chair it?
    Ms. Beneke. I am the Chair of the Task Force.
    Mr. Miller. Okay, okay. And there are representatives of 
the Corps of Engineers, is that right? And BIA and Park 
Service?
    Ms. Beneke. We have five cabinet-level departments with 14 
Federal agencies involved.
    Mr. Miller. Okay. Why are you the one chosen to be the----
    Ms. Beneke. Well, by statute, the Secretary of the Interior 
is the designated chair of the Task Force and Secretary Babbitt 
asked me.

                         Restudy Authorization

    Mr. Miller. What about the Corps of Engineers?
    Ms. Beneke. Pardon me, they are not chairing, they are a 
member of the Task Force.
    Mr. Miller. What are they responsible for? I thought you 
mentioned--for the water?
    Ms. Beneke. By statute, they are responsible for doing the 
Restudy plan, the plan on how to re-plumb Florida. And that by 
statute, the Task Force is responsible for providing 
recommendations to the Secretary of the Army on that plan. So 
the Task Force has had a direct voice in the crafting of the 
Restudy plan.
    Mr. Miller. This Restudy is due July 1, is that right?
    Ms. Beneke. Correct.
    Mr. Miller. What happens with that Restudy? Where does it 
go?
    Ms. Beneke. It goes up to the Congress. It goes to the 
authorizing committees of the Congress and then there will be 
an effort to have the Restudy plan authorized by the Congress 
so that we can proceed with the first set of components for 
implementation.
    Mr. Miller. Do you expect that to be a free-standing bill 
or it will be rolled into another WRDA bill?
    Ms. Beneke. I believe that the Corps is contemplating 
putting it in the WRDA 2000 bill.
    Mr. Miller. That is going through the process now?
    Ms. Beneke. No, trying to have it put in.
    Mr. Miller. In fact, it has already come out of 
subcommittee.
    Ms. Beneke. That is WRDA 1999, isn't it?
    Mr. Leary. It would be WRDA 2000.
    Ms. Beneke. WRDA 2000, yes.
    Mr. Miller. They don't always do one every year.
    Ms. Beneke. I believe the Corps is anticipating that there 
will be a WRDA 2000 bill and this will be included in it.
    Mr. Miller. And this will have the time lines and things in 
there for projected appropriations?
    Ms. Beneke. It will have--I am not the foremost expert. We 
actually have somebody here from the Corps who could probably 
respond to these questions better than I, but it will have 
included in the package, as I understand it, a set of initial 
components for authorization. The goal is to have the entire 
plan authorized conceptually and then have a set of specific 
components for the first increment of the plan authorized so 
that the Corps can proceed. And, yes, the plan includes 
specific components in different stages and anticipated 
appropriations.
    Mr. Miller. On what authorization are we proceeding now? 
Was it authorized what we are doing now?
    Ms. Beneke. Yes. WRDA 1996.

                     Restudy and Water Allocations

    Mr. Miller. WRDA 1996 provided for that. And maybe you have 
asked this question, Mr. Chairman, but there has been some 
concern from the environmental community that Restudy plan is 
being too heavily weighed towards urban water supply at the 
expense of natural areas. Would you respond to that?
    Ms. Beneke. Yes, I would be happy to. Again, one of the 
positive things about the south Florida ecosystem is we are 
able to approach it by actually enlarging the water pie. 
Because so much water is currently lost to tide, the Restudy 
plan contemplates recapturing that water, storing some 1.5 
million acre feet of it. And so for that reason, the Corps, and 
we don't disagree, believes that we can enhance urban water 
supply while at the same time making tremendous strides in 
terms of restoring the Everglades.
    Mr. Miller. What are the concerns of the environmental 
community? They have had some concerns. And I know in southwest 
Florida there is concern about taking the water and diverting 
it away from southwest Florida, which is not my district but my 
adjoining district. The environmental community is not jumping 
for joy on this, is that right? Or is it?
    Ms. Beneke. Well, I do not really want to speak for the 
environmental community, but I do know that the Corps has 
received many comments from them. I am told that they are 
accommodating those comments. What I hear from the 
environmental community is essentially very positive about this 
overall.

               1996 Farm Bill and Surplus Property Sales

    Mr. Miller. I know they want to move forward, I just--let 
me, one thing that was in the 1996 Farm Bill, we put the $200 
million in in 1996 I believe. There was also a provision for 
surplus property sales. I happened to see an article in my 
local paper yesterday. They are getting ready to maybe sell a 
Federal building in Sarasota. We have a small Federal building 
going back to the 1930's and the article says that the money 
goes to the Everglades, which is interesting to me. They have 
kind of outgrown the building. It was too expensive. Where does 
that stand because that was extra money for land in that bill?
    Mr. Leary. Yes, in the farm bill, what most everybody is 
focused on is the $200 million that was provided to the 
Secretary to spend primarily on land acquisition. In addition 
to that, there was authorization for the sale of surplus 
Federal property in Florida and for those funds to be put into 
a separate Everglades restoration fund. We have been working 
very hard with all the different Federal agencies in the State 
to try to identify surplus properties and try tomake them 
available for sale so that those proceeds could come forward to us. We 
have now identified a building, I believe it is in St. Petersburg, that 
is worth close to $4 million. We will be realizing the benefit of those 
funds in that Everglades restoration account. And that will then be 
available to the Secretary of the Interior, similar to the $200 
million, to spend on ecosystem restoration purposes.
    Mr. Regula. Mr. Miller, you may be interested, that 
authority was in our bill which you voted for as a member of 
this committee.
    Mr. Miller. Okay. A small Federal building in Sarasota 
apparently is going to come up.
    Mr. Leary. We are looking at several right now. We have 
several in the pipeline. We are hoping to actually get a 
substantial amount of money out of this in the years to come.

               Overall Management and Dispute Resolution

    Mr. Miller. Well, good. I think the concern that we have is 
who is in charge and we have that problem not only with you 
all, but fortunately they have a task force that kind of pulls 
it together. I am not sure. Our problem is us somewhat.
    Mr. Regula. I think you are absolutely right, and the GAO 
pointed this out rather clearly that we need a supreme court or 
the ``court of last resort'' to adjudicate these many 
conflicting interests. The study is not going to solve that 
problem. It may say, well, do this and do this. But in the 
implementation, inevitably there is going to be conflicting 
interest among the many competing needs. I think we have to 
think about perhaps helping to structure that based on the 
observations of GAO.
    Mr. Miller. One question you had I remember last year also 
was who is going to control the water ultimately? You have the 
Water Management District, you have the Corps.
    Mr. Regula. Good question.
    Mr. Miller. I wish we got the answer last year.
    Ms. Beneke. Well, statutorily as it stands now, it is the 
Water Management District and the Corps of Engineers.
    Mr. Miller. And the Corps of Engineers.
    Mr. Regula. So they have the spigots?
    Ms. Beneke. Indeed, they do.
    Mr. Regula. How do you know they are going to be sensitive 
to the ecosystem?
    Ms. Beneke. Well, as I said, that is a very important 
issue. It is one we are working on. And I guess the other 
answer to that is they have been very open to working with us 
in the course of designing this Restudy. We think the Task 
Force has been extremely effective. Certainly at a bare 
minimum, we would anticipate the Task Force continuing on so 
that we are sure the resource agencies have a strong voice. But 
I think we need to look very hard at this issue and see if we 
need more than that.
    Mr. Regula. We are too. And I was interested in Mr. 
Rezendes' view. Do you agree that the Department of Interior 
does not have an equal place at the table ultimately in making 
the decisions? I think this is what Ms. Beneke said.
    Mr. Rezendes. Right, they are certainly part of the Task 
Force, but a lot of people are part of the Task Force and a lot 
of people have different agendas and different priorities and 
this gets back to the thrust of what we are trying to convey 
here today. We would like to see some way that all the key 
players who are ponying up the money here be able to have 
assurance that the money they put on the table will achieve the 
objectives that they set out to do. And if they don't, how are 
we going to resolve those conflicts? Right now, we have seen a 
couple of projects that had problems that weren't really 
resolved by the Task Force. We are not looking for the Interior 
to be the czar here to take over and decide, but they need some 
kind of mechanism here. Basically, how long do they discuss 
conflicts these before it goes up to the next level? A month, 
six months, a year? What kind of negotiated process? I mean 
something needs to happen here. We agree with that.

                           Dispute Resolution

    Mr. Leary. Mr. Chairman, on the issue of dispute 
resolution, we, of course, all agree that disputes need to be 
resolved as quickly as possible. The point we were trying to 
make, I think, in our response to the suggestion was simply 
this. We have seen recent disputes between the Miccosukee Tribe 
and the South Florida Water Management District.
    Mr. Regula. Right.
    Mr. Leary. Between the EPA and the State Department of 
Environmental Protection.
    Mr. Regula. Right.
    Mr. Leary. Between us and the Corps. Between Dade County 
and to pick an agency, the South Florida Water Management 
District. There are intra-State disputes of agencies that are 
going to be involved here. There are inter-Federal agency 
disputes. There are inter-governmental disputes. We find it 
difficult to envision all of those different sovereigns, all of 
those different levels of government, signing up to one uniform 
process that will resolve all types of disputes.
    Mr. Regula. But without it, how do you get them resolved?
    Mr. Leary. Well, we have in some cases for example, 
disputes between the Corps of Engineers and the Water 
Management District over the regulation of the water that are 
resolved pursuant to the Project Cooperation Agreements that 
they enter into for every project they enter. There are 
Memoranda of Agreement among agencies. For example, in 
Stormwater Treatment Area (STA) 1 East, for which this 
committee funded the land acquisition in the 1998 budget, we 
made sure, because we were the ones providing the $46 million, 
that we entered into a memorandum of agreement with the Water 
Management District and the Corps of Engineers that said we are 
going to be at the table when it is designed and involved in 
the operation mechanisms, and we are hoping that that will be a 
model memorandum of agreement. But it is a memorandum of 
agreement among the agencies that are intimately affected. Some 
of those disputes are best resolved only by those agencies. 
There are some issues that are appropriate to go before the 
working group and the Task Force to resolve where all the 
different members of the Task Force may weigh in. But there are 
other disputes where that is not the case at all. And they are 
best handled between the two agencies that best----
    Mr. Regula. What if they can't agree? There has to be a 
court of last resort. This is a complex project. And the 
competing interests are going to be significant because you 
have development, with a growing population on the East Coast, 
you have agriculture, and you have restoration and there is 
only so much water. I am getting down to basics here.
    Ms. Beneke. If I could jump in for just a minute. From 
where I sit, the Task Force is not a bad model. It is not a bad 
model for resolving many disputes.
    Mr. Regula. Should we give it greater authority?
    Ms. Beneke. Well, it is something that we ought to look at. 
In fact, the Task Force has had many very notable successes in 
resolving interagency disputes. But to get into a binding kind 
of over-arching dispute resolution authority ends up presenting 
some pretty tricky issues of law, constitutionality and so 
forth because you have so many different sovereigns at so many 
different levels.
    Mr. Rezendes. In no way are we saying binding authority. We 
don't want to usurp anyone's legislative prerogatives here.
    Mr. Regula. Okay.
    Mr. Rezendes. But what we are saying is that there should 
be a meeting of the minds as to what the process you are going 
to use to resolve conflicts. That is different.
    Mr. Regula. So you are saying there is no clarity built 
into the process?
    Mr. Rezendes. Correct. Absolutely. In fact, we have run 
across two problems already in looking at two projects. These 
projects have experienced long delays and cost overruns that 
were not resolved by the Task Force. So, obviously, I think 
there are issues that when they were presented, the Task Force 
was unable to expeditiously resolve them.
    Mr. Regula. How do you respond to that?
    Ms. Beneke. I guess if I could add to that. Again, I think 
there is more process and more clarity in the South Florida 
ecosystem restoration effort than there is in most other places 
in the country because at least there we do have a task force. 
One of its missions is to try to resolve disputes. There is a 
forum, an interagency and multiple level of government forum, 
for people to get together and to actively work on these 
disputes. In other ecosystems in other areas of the country, 
every agency is off doing its own thing, potentially wearing 
blinders. So I think to me it is a little ironic that we get 
this critique, although, again, we welcome the review.
    Mr. Regula. We are here to help you.
    Ms. Beneke. We welcome the input. Right.
    Mr. Regula. Adversarial.
    Ms. Beneke. And I appreciate that. But it is a little 
ironic because we are doing more in Florida than we are I think 
almost anywhere else in the country.
    Mr. Rezendes. We agree with that. And, in fact, I want to 
give them credit. I think this Task Force is unprecedented, and 
I think they have done more probably than most other water 
projects. However, this is probably the most complex, the 
largest water restoration effort the Federal Government has 
undertaken. So I think the standard goes up here in terms of 
this is not business as usual. This is something unprecedented, 
and we need to make sure we have the systems in place to 
effectively manage it because there are a lot of pitfalls here 
that could occur over the next 20 years as we try to build the 
system.
    Ms. Beneke. Let me also say we welcome the input. We 
welcome the analysis. We welcome the suggestions because we all 
want to do this right. It is crucially important. It is a 
national or even a world treasure in terms of the resource we 
have there.
    Mr. Regula. The stakes are high.
    Ms. Beneke. And the stakes are very high.

                  critical ecosystem study initiative

    Mr. Regula. A few questions. It is my understanding that in 
the development of the Fiscal 2000 budget, the request for the 
Critical Ecosystem Study Initiative, that is science, funded 
through the National Park Service was scaled back from a level 
of $21 million to $8 million, which is below the base of $12 
million. I would be interested in the rationale, and of course 
you speak for the Interior Department, as to why there is such 
a large difference between the actual and requested levels?
    Ms. Beneke. I can briefly respond to that. I was under the 
impression that it had been scaled back from $12 million to $8 
million. And, again, we in the administration are confronting 
exactly the same difficult budget allocations.
    Mr. Regula. The agency request was for $21 million and the 
Department put it back to $8 million?
    Ms. Beneke. Well, during the budget process, it was put 
back to $8 million.
    Mr. Regula. Right, I understand.
    Ms. Beneke. And we are confronting the same difficult 
budget constraint issues that the Congress is. And all I can 
tell you is that in the final analysis, as the priorities were 
put together, the program was proposed for $8 million. Of 
course, there is still an $8.6 million request in the U.S. 
Geological Survey (USGS) budget. Other agencies are 
contributing science dollars toward this effort. You will not 
hear an argument from me, Mr. Chairman, that science is not 
important. It is crucial. It is crucial.
    Mr. Regula. I think this is a classic example of what has 
been my concern with the proposed new State-side Land and Water 
Conservation Fund Program that is in the President's budget of 
$200 million to go out and buy more land. And to get that $200 
million, we take the science from $21 million to $8 million. 
Now you all agree that this progress has great magnitude, great 
implications, a lot of long-term impacts on the State of 
Florida and on the people there. Science has to be number one. 
Why would we buy more land and not even have the science to 
take care of the land that we are talking about here? Don't you 
agree that science should be up-front?
    Ms. Beneke. I agree that science is fundamental. There has 
been a tremendous amount of excellent work done in Florida and 
it is proving to be useful on a daily basis. It is evidenced 
throughout this Restudy plan, the work that the USGS and other 
science agencies have done in Florida has been very key to our 
efforts.
    Mr. Regula. Perhaps, along with designing a better voice 
for the Secretary of the Interior in this process, this 
committee ought to respond to the science needs in the way in 
which we allocate our funding.
    Ms. Beneke. We would be happy to work with you on that 
further, Mr. Chairman.
    Mr. Regula. Let me say again that our only mission is to 
(1) make sure that the environmental goals are guaranteed, this 
is what Mr. Hinchey was talking about, guaranteed. That means I 
think we are a third of the equation at least. So we, 
therefore, deserve a place--``we'' meaning Interior--deserves a 
place at the table. I think secondly we need to have a plan 
that is finally agreed on by everybody that at the end of 20 
years and $12 billion, we will have achieved the mission, which 
I think there is agreement on as much as possible. Although, 
obviously, the State has adifferent set of priorities than the 
Federal Government. Their priorities are agriculture and development, 
and I can understand that in a sense. Our priority is the restoration 
of an asset that we are responsible for in this subcommittee. These are 
interesting challenges.
    Do you have any further comment, Mr. Hinchey?

               everglades restoration and decision-making

    Mr. Hinchey. Well, just to continue what you were saying, I 
think to some extent, Mr. Chairman. The Everglades and the 
Everglades National Park are important to all Americans. And I 
think they are particularly important to all Floridians. I 
think it is an important part of their sense of belonging to a 
community and it is an important part of their imagination. And 
any project that labels itself restoration of the Everglades 
has got to, in fact, do that. And I am not convinced that this 
project does it adequately as it is currently envisioned and 
moving forward.
    The Task Force, as I am beginning to understand, is a 
coordinating agency. It is not a decision-making agency. The 
decisions that are critically important in this arena are going 
to be made by two parties: the Army Corps of Engineers and the 
South Florida Water Management District. Now certainly they 
should be involved in it, but I am finding it very difficult to 
understand the reluctance of the Secretary to have the 
Department of the Interior involved in that decision-making 
process. And your answers to questions have been consciously 
incomplete, but I think it is important for us to understand 
where the Department is in this regard. And just speaking for 
myself, I think that it is critical that the Department be 
involved in the decision-making process because without the 
Department's involvement, the interest of the country in the 
Everglades National Park, and the interests of the citizens of 
Florida in the Everglades are not going to be adequately 
represented.
    Ms. Beneke. If I could respond for a moment. If I have left 
the impression that the Secretary is reluctant to be involved 
in the decision-making, I would like to correct that.
    Mr. Hinchey. That is the impression you have left with me, 
just speaking for myself.
    Ms. Beneke. I am sorry that I have left that impression. He 
has been very actively and personally engaged in almost every 
decision relating to this ecosystem restoration effort, and I 
anticipate that Secretary Babbitt will continue to be.
    Mr. Hinchey. I know that, that is why I am surprised at the 
answers we have gotten to some of the questions that we have 
asked here today.
    Ms. Beneke. I guess if I have seemed evasive, I certainly 
don't mean to. I cannot give you the kind of specificity that 
perhaps you would like today in terms of exactly how we would 
craft the future role. We would like very much to have your 
input. We would like very much to work with you on it. We are 
not going to argue against having a role down the line in terms 
of decision-making on this. I think it is crucial that the 
resource agencies be heard. So I am sorry if I have left 
another impression.
    Mr. Hinchey. Well, it is not clear. If you want to restore 
the Everglades, you have got to have a consistent flow of water 
in the Everglades. That I think is obvious even to someone like 
me. The plan that you are proposing I am not sure guarantees 
that. And without the active involvement of someone who has 
that interest, the Army Corps doesn't have that interest. The 
Army Corps has their responsibilities. They carry them out very 
effectively and efficiently. The South Florida Water Management 
District has its areas of interest and responsibility. I am 
sure that they do it quite well. But the interest of restoring 
the Everglades and having that consistent flow of water in that 
area is not represented currently by anyone in this plan. And 
without the participation of the Secretary of the Interior or 
some language in the legislation, I don't see how it is going 
to happen; that is, that representation will not, in my 
judgment, occur absent those provisions.
    Ms. Beneke. I don't know that I disagree with you on that.
    Mr. Regula. Well, let me say and, of course, you have 
mentioned--you want to qualify?
    Ms. Beneke. Colonel Salt is reminding me that I probably 
don't want to be on record agreeing that the Corps doesn't care 
about the environment. They have done----
    Mr. Hinchey. I don't want to be on record if what I said 
was misinterpreted to mean that the Corps doesn't care about 
the environment, then I want to correct the record also.
    Ms. Beneke. All right, good.
    Mr. Hinchey. What I said was not that the Corps does not 
care about the environment, but that the Corps has its own 
responsibilities in a finite arena and they carry out those 
responsibilities carefully and efficiently. But that arena is 
finite.
    Mr. Regula. And what we are really getting back to is you 
say there will be extra water?
    Ms. Beneke. Yes, that is the goal of the plan.
    Mr. Regula. And our mission would be to ensure that the 
restoration gets its fair share.
    Ms. Beneke. Yes.
    Mr. Regula. A guaranteed fair share that restoration will 
have the same high priority that development and agriculture 
has.
    Ms. Beneke. And it is a goal we share with you, Mr. 
Chairman.
    Mr. Regula. Yes, and I think we will try to craft some 
language to achieve that goal as part of a condition of 
additional funding because at the end of the day with the $12 
billion spent, we want all of these goals to be met in the best 
possible way and a guarantee that they will continue to be done 
long after we are off the scene. We are talking about something 
that is going to be in place here for decades. Am I correct?
    Ms. Beneke. Indeed, you are.
    Mr. Regula. We will be having further discussions with you 
as we move along on this. We would hope there will be continued 
GAO oversight and interest in this project because, as I said, 
we have no preconceived notions here nor adversarial positions. 
We just want to make it work, and we want to make sure the 
money meets the goals that will address the concerns of all 
America. It is a big job that we all share frankly.
    Do you have any further comments?

                     analysis of gao cost estimate

    Ms. Beneke. One issue that occurs to me is that I did not 
have an opportunity to address today the $11 billion figure 
that I mentioned.
    Mr. Regula. Yes.
    Ms. Beneke. And if I could just have an opportunity to 
submit for the record our analysis of that figure.
    Mr. Regula. Absolutely.
    Ms. Beneke. We question that figure and would like 
toclarify it for the record.
    Mr. Regula. Well, my experience with Federal projects is 
that they never go down from the estimates. That is just based 
on time.
    [The information follows:]

    Department of the Interior Analysis of GAO's Coast Estimate for 
                         Everglades Restoration

    In its April 1999 report entitled, ``South Florida Ecosystem 
Restoration: An Overall Strategic Plan and Decision-Making Process 
Needed to Keep the Effort On Track,'' the General Accounting Office 
(GAO) stated that the restoration effort ``could cost at least $11 
billion.'' The Department of the Interior questions the $11 billion 
figure used by GAO and believes that it is premature to cite a total 
cost for the restoration effort at this time. The $11 billion figure 
cited by GAO includes the following: (1) an initial Army Corps estimate 
of $7.8 billion for projects contemplated, but not yet authorized or 
designed in detail, under the Restudy; (2) funding for already 
authorized State and Federal capital projects that were on-going prior 
to the Administration's efforts to improve overall planning and 
coordination of Federal efforts in the Everglades; and (3) Federal 
expenditures for routine expenditures in South Florida, including on-
going management of parks, refuges and marine sanctuaries. Further, it 
is important to note that $7.8 billion cited for projects contemplated 
by the Restudy is an initial cost estimate for costs of projects that 
are to be shared equally with the State of Florida over a significant 
number of years, perhaps as many as 30.

          state and federal interest in everglades restoration

    Mr. Leary. Mr. Chairman?
    Mr. Regula. Yes?
    Mr. Leary. While we are about the business of wrapping up 
and clarifying the record, I would like to make one additional 
point and that is I wouldn't want anyone to get the mis-
impression that this is the Federal Government that is only 
concerned about the natural environment and the State 
government concerned about the built environment. Probably at 
least half of the remaining Everglades is owned by the State of 
Florida and managed by the State of Florida. The State of 
Florida has in addition to its obvious concerns for its 
citizens----
    Mr. Regula. Right.
    Mr. Leary. It has its concern for the Everglades as well. 
What it will be seeking to do is striking that balance, and 
what we hope to be doing and through the Task Force doing is 
helping strike that balance.
    Mr. Regula. Now will the State areas benefit from this 
increased flow of water?
    Mr. Leary. Absolutely, sir. I can show it to you there.
    Mr. Regula. Yes, do that. Explain that a little bit, just 
in general in terms of what we have been talking about this 
morning?
    Mr. Leary. It has been pointed out. Once you have seen it, 
you will always see it.
    Ms. McDonald. You are going to steal Pooh Bear?
    Mr. Leary. Yes, I am going to steal Pooh Bear. It has been 
pointed out to me once you see Pooh Bear, you always see it, 
with the head here being Lake Okechobee, the Everglades 
agricultural area being his Hawaiian shirt, and the water 
conservation areas being his legs and paws, okay.
    Ms. McDonald. And I would like to point out that we pointed 
that out to the Interior. [Laughter.]
    Mr. Leary. They did. The Everglades National Park is 
roughly this area of the historic Everglades. This is Big 
Cyprus National Preserve. This is Biscayne National Park over 
here. The water conservation areas, which are these, are owned 
by the State of Florida. They are every bit as much of the 
Everglades as Everglades National Park is. This water 
conservation area here is owned by the State, but it is 
Loxahatchee National Wildlife Refuge. So this one has a dual 
Federal and State interest.
    But anyway I just wanted to make clear that we, of course, 
are very interested in protecting our resources and we 
appreciate your support in that. But I just wanted to make 
clear that it isn't us against them.
    Mr. Regula. Lake Okechobee is the spring, am I correct?
    Mr. Leary. Actually, this system is largely rain driven, as 
I understand it. That is one of the things that makes the 
Everglades kind of unique in the world. But what we were 
talking about earlier, I think you were talking about this 
earlier with GAO, is the difficulty of restoring the water. And 
historically, if this table is the Everglades and this is Lake 
Okechobee up here and that is Florida Bay down there, it looks 
about as flat. Historically, this end was up much higher and 
there was a head of water that in-flowed and we can't replicate 
that head anymore. There has been a lot of subsidence here. And 
so, indeed, there will have to be manipulation of the water, 
but the goal of this is by removing a lot of these structures, 
capturing the water in large places so that throughout the 
year, it can be released to replicate the natural flow----
    Mr. Regula. That would be the spigots?
    Mr. Leary. Yes, the spigots and the removal of some of 
these levies so that the water again flows in the sheet flow 
that it historically did. And that is the goal here and the 
goal that Secretary Beneke was talking about. The 90 percent 
restoration goal here is to restore 90 percent of what 
naturally flowed here through Shark River Slough into Florida 
Bay.
    Mr. Regula. Now does that water also percolate into the 
aquifer to support the development?
    Mr. Leary. Oh yes, it does. Part of the problem that we 
have had in the past is not only does most of the water that 
falls in Florida evaporate, but we either lose it because it is 
deliberately sent to tide out the St. Lucie Estuary, or the 
Caloosahatchee River, or it seeps out. A lot of that two 
million acre feet seeps out here into----
    Mr. Regula. That feeds your aquifer?
    Mr. Leary. But it is lost to the natural system. And so one 
of the primary projects, and one of the things this 
subcommittee had given us land acquisition money for, and why 
it is so important, is the East Coast Buffer Project, which is 
this little narrow strip here where we want to buy the 
remaining land. It is under a lot of development pressure. And 
be able to put water there to keep that seepage from occurring. 
That is just one of the projects under the Restudy.
    Mr. Regula. Well, it will still occur, but you will just 
have more water there to allow the seepage. Or are you going to 
catch it, impound it?
    Mr. Leary. Well, this water that is stored is going to 
serve multiple purposes. It will help with water supply, but it 
will also help keep the seepage from occurring so that the 
water here in the natural system stays there when we want it to 
be.
    Mr. Regula. And there will be dams and pumps to try to have 
a continuous flow down through the Park?
    Mr. Leary. As necessary to help replicate that sheet flow, 
yes.
    Mr. Regula. Who will control this allocation of water? Who 
will really sit there with the spigot to say whether it stays 
in there to percolate or whether it is released to move down 
through the Everglades?
    Mr. Leary. These projects are being designed by the Army 
Corps of Engineers and the South Florida Water Management 
District, with input from the Task Force on each of these 
features of the Restudy project to achieve those specific 
goals.
    Mr. Regula. Well, it seems down the road, 25 years from 
now, the control of this will be extremely important because 
there is only going to be so much water and there are going to 
be more people and maybe more agriculture. Won't that control 
be a very key element? Do we need to ensure that it is balanced 
for the long-term?
    Ms. Beneke. I think you are getting to the allocation 
issue, Mr. Chairman.
    Mr. Regula. Right, right, I am.
    Ms. Beneke. And I am only going to give you the same answer 
again, but I agree with you. It is extremely important.
    Mr. Regula. I guess what we are trying to do is just make 
sure, as we appropriate this money, that we also build in the 
legal structures to ensure that the interests of all parties 
are given equal treatment for allocation.
    Ms. Beneke. And that is something we are going to work on 
with you and with our State partners.
    Mr. Regula. Do you have anything, Mr. Hinchey.
    Mr. Hinchey. Just to restate it, Mr. Chairman. There is a 
very substantial national interest in this project demonstrated 
not least by the extraordinary amount of Federal money that 
will be applied to it. Therefore, it seems to me absolutely 
imperative that the Secretary of the Interior be a member of 
the decision-making entity that regulates the flow of water in 
order to make sure that the interests of Everglades National 
Park are represented adequately.
    Ms. McDonald. If I can add to that, I think where our 
strategic plan would be useful is the plan that we are calling 
for specifies quantifiable goals with performance measures 
attached to those so that everyone would know what this 
restoration effort is going to accomplish and how we are going 
to get there and then progress can be measured as we go along. 
The strategic plan that we are calling for would include those 
elements, and I think would assist in resolving some of the 
concerns that you have expressed today.
    Mr. Hinchey. What is the Department's response to that 
recommendation for the strategic plan.
    Mr. Rezendes. I can let them respond, but basically they 
said they have a lot of the process already underway and will 
implement this.
    Mr. Hinchey. So they are saying the strategic plan is not 
necessary?
    Mr. Rezendes. No, they are saying they will do it.
    Mr. Hinchey. Oh, they will do it? Oh, okay. Yes, well, 
let's hear from you? We are not going to let you get off.
    Ms. Beneke. Thank you, thank you, I would love to respond. 
Well, I think what I have said already is we feel we are doing 
a tremendous amount of planning already. We have defined goals. 
We have set out strategies. We are tracking progress and 
accomplishments already.
    Mr. Hinchey. But how do you respond to the recommendation 
for the strategic plan?
    Ms. Beneke. And we are currently working on a strategic 
plan much like the one GAO recommended.
    Mr. Regula. ``We'' meaning everybody, all the players?
    Ms. Beneke. ``We'' meaning the Task Force.
    Mr. Regula. Okay.
    Ms. Beneke. And we are going to look hard at GAO's 
recommendations and do whatever we can to use their 
recommendations and incorporate their work.
    Mr. Hinchey. We will watch with great interest.
    Ms. Beneke. Thank you.
    Mr. Regula. Thank you and I think after we get the 
strategic plan, we may want to have you come back for follow-
up. We all have a common goal: doing the best possible job with 
the money available and ensuring that 25 years or 50 years from 
now, the people that are affected don't feel that we didn't 
take our responsibility in making this happen.
    Ms. Beneke. Thank you.
    Mr. Regula. Thank you all for coming. It was a very 
constructive hearing and has given us all some things to think 
about.
    The committee is adjourned.
    [The following questions and answers were submitted for the 
record:]

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                           W I T N E S S E S

                              ----------                              
                                                                   Page
Barry, D.J.......................................................   207
Beneke, Patricia.................................................   337
Bschor, Denny...................................................41, 207
Cotton, Charlie..................................................     3
Craven, J.L......................................................    41
Finnerty, Maureen................................................   207
Fowler, Cliff....................................................   173
Hatfield, N.R....................................................   207
Hill, B.T........................................................3, 173
Janik, Chet......................................................   299
Kladiva, S.D.....................................................   103
Leary, William...................................................   337
McDonald, Sherry.................................................   299
Reicher, D.W.....................................................   103
Rezendes, V.S....................................................   299
Rogers, John.....................................................   207
Sanders, James...................................................   207
Stewart, R.E.....................................................    41
Zadjura, E.M.....................................................   103


                               I N D E X

                              ----------                              

                     Forest Service--Fee Generation

                                                                   Page
Entrepreneurial Approach.........................................    64
Examples of Forest Uses..........................................    25
Fees from Ski Areas..............................................    21
Filming Fees.....................................................    53
Financial Management.............................................    58
Fire Assistance..................................................    65
Forest Service Witnesses.........................................    41
GAO Witnesses....................................................     3
Hydropower Fees..................................................    53
Lost Revenue.....................................................    20
Opening Remarks of the Chairman..................................     3
Oral Statement of Forest Service.................................    41
Oral Statement of GAO............................................     5
Priority of Fee Collection.......................................    55
Public Attitudes.................................................    72
Questions from Mr. Taylor........................................    98
Questions from the Committee.....................................    74
Recreation Fee Demo Program......................................27, 67
Recreational Residence Fees......................................    31
Re-engineering Team..............................................    59
Special Forest Products..........................................    69
State and Local Government Impacts...............................    63
State Forest Revenues............................................    56
Telecommunication Fees...........................................    63
Timber Bidding Process...........................................22, 61
Timber Revenue...................................................    22
Updating Appraisals..............................................    33
Written Testimony--Forest Service................................    48
Written Testimony--GAO...........................................     8

    Status of Carryover Balances in the Energy Conservation Program

1-Year, 2-Year, or No-Year Funds.................................   167
Accounting Complexity............................................   157
Amount of Carry Over Funds.......................................   138
Availability of Carryover Funds..................................   155
Comparison to Other Agencies.....................................   139
Energy Conservation Appropriation Uncosted Balances (R&D Only)...   144
Energy Efficiency Cost-Shared Contracts..........................   141
Fossil Energy Offsets............................................   159
Introductory Statement of Congressman Ralph Regula...............   104
Inventions Program...............................................   165
Multi-Year Projects..............................................   147
Multi-Year Obligations...........................................   157
National Renewal Energy Report...................................   124
Opening Remarks of Dan W. Reicher, Assistant Secretary...........   121
Opening Remarks of Susan D. Kladiva, Associate Director, OMB.....   106
Percent of Petroleum Imports from the Persian Gulf...............   160
Potential Offsets................................................   168
Prepared Statement of Dan W. Reicher, Assistant Secretary........   130
Prepared Statement of Susan D. Kladiva, Associate Director, OMB..   109
Reprogramming Issues.............................................   166
Special Projects...............................................140, 163
Strategic Petroleum Reserve......................................   149
Uncosted vs. Unobligated Funds...................................   142

                  Recreation Fee Demonstration Program

80/20 Distribution...............................................   192
Additional Revenue from Fees.....................................   220
Additional Revenue Under Permanent Program.......................   256
Agency Coordination..............................................   221
Boundary Waters Canoe Area Fee Project...........................   223
Brochure Package.................................................   248
Costs of Collecting Fees.........................................   194
Criticisms of Program............................................   195
Deferred Maintenance.............................................   245
Deferred Maintenance Is Expenditure Priority.....................   253
Demonstration End Date and Permanent Extension...................   256
Discretion in Fee Uses...........................................   226
Effects on Visitation............................................   196
Expenditure Controls.............................................   250
Expenditure Rate.................................................   220
Experience Reported by GAO and DOI...............................   219
Fee Collection Arrangements......................................   254
Fee Collection Costs.............................................   221
Fee Collection Improvements......................................   256
Fee Collections..................................................   223
Fee Program Incentives...........................................   254
Fee Program Success..............................................   219
Fee Revenues.....................................................   252
GAO Testimony....................................................   189
Golden Age Pass..................................................   193
Gold Eagle Pass..................................................   254
Impact of Fees on Visitation.....................................   219
Impact of Higher Fees on Visitation..............................   257
Impact on NPS Maintenance........................................   190
Improvements.....................................................   226
Incentives for Small Parks.......................................   252
Interagency Cooperation..........................................   246
Limit on Number of Demonstration Sites...........................   253
Need for Innovation..............................................   189
Non-demonstration Site Projects..................................   252
Overnight Use....................................................   224
Passes Available Through Internet................................   247
Permanent Legislation............................................   222
Permit Availability..............................................   225
Program Extension................................................   219
Project Review...................................................   255
Public Acceptance of Higher Fees.................................   221
Public Involvement...............................................   225
Questions to DOI for the Record..................................   259
    National Park Service Issues.................................   284
    Fish and Wildlife Service Collection Costs...................   286
    From Congressman Hinchey.....................................   287
Questions to Forest Service for the Record.......................   289
Qeustions to GAO for the Record..................................   198
Recreation Site Brochures........................................   250
Reprogramming Request............................................   222
Review of Projects...............................................   220
Setting Fee Rates................................................   248
Signage..........................................................   245
Statement of Barry T. Hill.......................................   175
Statement of Denny Bschor........................................   239
Statement of Donald J. Barry.....................................   208
Statement of John Rogers.........................................   233
Statement of Maureen Finnerty....................................   229
Statement of Nina Rose Hatfield..................................   236
Survey Results...................................................   226
Universal Pass...................................................   245
Use of Volunteers in Fee Collection..............................   255
User Fee Brochure................................................   224
Visitor Reaction.................................................   220
Witness Lists:
    General Accounting Office....................................   173
    Fish and Wildlife and Parks..................................   207

                  South Florida Ecosystem Restoration

Agency Missions..................................................   318
Allocation of Water..............................................   342
Analysis of GAO Cost Estimate....................................   354
Army Corps Restudy........................................323, 339, 341
Background.......................................................   305
C-111 Project....................................................   319
Conflict Resolution..............................................   318
Controlling Water Flow...........................................   333
Cost of Restoration..............................................   314
Critical Ecosystem Study Initiative..............................   357
DOI Analysis of GAO's Cost Estimate for Restoration..............   355
Endangered Species...............................................   335
Environmental Restoration........................................   332
Establishment of Task Force......................................   337
Everglades Restoration and Decision-Making.......................   352
Farm Bill and Surplus Property Sales--1996.......................   348
GAO Testimony....................................................   301
Government Performance and Results Act...........................   340
Historical Perspective...........................................   331
Increased Water Flows............................................   330
Integrated Strategic Plan........................................   339
Land Acquisition.................................................   329
Modified Water Deliveries Project................................   316
Money in FY2000..................................................   322
Multiple Appropriations Subcommittees............................   327
Opening Remarks--DOI.............................................   337
Opening Remarks--Regula..........................................   299
Opening Remarks--Young...........................................   300
Overall Management and Dispute Resolution........................   348
Overview of Accomplishments......................................   337
Questions for the Record--Additional DOI.........................   364
Questions for the Record for GAO.................................   359
Questions from the Honorable Norm Dicks..........................   379
Restoration Definition...........................................   326
Restudy and Water Allocations....................................   347
Restudy Authorization Process....................................   345
Scientific Input.................................................   334
State and Federal Interest in Everglades Restoration.............   355
Strategic Plan............................................310, 325, 338
Task Force Coordination..........................................   346
Water Loss and Restoration Goals.................................   344

                                
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