[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]




               DEVELOPING ECONOMIC USES FOR FOREST FUELS

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

                           OVERSIGHT HEARING

                               before the

                      SUBCOMMITTEE ON FORESTS AND
                             FOREST HEALTH

                                 of the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             April 3, 2001

                               __________

                           Serial No. 107-13

                               __________

           Printed for the use of the Committee on Resources



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                         COMMITTEE ON RESOURCES

                    JAMES V. HANSEN, Utah, Chairman
       NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska,                   George Miller, California
  Vice Chairman                      Edward J. Markey, Massachusetts
W.J. ``Billy'' Tauzin, Louisiana     Dale E. Kildee, Michigan
Jim Saxton, New Jersey               Peter A. DeFazio, Oregon
Elton Gallegly, California           Eni F.H. Faleomavaega, American 
John J. Duncan, Jr., Tennessee           Samoa
Joel Hefley, Colorado                Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland         Solomon P. Ortiz, Texas
Ken Calvert, California              Frank Pallone, Jr., New Jersey
Scott McInnis, Colorado              Calvin M. Dooley, California
Richard W. Pombo, California         Robert A. Underwood, Guam
Barbara Cubin, Wyoming               Adam Smith, Washington
George Radanovich, California        Donna M. Christensen, Virgin 
Walter B. Jones, Jr., North              Islands
    Carolina                         Ron Kind, Wisconsin
Mac Thornberry, Texas                Jay Inslee, Washington
Chris Cannon, Utah                   Grace F. Napolitano, California
John E. Peterson, Pennsylvania       Tom Udall, New Mexico
Bob Schaffer, Colorado               Mark Udall, Colorado
Jim Gibbons, Nevada                  Rush D. Holt, New Jersey
Mark E. Souder, Indiana              James P. McGovern, Massachusetts
Greg Walden, Oregon                  Anibal Acevedo-Vila, Puerto Rico
Michael K. Simpson, Idaho            Hilda L. Solis, California
Thomas G. Tancredo, Colorado         Brad Carson, Oklahoma
J.D. Hayworth, Arizona               Betty McCollum, Minnesota
C.L. ``Butch'' Otter, Idaho
Tom Osborne, Nebraska
Jeff Flake, Arizona
Dennis R. Rehberg, Montana

                   Allen D. Freemyer, Chief of Staff
                      Lisa Pittman, Chief Counsel
                    Michael S. Twinchek, Chief Clerk
                 James H. Zoia, Democrat Staff Director
                  Jeff Petrich, Democrat Chief Counsel
                                 ------                                

               SUBCOMMITTEE ON FORESTS AND FOREST HEALTH

                   SCOTT McINNIS, Colorado, Chairman
            JAY INSLEE, Washington, Ranking Democrat Member

John J. Duncan, Jr., Tennessee       Dale E. Kildee, Michigan
John E. Peterson, Pennsylvania,      Tom Udall, New Mexico
  Vice Chairman                      Mark Udall, Colorado
Mark E. Souder, Indiana              Rush D. Holt, New Jersey
Michael K. Simpson, Idaho            Anibal Acevedo-Vila, Puerto Rico
Thomas G. Tancredo, Colorado         Betty McCollum, Minnesota
J.D. Hayworth, Arizona
C.L. ``Butch'' Otter, Idaho

                                 ------                                

                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on April 3, 2001....................................     1

Statement of Members:
    McInnis, Hon. Scott, a Representative in Congress from the 
      State of Colorado..........................................     1
        Prepared statement of....................................     2

Statement of Witnesses:
    Carlson, William H., Vice President, Wheelabrator 
      Environmental Systems, Anderson, California................    28
        Prepared statement of....................................    30
    Hamilton, Dr. Thomas E., Director, Forest Products 
      Laboratory, USDA Forest Service, Madison, Wisconsin........     3
        Prepared statement of....................................     6
    Holmer, Steve, Campaign Coordinator, American Lands Alliance, 
      Washington, DC.............................................    43
        Prepared statement of....................................    45
        Letter to The Honorable Dan Glickman and The Honorable 
          Bruce Babbitt submitted for the record.................    49
    KenCairn, Brett, Director, Indigenous Community Enterprises, 
      Flagstaff, Arizona.........................................    38
        Prepared statement of....................................    40
    Smith, Megan, Co-Director, American Bioenergy Association, 
      Washington, DC.............................................    21
        Prepared statement of....................................    23

Additional materials supplied:
    Thomas, Craig, Conservation Director, The Sierra Nevada 
      Forest Protection Campaign, Statement submitted for the 
      record.....................................................    60

 
     OVERSIGHT HEARING ON DEVELOPING ECONOMIC USES FOR FOREST FUELS

                              ----------                              


                         Tuesday, April 3, 2001

                     U.S. House of Representatives

               Subcommittee on Forests and Forest Health

                         Committee on Resources

                             Washington, DC

                              ----------                              

    The Subcommittee met, pursuant to notice, at 3:03 p.m., in 
Room 1334, Longworth House Office Building, Hon. Scott McInnis 
[Chairman of the Subcommittee] presiding.
    Mr. McInnis. The Committee on Resources, Subcommittee on 
Forests and Forest Health is now in order. The Subcommittee on 
Forests and Forest Health is meeting today to discuss testimony 
on developing economic uses for forest fuels. Under Committee 
Rule 4(g), the Chairman and the Ranking Minority Member can 
make opening statements. If any other Members have statements, 
they can be included in the hearing record under unanimous 
consent.

 STATEMENT OF THE HONORABLE SCOTT MCINNIS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Mr. McInnis. Last week, the Subcommittee conducted an 
oversight hearing exploring the role of community-based 
partnerships in management of our national forests. During the 
course of the hearing, a critical theme surfaced, which was 
that healthy forests and healthy local communities are 
inalterably intertwined. Several witnesses testified that, 
where possible, local economies should be allowed to benefit 
from the implementation of sustainable management practices, 
which brings us to today's hearing.
    One meaningful opportunity to encourage both healthy 
forests and healthy local economies is found in the emerging 
field of biomass production. In short, biomass is excess wood 
fiber generated by the mechanical thinning of forests. Biomass 
production seeks to utilize these wood byproducts for energy 
production. A good deal of work has also been done around the 
country to develop innovative value-added products from small 
logs, like furniture or hardwood floors or composite signs when 
made from chip wood and plastics, for example.
    As the members of this Subcommittee and our witnesses know 
well, last year, Congress established the National Fire Plan to 
combat the rampant threat of catastrophic fire on our forest 
lands. At present, 73 million acres of national forest lands 
run the substantial risk of experiencing runaway wildfires 
during the coming fire season. The cause of this imminent 
threat is clear: After 100 years of effective fire suppression, 
our forests are littered with excess fuels in the form of live 
small-diameter trees, dead trees of all sizes, branches, brush, 
needles, and leaves. The National Fire Plan creates a 
comprehensive and coordinated framework through which land 
managers can address this fundamental cause of our current 
forest fire crisis.
    As resource managers begin to systematically reduce these 
forest fuels, as directed by the National Fire Plan, vast 
quantities of biomass will become available. If, for the health 
and sustainability of our forests, these wood byproducts are to 
be removed in the first place, it only stands to reason that 
these resources be put to an efficient use in the local 
marketplace. It is a matter of common sense. In my estimation, 
Congress and Federal land management agencies should take all 
practical steps to promote the long-term availability of 
biomass and availability of businesses that utilize it.
    Now, there will be no doubt there will be some who 
cynically, and wrongly, view biomass production, particularly 
biomass stemming from implementation of the National Fire Plan, 
as some sort of threat to our forests. I do not see it that 
way. Let me be clear. Forest fuel reduction and biomass 
production is not an excuse to increase timber harvesting. 
Instead, it is a one-two combination that, in my opinion, 
simultaneously provides the sustainability of our forests and 
the health of our local economies.
    I look forward to exploring the benefits, opportunities, 
and obstacles to utilizing biomass during the testimony from 
this hearing. Ultimately, I hope specific bipartisan proposals 
will emerge about how we can efficiently and responsibly 
promote the careful use of forest biomass.
    [The prepared statement of Mr. McInnis follows:]

  Statement of The Honorable Scott McInnis, Chairman, Subcommittee on 
                       Forests and Forest Health

    Last week, this Subcommittee conducted an oversight hearing 
exploring the role of community-based partnership in the management of 
our nation's forests. During the course of the hearing, a critical 
theme surfaced, which was, that healthy forests and healthy local 
communities are inalterably intertwined. Several witnesses testified 
that, where possible, local economies should be allowed to benefit from 
the implementation of sustainable management practices. Which brings us 
to today's hearing.
    One meaningful opportunity to encourage both healthy forests and 
healthy local economies is found in the emerging field of biomass 
production. In short, biomass is excess wood fiber generated by the 
mechanical thinning of forests. Biomass production seeks to utilize 
these wood byproducts for energy production. A good deal of work has 
also been done around the country to develop innovative value-added 
products from small logs, like furniture or hardwood floors or 
composite signs made from chip wood and plastics, for example.
    As the members of this Subcommittee and our witnesses know well, 
last year Congress established the National Fire Plan to combat the 
rampant threat of catastrophic fire on our forest lands. At present, 73 
million acres of National Forest Lands run the substantial risk of 
experiencing run-a-way wildfires during the coming fire season. The 
cause of this imminent threat is clear: after 100 years of effective 
fire suppression, our forests are littered with excess fuels in the 
form of live small-diameter trees, dead trees of all sizes, branches, 
brush, needles and leaves. The National Fire Plan creates a 
comprehensive and coordinated framework through which land managers can 
address this fundamental cause of our current forest fire crisis.
    As resource managers begin to systematically reduce these forest 
fuels, as directed by the National Fire Plan, vast quantities of 
biomass will become available. If, for the health and sustainability of 
our forests, these wood byproducts are to be removed in the first 
place, it only stands to reason that these resources be put to 
efficient use in the local market place. It's a matter of common sense. 
In my estimation, Congress and Federal land management agencies should 
take all practical steps to promote the long-term availability of 
biomass and the viability of the businesses that utilize it.
    Now, there will no doubt be some who cynically, and wrongly, view 
biomass production, particularly biomass stemming from implementation 
of the National Fire Plan, as some sort of threat to our forests. It is 
not. Let me be clear: forest fuel reduction and biomass production is 
not an excuse to increase timber harvesting; instead, it is a one-two 
combination that simultaneously promotes the sustainability of our 
forests and the health of our local economies.
    So, I look forward to exploring the benefits, opportunities and 
obstacles to utilizing biomass during the course of this hearing. 
Ultimately, I hope specific bipartisan proposals will emerge about how 
we can efficiently and responsibly promote the careful use of forest 
biomass.
                                 ______
                                 
    Mr. McInnis. The Ranking Member is not here. When the 
Ranking Member does appear, we will allow him some time for any 
opening remarks.
    To the witnesses, first of all, I thank you very much for 
taking the time in your busy schedule to appear before the 
Committee today. I also want to let you know, this little 
machine right here, pay attention to it. Because we have a 
number of witnesses we would like to hear today, that is your 
timer, and if you would wrap up your comments when the machine 
indicates that that should be done, I would appreciate that.
    Let me begin with the Ranking Member, Mr. Inslee, who has 
arrived. I will yield to Mr. Inslee for opening remarks and 
then we will proceed to our witnesses.
    Mr. Inslee. Let us proceed to our witnesses, Mr. Chair.
    Mr. McInnis. All right, fine. Thank you.
    Panel one, Mr. Hamilton, USDA Forest Service--I will just 
go ahead and introduce the panel--Ann Bartuska with the Forest 
and Rangeland Staff, and Denny Truesdale, Deputy National Fire 
Plan Implementation Coordinator. I thank the three of you. Mr. 
Hamilton, since you are first on the table there, why do you 
not proceed and we will just go across the table.

    STATEMENT OF THOMAS HAMILTON, DIRECTOR, FOREST PRODUCTS 
     LABORATORY, USDA FOREST SERVICE, MADISON, WISCONSIN; 
  ACCOMPANIED BY ANN BARTUSKA, DIRECTOR, FOREST AND RANGELAND 
 STAFF, WASHINGTON, D.C.; AND DENNY TRUESDALE, DEPUTY NATIONAL 
     FIRE PLAN IMPLEMENTATION COORDINATOR, WASHINGTON, D.C.

    Mr. Hamilton. Thank you, Mr. Chairman. I will be delivering 
the testimony for all three of us, but we are all here to help 
answer questions. Our testimony was submitted for the record. 
What I intend to do here is briefly summarize our activities in 
use of the small-diameter and underutilized material from 
forests.
    We believe there are significant benefits for removing this 
material. To name a few, hazardous fuels are reduced and 
communities are protected from fire. Economic opportunities are 
available to many of these rural communities. We believe this 
will help improve the condition and health of the forest. It 
will provide fiber for the nation, and in the East in 
particular, it can contribute to preventing forest 
fragmentation.
    There are some impediments, though, to removal of this 
material. A few of the major ones are, first of all, there 
needs to be an available and accessible supply. Simply put, 
investment dollars are unavailable if supply is uncertain. 
Second, the cost of traditional thinning and processing is high 
and it makes it uneconomic to use this material. And third, 
there is a lack of other value-added uses which could offset 
the higher costs. We believe that we can provide the kinds of 
technologies that will accomplish all of these things.
    If you would look at the chart on my far left, it shows 
three columns, the one on your left being value-added uses, the 
one in the middle, traditional forest products uses, and the 
one on the right, what I have called residues. What that chart 
shows is that there are different levels of opportunity to use 
this material and we believe that moving as much as possible 
into the value-added column will mean that it will become 
economic to move this material out of the forest.
    Yes?
    Mr. McInnis. If I might interrupt, Mr. Hamilton, just for a 
moment, do you have copies of this included in your comments, 
of the charts?
    Mr. Hamilton. I do not, but we can provide those.
    Mr. McInnis. I think it would be helpful. We cannot read 
them, obviously, from here, but I think that subsequent to the 
hearing, if you could provide us with copies of it, I would 
appreciate it.
    Mr. Hamilton. Okay.
    Mr. McInnis. Thank you, and you may proceed.
    Mr. Hamilton. Thank you. The concept here is that using a 
material in its highest-value use will give us the best chance 
of covering costs.
    Now what I would like to do is give you some examples of 
what we are doing with local communities, primarily in the 
West, to make this sort of thing happen. We think the most 
immediate opportunity is in the traditional markets and we are 
working with a number of firms and communities on this. We have 
shown that species such as Briscoe, Douglas fir, grand fir, and 
large pole pine in the west and red maple in the East can 
achieve an increase in value by mechanically grading it and 
providing lumber for trusses and I-beams. Typically, these 
species have not moved into high-value use applications. Red 
Creek Lumber Company in Sand Point, Idaho, is one example of a 
firm that is now doing this.
    Another technical barrier is drying Ponderosa pine. We are 
working with mills in several locations to dry Ponderosa pine 
properly so it does not twist and warp. One example is Burnt 
River Forest Products Company in Unity, Oregon, where they are 
using some of the technology that we have provided.
    We are also working with firms on small-diameter round wood 
for recreation structures, fence posts, and guard rails. Round 
wood is difficult to connect. I have brought an example here of 
a unique connection. It is a radial finger joint, but it is a 
way to connect round material to gain some strength.
    Finally, we have been working with a community called 
Reserve, New Mexico, on ways to revamp their saw mill to use 
the smaller-diameter material that is now available, and I just 
learned yesterday that as a result of our advice, they are 
moving into an expanded post and pole operation that will 
employ about 20 to 25 people in that community at a place where 
their primary mill is shut down.
    Value-added markets are the ones that capture a substantial 
economic gain. We believe if we could move 30 to 40 percent of 
this material into the value-added kinds of categories, that 
would go a long way toward closing the gap between cost and 
returns.
    We have been working with Hayfork, California, as I know 
you have heard in previous hearings, on a number of projects. 
They are shown on the big chart here, and I can provide that 
for you, also. But one of the examples would be using Douglas 
fir for flooring, because it is very dense and very hard and it 
adds significant value to the resource there.
    We have been working with a firm in Arizona on making glue-
laminated Ponderosa pine beams, where they are 100 percent 
Ponderosa pine rather than Douglas fir on the outside edges 
where the strength is needed. That firm is now entering 
production of those beams and that will mean that all of those 
beams will be made out of this resource.
    We are working on recreation structures with firms in 
places like Hamilton, Montana, Enterprise, Oregon, Hayfork, 
California. An interesting sidelight is that they will all be 
furnishing material for some kiosks, recreational kiosks, at 
the 2002 Winter Olympics.
    We are working with the Navajo Nation on home construction, 
and you will hear from Brett KenCairn on that, I think, a 
little later today.
    And finally, in Hamilton, Montana, we are working with 
Rocky Mountain Log Homes to find ways to use raw material 
instead of dimensional material, two-by-eights and two-by-tens, 
for things like floor joists. And the interesting thing is, 
this would be fire killed timber, not timber that is removed 
before the fire, but timber that has been removed as a result 
of those fires this past summer.
    One last point I wanted to make was that residues are an 
important part of this total package. Without the return you 
can get from residues, often the total package will not be 
economic.
    We are working with a firm in New Mexico to make things 
like this sign that is made out of wood fiber and plastics. It 
does not get eaten by rodents because there is no resin in it, 
and as a result, the signs last a much longer period of time. 
They are currently in manufacture of these kinds of signs.
    We are working with a concrete company in Colorado in 
manufacture of concrete using wood to increase the heat. We are 
working with a community in Salmon, Idaho, on providing small-
scale energy for schools and their hospital. So those residues 
are an important part of the total package.
    We believe that we can make a significant contribution, not 
only to the national economy but to local communities, with 
this material. With needed research, adequate technical and 
financial assistance, and some assurance of long-term supplies, 
I think this material can be economically viable.
    I have a publication that I have left here for you that 
describes many other activities we have going on--
    Mr. McInnis. Mr. Hamilton, you will need to wrap it up.
    Mr. Hamilton. Okay. Individual communities and firms, so 
you may look at that afterwards, and that concludes my remarks. 
Thank you very much.
    [The prepared statement of Mr. Hamilton follows:]

    Statement of Dr. Thomas E. Hamilton, Director, Forest Products 
       Laboratory, Forest Service, U.S. Department of Agriculture

    Mr. Chairman and Members of the Subcommittee:
    Thank you for the opportunity to be here today. I am Tom Hamilton, 
Director of the Forest Products Lab. With me today is Ann Bartuska, the 
Director of Forest Management, and Denny Truesdale, Deputy National 
Fire Plan Implementation Coordinator.
    Tremendous opportunities exist to improve wood utilization, 
bringing more value to forest material and reducing our dependence on 
other non-renewable energy resources. The Forest Service is actively 
involved in these opportunities. I would like to discuss our actions to 
improve the utilization of small diameter and under-utilized wood 
resources.
    There is a national need for: 1) recognizing the significance of 
wood resources for community based value-added businesses and energy 
production; 2) intensifying efforts to increase the use of wood for 
energy; 3) applying our existing authorities to develop wood-based 
industries and; 4) expanding markets for the energy and products that 
we can produce through improving utilization of wood resources.
    Using wood for products and energy generates additional benefits, 
including creating and sustaining jobs; diversifying and strengthening 
small business and rural economies; and reducing the threat of 
catastrophic wildfires.
    As you know, the massive wildfires of 2000 have focused attention 
on the buildup of wood on Federal lands. The Forest Service estimates 
there are 400 to 500 million tons of small diameter woody biomass on 
national forest lands that are classified at high or moderate fire 
risk. Efficiently capturing and utilizing only a part of this material 
would help offset the public cost of hazardous fuels reduction and 
forest ecosystem vegetation while contributing to rural communities 
sustainable growth and development.
    We have a long history of developing forest management systems and 
utilization technologies at the Forest Products Lab (FPL), Research 
Stations, State and Private Forestry programs on private woodlands, as 
well as, on the National Forests. We will continue to search for better 
ways to harvest, recover, and process this low value, small-diameter 
material in an economically and environmentally sound manner.
What Are Under-utilized Wood Resources?
    Under-utilized, wood resources are low value, small diameter trees, 
generally growing beneath the forest canopy. These trees are usually 
too small to make lumber or paneling, and of too little value to be 
economically harvested and transported. In many forests, their presence 
is a result of earlier management practices, such as fire suppression, 
and now creates a high risk of wildfire. Discovering new uses and 
expanding current uses and new product development could help reduce 
the cost of removing hazardous fuels and make this material into 
economical and renewable wood-based alternatives to large trees, 
plastics and other oil-based or more resource-costly products.
Value Added Products
    In many parts of the West, particularly where fire risks are great, 
there is no industrial infrastructure capable of processing thinnings 
from hazardous fuels treatments. Yet, there are significant 
possibilities for adding value to the wood resource at the small scale, 
local community level. These include traditional commodity wood 
products made from small logs and non-traditional species, new 
secondary products such as structural strand lumber (made from chips), 
laminated timbers, oriented strand board, round products, and a vast 
array of specialty products. Obstacles to the use of small diameter and 
underutilized species on Federal lands for products include remoteness, 
high costs of harvest and transport, low timber prices, lack of 
industry, and administrative procedures designed for larger scales of 
timber harvesting.
Renewable Energy
    Geothermal, solar, wind, and biological sources (including wood), 
provides about 4 percent of the total energy need of America. 
Approximately three-quarters of the renewable energy today come from 
wood. Some analysts have estimated that the use of all alternative 
energy sources could potentially meet 20 percent or more of America's 
present energy needs. Wood could contribute a major portion of that 
amount.
    Wood energy is thermal, electrical, or chemical energy produced 
from wood, including forest residue, unmerchantable material, and 
specialty-grown woody crops. In its simplest form, wood energy is using 
a fireplace, stove, furnace or boiler to produce heat. The scale of 
operation ranges from individual homes, to buildings and facilities 
such as schools, offices and hospitals, to heating districts in urban 
areas where the heat is distributed as hot water through a network of 
underground utility pipes.
    Most of the current wood energy activity is associated with 
industrial wood processing facilities, such as sawmills and pulp and 
paper manufacturers. Wood by-products, such as bark, sawdust and pulp 
liquors, are burned or converted to gas to create heat or electricity 
for the facilities, the excess of which is often sold to local power 
grids. Electricity is also generated through the process of co-fired 
generation or co-generation, which is burning wood energy sources along 
with fossil fuel sources.
    Challenges, however, exist in the use of wood energy. Wood from our 
nation's private forests plays a significant role in producing wood 
energy, especially in the Eastern United States. These forests are
    actively managed to produce a variety of products and outputs 
including wood energy. Federal lands in both the eastern and western US 
contain significant sources of small-diameter and underutilized wood 
that can be used to develop and support strong wood products and energy 
economies.
    The Biomass Research and Development Act of 2000 (Public Law No. 
106-224) promotes the technology and research and development of 
industries that use trees, crops, and agricultural and forestry waste 
to make fuels, electricity, chemicals, and other industrial products. 
The law also provides that the feedstock sources on Federal lands 
should be fully integrated into this use. The Department of Agriculture 
and the Department of Energy have the joint Federal leadership in 
implementing P.L. 106-0224. The Forest Service, working through USDA, 
is a partner with other agencies to implement this law through a joint 
Biobased Products and Bioenergy Program.
    The Forest Service is also a contributing agency to the President's 
National Energy Policy Group, now developing a national strategy that 
includes the use of renewable energy sources such as wood and 
agricultural crops and residues.
Forest Service Actions
    The Secretaries of Agriculture and Interior presented the National 
Fire Plan (NFP) in September 2000, which emphasizes hazardous fuels 
reduction and community assistance. Funding for the NFP in Fiscal Year 
2001 included $205 million for hazardous fuels treatments on National 
Forests, $120 million of which is targeted for Wildland-Urban 
Interface, and $20 million in discretionary grants for Economic Action 
Programs and pilot projects to develop wood utilization in communities 
close to the resource. In addition, the Forest Products Lab 
appropriation contains $750,000 for wood utilization research.
    The Forest Service is developing appropriate management systems, 
harvest and delivery systems, processing and conversion systems to 
improve the economic feasibility of using small diameter and under-
utilized wood that will help local communities build wood products and 
wood energy related industries.
    Under the Biobased Products and Bioenergy Program, FS Research and 
Development is developing the science, technology and management 
systems for wood energy and wood products production on public and 
private lands, and improving the economic feasibility of using small 
diameter materials and solid wood and paper wastes. FS R&D is also 
developing low-impact operations and delivery systems. The fiscal year 
2001 appropriation is over $12 million. The National Forest Products 
Laboratory in Madison, Wisconsin, is conducting research on product 
development, economics, and marketing of new and traditional products 
from small diameter and under-utilized trees. Through a partnership 
with State and Private Forestry, they are transferring new and existing 
technologies to those interested in commercial undertakings.
    There is a strong need for market expansion in the use of small 
diameter and underutilized material. The following examples illustrate 
the range of projects that are underway:
     LEconomics and engineering using small-scale combustion 
technology for the community hospital and the Lewis and Clark Center in 
Salmon Idaho (contract for services with provider).
     LTimber bridge construction using FPL lamination 
technology over an arroyo in Santa Fe, New Mexico (contract for 
services with provider).
     LPotential uses of machine stress rated lumber for the 
Joseph Sawmill in Oregon (grant with university).
     LGrading logs from fire killed timbers--Rocky Mountain Log 
Homes and University of Idaho.
    The National Forest System in conjunction with the FPL and State 
and Private Forestry has created a full time position, located in Ft. 
Collins, Colorado, with responsibility for small diameter and under-
utilized timber. This position promotes project planning, biomass 
applications, community cooperation and small diameter harvest 
techniques. Accomplishments so far include establishing a website, 
Tools for Forest Vegetation Management, to gather ideas and share 
information; working with universities, states, counties and community 
groups treating and utilizing small diameter material in southwestern 
Colorado; exploring cogeneration opportunities through a cooperative 
agreement with Colorado State University; exploring new and existing 
contracting authorities; and promoting the use of small diameter wood 
harvesters in central Oregon.
    State and Private Forestry provides assistance to the 70% of the 
nation's forests not in Federal ownership. America's capacity to 
produce wood energy and products from renewable resources depends on 
these lands. Economic Action Programs (EAP), are providing 
opportunities to rural communities to diversify and expand their 
economies by providing support for innovative entrepreneurial 
businesses to remove, transport, and use wood. The EAP operates under 
broad existing authority, well-established networks and partnerships, 
and a proven record of local community-based implementation. The EAP 
serves as a catalyst, rather than the primary sources of funds to 
assist the communities to respond to needs they identify locally.
    The National Fire Plan is expected to help create and expand 
markets by using wood that will be removed to reduce fire hazards. 
Thinning and other treatment of woody materials to protect local 
communities and watersheds are major emphases of the NFP.
    These activities can provide a supply of wood to communities with 
facilities in place to process the material--provided that 
environmental and economic constraints can be met. Implementation of 
NFP may create as many as 8,000 new jobs in rural communities and 
provide economic opportunities for rural forest dependent communities 
through partnerships for natural resource work.
What More Is Needed To Encourage Utilization?
    We are addressing the following challenges:
     LFederal land management agencies have not been able to 
provide a reliable and consistent supply.
     LHigh costs.
     LLack of value-added uses that could offset the higher 
forest operation costs.
    National Forest Systems is addressing the first challenge by making 
sure our administrative and legal obligations are fully met prior to 
offering or contracting for the removal of material. We are also using 
our existing authorities more creatively. Illustrative of the latter 
approach is our recent development of a hybrid service contract with an 
embedded timber sale contract. In addition, continuing the hazard fuels 
reduction funding at this year's level would provide some assurance to 
companies that small diameter products would continue to be available 
in the future.
    The second challenge can only be overcome through a coordinated 
effort within and across land management and other relevant agencies 
to;
    1) recognize that utilization can be a cost-reduction opportunity;
    2) assist communities and businesses in establishing hauling, 
sorting and processing facilities as well as in marketing products;
    3) coordinate the sharing among interested parties in the cost of 
harvest and hauling, and
    4) develop and implement integrated management and production 
systems, technologies, and information for harvesting, merchandizing, 
processing, marketing and distributing products and energy from small 
diameter and under-utilized material.
    Other agencies may also be able to support the implementation of 
these goals. For example, USDA's Rural Development provides business 
and industry loans that would help establish new plants.
    The third problem can be overcome by new product processing and 
market development, pilot testing and demonstration, development and 
dissemination of information needed for market acceptance, 
participation in standards development, and entrepreneurial training 
and business assistance.
Conclusion
    Wood-based products and energy can eventually become significant 
contributors to a national energy policy. Supported by critical 
research and development, management systems development, active 
management on Federal lands, and targeted incentives, wood energy can 
become economically viable. The results of widespread use of wood 
products and energy greatly benefit the US through decreased pollution, 
enhanced energy security, improved management and fire safety of public 
lands, and increased economic opportunities in the rural economy. A 
coordinated approach is necessary to develop both products and suitable 
outlets for by-products and residues (energy). Both are needed for 
success. In short, the solution is community and technology based and 
can be achieved by addressing the larger problem one small community at 
a time.
    This concludes my prepared testimony and I would be pleased to 
answer any questions you may have.
                                 ______
                                 
    Mr. McInnis. Ms. Bartuska?
    Ms. Bartuska. I think we will just be available for 
questions rather than comments at this time.
    Mr. McInnis. Mr. Truesdale?
    Mr. Truesdale. Yes, the same. If you have questions, we 
would be happy to answer them.
    Mr. McInnis. First of all, back to Mr. Hamilton, go back 
through again the little log you have there.
    Mr. Hamilton. One of the difficulties in using round 
material for structural purposes is connecting it, connecting 
it on the ends, and we are working with certain special kinds 
of connectors, doing some research on those to determine how we 
can get the strength needed for structures. But we are also 
looking at how can you join these pieces so that you will have 
a strong joint, particularly in a tension or compression mode, 
not the vertical kind, and this is one example of the kind of 
connection that might work for that and add significant value 
to this material.
    Interestingly, raw material retains about three times the 
strength of the largest dimensional piece that could be cut out 
of this round log, so it could add significantly to structural 
integrity and conservation of resources, using this kind of 
material.
    Mr. McInnis. You mentioned one of the companies that 
employed 20 people. Were they making fence posts, is that what 
the company was doing?
    Mr. Hamilton. Posts and poles.
    Mr. McInnis. Where was that located?
    Mr. Hamilton. In Reserve, New Mexico.
    Mr. McInnis. So they have been pretty successful at 
figuring out the composite and the strength of the fence poles.
    Mr. Hamilton. We have been working with them on markets, on 
a business plan and what the best opportunity, given the 
resource in their area, is and that is what they determined 
they would like to move into. Actually, that operation is just 
now ready to start. They have not actually begun production 
yet.
    Mr. McInnis. Going into this new area, how dependent is 
that upon the construction market in the country? In other 
words, with the downturn in our economy, construction is going 
to slow down. Will that impede our efforts to proceed forward 
to the market with some of these products?
    Mr. Hamilton. I do not think so, because initially, we are 
working with individual communities. Probably, their markets 
initially will be largely local, but we are hoping that they 
will become larger and larger geographically so that the entire 
Western region will be the market.
    One of the things I think that will happen here is, if it 
is successful in one community, a similar kind of production 
process in another community is actually going to be a benefit 
because we will begin to see enough of the material on the 
market to make it a commercial thing that builders will, in 
fact, use in a widespread way. So I do not think that is going 
to be an issue for these firms.
    Mr. McInnis. Ms. Bartuska, maybe you can answer this 
question for me. There are some out there who would see the 
biomass or the removal of some of these materials as just 
simply a front to begin commercial logging. Can you tell me 
what checks and balances are in place out there and if there is 
some benefit to the commercial side and being able to use these 
materials to help offset the costs? You know, in the end, we 
probably still lose in the bottom line, but at least we offset 
some of the costs.
    Ms. Bartuska. I think you have touched on one part of it, 
in that having the timber sale program available to do some of 
the work is certainly still an option, but what we have 
increasingly found with some of the materials that Tom is 
referring to, you cannot really offer or make that material 
available through a sale. It is just not economically viable.
    And so the opportunity through service contracts to 
actually remove some of this material for fuels reduction 
purposes, for other kinds of forest structure changes, would 
require some appropriated dollars to do the service contract, 
and then once the wood is removed, using whatever the 
prescription is and we could have a secondary sale off-site. So 
you have all of the tools available. Some things would be 
through a service contract, where you do not have a sale 
directly tied to it. In other situations, you would have the 
sale as a secondary activity, maybe in a log sort yard like 
Reserve, New Mexico, has, or off a deck or landing. But quite a 
bit of this material, we think, will be moved without using a 
commercial sale and it would be made available subsequent to 
the activity.
    Mr. McInnis. Now, to go a little further on that, what kind 
of reliability? I mean to be able to move this to some type of 
market, what kind of reliability do you have or do you give to 
people like the pole company or other people out there, that 
they are going to have an assurance of product delivery? My 
thought is, you cannot transport this very far and still make 
it economical, because we are right on the edge anyway. Would 
you comment on that? Are you able to give any assurances on the 
pilot projects or tests that you are doing?
    Ms. Bartuska. Well, on the pilot projects, which I think 
you are referring to the now 56 stewardship contracting pilots 
we have, we do have some assurances that all of those projects 
are about three to 5 years in length. But they are also all 
very small projects, and we are talking about a scale of work 
across the interior West or the high fire risk areas that 
probably the pilots do not necessarily respond to.
    So you ask a really good question, and that is how can we, 
within these communities, create a long-term supply to 
accomplish resource objectives, and we do not have all the 
answers. I think what we are trying to do is through a more 
effective use of our NEPA work, where we can develop 
programmatic environmental impact statements that give us a 
larger area of work, where we can have a series of projects, 
not just one, but we would be over a five- to 10-year period of 
a series of activities that would all be made available to the 
community to bid upon over time. Bundling contracts, we are 
looking at multiple opportunities where a particular contractor 
could bid on maybe a small sale, maybe a service contract, 
certainly road obliteration opportunities, all the different 
projects one would have to do a restoration.
    Putting that all together, we think that that gives a much 
better basis for a community to invest in itself, to either 
invest in the equipment they need or the long-term 
opportunities the business climate has.
    Mr. McInnis. Thank you. Mr. Inslee?
    Mr. Inslee. Thank you, Mr. Chair.
    As far as long-term plans, is there a plan, let us say in 
sites where you do mechanical thinning this year or the next 
year, is it anticipated there would be another generation of 
thinning, you know, 15 years hence, or is the theory that once 
the thinning occurs, we then revert to allowing the natural 
fire cycle to sort of reestablish itself?
    Ms. Bartuska. That is really going to be dependent upon 
site condition. In some areas, there may be one entry to do a 
certain amount of thinning, evaluate what happens to the stand 
over time. You may have to go back in a second time. And then, 
hopefully, and that is part of the cohesive strategy, is you 
have a combination of thinning or some mechanical treatment, 
but ultimately to reintroduce fire and allow fire to continue 
and to maintain itself. But I think we also know in some of 
these interface areas that that will not be possible, and so a 
periodic entry to do structural changes would be very 
appropriate.
    I do not know if Mr. Truesdale has an addition to that.
    Mr. Truesdale. No, I think that is correct. It would be a 
combination. The ideal sequence of events that is outlined in 
the cohesive strategy would be to go in and mechanically treat 
the site and then fire would be--the stand would be in a 
condition that fire could naturally come through and play its 
role.
    But as Ann said, with the wild and urban interface, with 
all the other considerations on how much fire we can actually 
use, smoke management, clean air considerations, I think it is 
going to be a combination of things over time in order to 
maintain those forests in a healthy situation.
    Mr. Inslee. Thanks. The Chair has laid out concerns about 
decisions being driven by commercial interests one way or 
another and I want to talk to you more about how to guard 
against that. Let me talk about a concern I would have, is that 
if we develop--well, it is kind of interesting, the question 
was asked, how do we develop a sustainable supply of this 
material? Somebody has got to make a capital investment to make 
these poles, if you will. That person is going to want to have 
a supply for 30, 40, 50 years or through the generations.
    If you do create that industry, there is going to be a 
demand for that raw stock and there is going to be a political 
demand for it off national land, just as there is now for what 
we think of two-by-fours and four-by-fours. How do we avoid the 
commercial interests driving a political--say political forces 
driving decisions rather than scientific ones about what size 
of cut, where to cut, where the areas are that have to be 
mechanically thinned twice or three times instead of once.
    How do you create a commercial industry and not create an 
environment that drives non-scientific decisions? What 
restrictions or agency procedures could we adopt that would 
avoid that, and let me just throw out an idea for you. What if 
the salvage, if you will, if you look at it as kind of salvage 
of the raw product, what if those decisions were handled 
through a separate agency, through the GSA rather than the 
Forest Service, so you do not have one agency combining the 
commercial interest with a decision to do the thinning? Is that 
a viable way to try to not create this inappropriate incentive 
in the decision making process?
    Ms. Bartuska. I am not sure I can answer your proposal 
about the salvage. That is a--
    Mr. Inslee. It is not a proposal, just a brainstorm on my 
part.
    Ms. Bartuska. It would be interesting to look at. What I 
would love to do is turn it over to one of our folks to do an 
analysis of it, those who have a good familiarity of 
contracting mechanisms and the way our salvage operation works.
    But I think you are getting to the bigger picture and that 
is if we have a goal of doing restoration, can we provide an 
opportunity for a sustained economic base so that people have 
an opportunity to do the work but not make it so big that we 
basically have the business driving the management. There is a 
phrase that--well, Brett has used this many times, but this 
idea of being small scale or of a large scale, not growing so 
big that you have the business side driving what is actually 
done on the forest or on the lands, but instead having this 
balance between, just enough scale to make it economically 
viable over a certain period of time. And that is where a lot 
of, I think, our planning and our analysis comes in.
    There is a very good example on the Clearwater National 
Forest, the North Locks Watershed Project, where they did an 
analysis of a 146,000-acre watershed and they identified what 
the end condition is. They know what they wanted to do, long-
term restoration. They identified the projects that would need 
to be done where on that watershed to get there, and then they 
started figuring out, well, what are the tools we have. And in 
most, in fact, all cases, a commercial sale was not the tool 
that they wanted to use.
    They had thinnings, they had prescribed fire, they had 
wildlife openings. All of that was done. They identified a 
scope of work that would take 10 years to do. They had a budget 
identified for that entire 10 years. That allows the community, 
then, to know what investments they make. It allows the forest 
to plan on what is the amount of work that it is doing. But it 
also sends a very clear signal that after this work is done, 
except for some maybe periodic other types of activities, that 
is the end, so people can make a business decision based on 
that.
    I think if we can duplicate that in many of those kinds of 
watersheds around the country, that is one basis for getting at 
some of these issues that you have talked about, and trying to 
maintain--this is not just another commercial logging program. 
This is using all the tools that we have.
    Mr. Inslee. Mr. Chair, can you permit me one more question 
here? My red light is on, but in the decision in the planning 
process, where thinning will occur, whether it will be 
mechanical or a burn, does the Service take into consideration 
the economic value of what you may remove from the product? Is 
that involved in the decision, and from your last answer, I 
assume it is. You have to plan about whether it is going to be 
a commercial sale or whether it is going to be a service 
contract. Do you see what I am getting at?
    Ms. Bartuska. Yes. What would normally be done is that you 
identify what is it you want to do in terms of, let us say in 
this case, removing wood. If part of that wood could be removed 
through a commercial sale, that would be one of the tools that 
is identified. If they know that it is not a high enough 
quality to make up a sale, then they would do it through a 
contract, remove the wood to get to--either go into a landfill, 
hopefully minimize that, or some other way to use that product. 
But you would not a priori say, we are going to do a sale to 
get this job done. First you identify what it is you want to 
accomplish and then lay out the different tools that you have 
available.
    Clearly, though, when you have a Service contract, the 
Service contract is a mechanism that requires funds up front to 
do it. The sale, the reason we have timber sales in many cases 
is that you can actually get the work done, and because of the 
value of the product, you do not have to have that money up 
front. But in many of these areas we are talking about with 
fuels reduction, these are not viable timber sale areas. There 
is a quality of material that is just not going to get you what 
a sale would provide.
    Mr. Inslee. Thank you.
    Mr. McInnis. Mr. Otter?
    Mr. Otter. Thank you, Mr. Chairman.
    Mr. Hamilton, a very good report. I am impressed with the 
amount of work that has already been done. One of the questions 
I would have is, how do you make the transfer from your 
workshop, inventive bench, into the marketplace bench? Have you 
made any of these transitions with these products yet?
    Mr. Hamilton. Yes. The ones that I described are all 
technologies that we developed through our research part of our 
organization. We are fortunate at the forest products 
laboratory to have a State and private forestry unit there 
whose assignment is to move this technology into practice. They 
will work with their counterparts in every State, in these 
cases primarily in the West, to get this technology into 
practice.
    In addition to that, we toured virtually every State in the 
West and talked with communities, forest land managers, rural 
development folks, and talked about we could do and then asked 
them the question, are there some things we can do that you see 
would be a benefit in your particular area? So as we moved into 
this, we already had an idea of the kinds of needs that they 
had and what might work best in particular areas, and I think 
that helped move things a little more rapidly.
    Mr. Otter. But my point is, do you sell them the technology 
or do you sell them a franchise or how do you make the 
transition from government ownership into private ownership, 
private production, or do you make that transition? Is the 
government in the business? Who is in this business now?
    Mr. Hamilton. What we do is provide technology, and the way 
we have characterized the technology we provide is trying to 
accomplish a public objective like removal of small-diameter 
timber because of the threat of catastrophic fires. By 
providing that technology, we will help communities and firms 
understand that you do not just go into business using our 
technology. You need to have a business plan. You need to 
understand the market. You need to understand resource 
availability. But at that point, it becomes a private 
enterprise and we step away from it.
    Mr. Otter. So you give them, then, the results of your 
research?
    Mr. Hamilton. Right.
    Mr. Otter. Is there any kind of an amortization for the 
government on that research?
    Mr. Hamilton. No.
    Mr. Otter. That is a pretty good deal.
    Mr. Hamilton. Well, as I said, our research is designed to 
provide a public benefit, and the reason we work so closely 
with the private sector is no one is going to use our research 
if it is not economic. So to accomplish that public objective, 
we need to be sure that someone is going to use it, and if we 
can make it economic, then that public objective will be 
realized.
    Mr. Otter. Let us talk about the economics of this private 
marketplace, which I believe that there is a misunderstanding 
about. Do you not believe that it will not take long if you are 
successful with this product here, or even this post and pole? 
It seems to me that Canada has got a lot of large pole pine and 
they themselves would take a pretty good look if that pole 
business and rail business, 21-foot rails and eight-foot posts 
got to be pretty good business. Would we not be getting a lot 
of that product down here?
    Mr. Hamilton. Could be. I would guess that that would be an 
opportunity for Canadians as well as firms in the U.S.
    Mr. Otter. So we would not be able to just say, we are only 
going to do this--maybe my question should go more to the soft 
wood agreement that we have with Canada that, what, 4 days ago 
expired.
    Mr. Hamilton. Right.
    Mr. Otter. In order to give some of these new aspiring 
young businesses that are going to use the undergrowth some 
pioneer status or an effort to get going in their marketplace, 
would a renewal of the Canadian soft wood agreement have some 
positive effect on this potential?
    Mr. Hamilton. I do not know that that agreement would 
really--it would affect some of these--
    Mr. Otter. If you are involved with these products, it 
would, would it not?
    Mr. Hamilton. It would affect some of these kinds of 
products. Others, I do not think are included. The round wood, 
for example, I do not think would be included. The composite 
products, I do not think were included in that lumber 
agreement. I think that was a solid wood agreement, but--
    Mr. Otter. Yes, but nobody has had the technology on this 
stuff and perfected it to marketplace application, and as you 
said, value added. So now we have given the technology away. We 
cannot give the technology to just one company, can we?
    Mr. Hamilton. No, it is in the public domain.
    Mr. Otter. That is right, and so now it is available to 
everybody. I think I have gotten that clear in my head now.
    One other point I would like to make, overlay this whole 
opportunity that we have in removing the dense forest with the 
wilderness plan that we have. Could you overlay that, and 
sustainability and availability of product, of resource?
    Mr. Hamilton. Ann, can you answer that, or Denny?
    Mr. Truesdale. I think the numbers that Lyle Laverty has 
presented on the overlap between the areas that we have looked 
at in condition class two and three, and those would be the 
condition classes at moderate to high risk from having a fire, 
and the roadless areas is approximately 27 percent of that is 
in overlap. Now, that does not correlate directly to the areas 
that may have small-diameter material to utilize. That would be 
in long-needled pines, grasses, and chaparral. So in those 
areas, in those two fire regimes, there is about a 27 percent 
overlap.
    Now, we do not know for sure what that means as far as 
impact on ability to do--where our priorities are, because I 
think you have been briefed recently on the communities-at-risk 
list and the processes we are going through to set the 
priorities, and there may be some of those roadless areas that 
are close to some communities, but at this point, we do not 
know where those priorities are going to fall out.
    Mr. Otter. Thank you, Mr. Chairman.
    Mr. McInnis. Mrs. McCollum?
    Mrs. McCollum. Thank you, Mr. Chair. I think this is a 
wonderful discussion that I am just trying to get a handle on 
from the questions that have been asked, and maybe you can help 
me out.
    In Minnesota, we mandated biomass as part of a mix of 
alternative fuel energy, but we were working with our farmers 
and they were going to grow poplar and other kinds of crops, 
literally, for it, and so we were providing tax incentives for 
entrepreneurship for businesses to get in, and so I am 
thinking, hmm, this might be a good idea for our State forests 
and for our national forests, for where we have those kinds of 
facilities already set up, because there is going to be an 
investment made by groups of people to have the resource 
continually coming to them at a location.
    How does this work? Do we have any entrepreneurship in the 
area that is looking at doing biomass in other forms, raising 
it as a crop?
    Mr. Hamilton. Yes, and generally, that is, well, I guess a 
regional consideration. I was going to say a local 
consideration, but a regional one. In some parts of the 
country, raising biomass as a crop and using it locally for 
energy, for example, is the most economically efficient thing 
to do. In other parts of the country, perhaps the inter-
mountain West would be an example, there is a lot of biomass 
that we believe should be removed from the forest, and so 
probably that particular kind of operation might not be as 
economically viable there.
    The other thing is, it depends on what that short rotation 
or uniform species material is going to be used for. Pulp and 
paper, for example, pulp in particular requires species 
uniformity and that is something you do not find in a lot of 
the stands on the national forests in the West. There is a 
large diversity of species. So one reason that those kinds of 
crops that you are referring to are grown is to get that 
uniformity for certain kinds of processes.
    Mrs. McCollum. Mr. Chair, sir, I have worked--I am just 
right out of the private sector and I am trying to figure out 
how, without other private sector entities to continue to 
supply fuel, how we start--and I am very interested in the 
project--how we start this project, though, and have other 
outside people invest into it and then make the decision, 
whoops, we are not going to supply you any more product and not 
put a pressure on the government promise, ``You said you were 
going to,'' ``I have made this investment, what happens to 
me?''
    And so I just want to understand. You are not setting any 
criteria that in the region, in the area, that there already 
be, whether it be energy or some of these other products, some 
other biomass industry in there that you would be part of, you 
would not be the driving engine.
    And then, Mr. Chair, I had one other quick question.
    Mr. Hamilton. No, we would not be--as Ann Bartuska pointed 
out, our reason for removal is because we want to move that 
material out of the forest. The fact that we can find an 
economic use for it means that we can pay some of the costs, at 
least, hopefully all of them, of moving the material out of the 
forest. So the driver is not the use. The driver is to get the 
material out of the forest in this particular case.
    Ms. Bartuska. Can I partly answer that, too?
    Mrs. McCollum. Certainly.
    Ms. Bartuska. I think another answer to your question is, 
what we would use to sort of create that environment, that 
partnership, would be the forest plan, and if in the 
development of a forest plan we identified biomass energy 
areas, or if that was a goal, then that would be the way we 
would establish a long-term track record. But not having a plan 
that would identify that as one of the planned goals, then you 
would not have a guarantee that there is going to be a 
partnership in producing wood as a biomass product over a long 
period of time.
    Mrs. McCollum. Mr. Chair, if we are asking people to come 
in, we are asking them to be partners and partners do not like 
to feel that they are not part of it.
    Mr. McInnis. Pardon me, Mrs. McCollum. Would you mind 
repeating what you just said?
    Mrs. McCollum. Well, if we are asking people in to be 
partners, if we say, come in, we will provide this for you, you 
build the infrastructure to be there, I think then we set up an 
expectation that we are going to be fully responsible partners. 
And so I would think, at least starting out, we would want to 
try to be in regions where we are fitting in with other private 
sector biomass industries so we are not asking someone to 
assume a huge risk.
    Mr. McInnis. That is true, but when we have biomass, when 
we are trying this forest plan, it unfortunately does not 
always place us within a local arena where those kind of 
industries exist. And if we do not--in my opinion, in response 
to your question, and then I will allow you to proceed with 
your next question to the witnesses, in my opinion, if we do 
not partner up with somebody, what are we going to do with it? 
I am with the Forest Service in this business.
    You may proceed. You had another question following.
    Mrs. McCollum. And Mr. Chair, I am not familiar with the 
Forest Service policy. How clean of a requirement is it for the 
forest floor to be after cutting has taken place? I know that 
that has been a real contention in our State forests back home. 
Can you tell me how clean it is left, because that can 
contribute to the problem that we are talking about and then 
needing to do the burns.
    Mr. Truesdale. There is generally a requirement, and I 
assume--I do not know your State, but I assume your State is as 
with many others that I am familiar with, that logging 
operations, operations that take place in the forest, once they 
are finished, that there has to be some consideration of fire 
danger and the risk that would be left afterwards. In the old 
days, there were large fires in your part of the country where 
that was not a consideration. At the turn of the century, 
people took out the big trees, left all the slash and many 
fires resulted from those conditions and people have learned 
from that.
    The condition of the forest, though, after these operations 
would depend upon the makeup of the structure of the forest 
that is required, that we would desire for that condition, not 
just to keep it clean, but the species that need to be there, 
how much material and all that. So it would vary from place to 
place. Some places, such as in the Chairman's area, where you 
have got Ponderosa pine and what you want is the traditional 
pine to open Ponderosa pine, it may be very clean because that 
would require frequent fires to come through. In other areas, 
it may be what some people would think looks pretty messy if 
they are comparing it to a city park, but that would be the 
structure that would be required afterward.
    Mr. McInnis. Mr. Peterson?
    Mr. Peterson. Thank you, Chairman.
    I guess I would like to ask the panel, what can Congress do 
to help? Put the monkey back on us. What can we do to help?
    Mr. Hamilton. First of all, I think having support from the 
Congress to make sure that we can accomplish some of the 
questions that have been raised, like some assurance of 
supplies. Finding ways to assure supplies over a longer period 
of time would be useful.
    I think a continuation of the support that we receive from 
Congress to work on some of the technologies and some of the 
methods we have for moving those into practice rapidly would be 
very useful so that we can continue this process.
    So I guess from my point of view, the main thing would be 
continued support and probably working together on some of the 
issues that come up that seem to slow the process would be the 
ways that I think we could get this done most readily.
    Mr. Peterson. If we could get Congress to speak with one 
voice.
    [Laughter.]
    Mr. Peterson. How about the other two?
    Ms. Bartuska. Well, in about a year, we will have more 
results from the stewardship pilots and so we will be able to 
come back with a list of things that have been successful and 
have not. Now, notwithstanding we have a year to wait, I know 
one of the areas that we have talked quite a bit about in being 
able to implement the fire plan is the support for the Fish and 
Wildlife Service and National Marine Fisheries Service in 
helping us through Section 7 consultations, and being able to 
have sufficient capability in those two agencies goes a long 
way to helping us get our job done, because we do need them at 
the table as we try to move our projects forward.
    I think we also have some concerns and hope that we have 
continued support for the cohesive fire strategy, and you 
probably want to talk about that.
    Mr. Truesdale. Well, then, I think the most important thing 
is in the continuation of the national fire plan, you folks 
through the Appropriations Committee in the appropriations last 
year asked us to prepare a 10-year strategy on dealing with the 
issue. It seems like it is pretty easy when you have 2,000 
fires, seven million acres burning, to address the initial 
attack, preparedness, fire suppression, and those types of 
activities.
    But in the 10-year strategy, you are asking us to continue 
to look at what we need for 10 years on a national fire plan, 
and that includes preparedness, it included suppression, it 
included hazardous fuels treatment, it included the restoration 
of burned areas, and it included the State and private, the 
community assistance, the economic action, which will help 
develop some of these markets that we are talking about here.
    But I think the support from both sides, from the 
administration and the Congress, of a balanced plan that is not 
just fire suppression or hazardous fuels treatment, and the 
recognition that it is a long-term process and how do we deal 
with this over the next 10 years, I think is very important.
    Mr. Peterson. Do you do 10-year contracts now?
    Ms. Bartuska. Yes, we do for timber sales.
    Mr. Peterson. For timber sales?
    Ms. Bartuska. I think actually for--I am not sure what the 
authority is for service contracts. I think we tend to keep 
them on about 5 year, three to 5 years in length, but I am not 
sure. We could get the information specifically on what our 
authorities are. But I know for timber sales, we have a 10-year 
limit.
    Mr. Peterson. You mentioned the pilot stewardship programs. 
Can you tell us a little bit about them? When did those start 
and when will we have some data there?
    Ms. Bartuska. Well, the stewardship contracting pilots were 
initiated in the fiscal year 1999 appropriations bill. We got 
funding authority and funding for 28 projects at that time and 
we just in this last cycle got authority for another 28.
    It allows us to use some new authorities, things like goods 
for services, where we actually are able to have a contractor 
come in, do a particular activity, and then if they have any 
wood removed as part of that activity then can keep it and use 
it for other products, like post and poles. It allows us to 
bundle contracts, multiple contracts. It allows us to have a 
multi-year contracting going on through those projects, a whole 
host of other activities, some existing authority, some not.
    We have our first report--actually, we have had two 
reports. The first year was not really conclusive. It is sort 
of where we are on the projects. We have just gotten a report, 
which will be delivered to Congress, I think this next week, on 
the results of the last 2 years, and again, I think we only 
have about 51 of the projects actively in operation.
    So we think that another year will give us more information 
about what is working, what is not. We have already found 
certain things are not as effective as we would have liked them 
to be, so we have an opportunity to change those over time.
    Mr. Peterson. Thank you.
    Mr. McInnis. Mr. Holt?
    Mr. Holt. Thank you, Mr. Chairman.
    Coming from New Jersey, I do not have a lot of direct 
experience with this, and so I am trying to get a sense of the 
two prongs of what I think we are talking about here. One is 
fire suppression and the other is economic use of materials.
    As I understand it, the cost of cleaning a forest is 
something like $500 an acre. First of all, do I understand 
correctly, and secondly, how dependent is that on how 
thoroughly it is cleaned up? And then I wanted to follow on 
Mrs. McCollum's question of how that thoroughness relates to 
the fire suppression. I am not sure to whom I am addressing 
this, whoever would care to take it.
    Mr. Truesdale. I can address the cost issue for you. It 
would range--your numbers are good, but the range is pretty 
wide. In the South, where you are simply maintaining some areas 
with fire, the costs can be $35 or $50 an acre. In other areas 
that, for various reasons that are grown up or the access is 
difficult, it could be as high as $1,500 an acre, particularly 
if you are working around the interface with homes and that 
sort of thing. I think $500 is a reasonable amount, and yes, it 
would depend upon the amount of material there and how much 
material is needed to be removed or altered in some way in 
order to meet the conditions that you want.
    Mr. Holt. Can you--yes?
    Mr. Hamilton. Can I just clarify one point, and that is 
what we are talking about here is fire prevention, not 
suppression.
    Mr. Holt. I beg your pardon. Prevention is the better term, 
yes. I stand corrected.
    Mr. Hamilton. One thing, the value-added opportunities that 
we pointed out here are real key to that cost question. If we 
can move more of the material into higher-value uses, then we 
have a better opportunity to cover the cost that you are 
referring to. But on the other hand, you need to get an 
economic return even for the forest value part of the material 
to have an economic package. So it is a case of trying to find 
the best economic use for all the material.
    Mr. Holt. To get the benefit of either the fire prevention 
or the economic use of material, how thoroughly must one clean? 
I guess that is really what I am trying to get at.
    Mr. Hamilton. I will let Ann speak to this in a minute 
here, but basically, what we are talking about is trying to 
achieve a particular forest condition, and so clean might not 
necessarily be the right word. What we are trying to do is 
achieve a condition that fire science says will put that forest 
in a situation where we will not have the kinds of catastrophic 
wildfires that we experienced last summer. And depending on the 
species and the location, that condition will vary. So the 
amount of removal is different in different areas and again 
depends on species, climate, and a lot of factors.
    Mr. Holt. Ms. Bartuska?
    Ms. Bartuska. Yes. I think the only thing I would add to 
that, I think Tom hit most of the points, is, and it is a 
balance between recognizing what fire activity might be and 
ecological sustainability. You need to have enough biomass left 
so that other processes go along, so that you have the critters 
in the soil and the litter that keeps the forest functioning, 
and so that is that balance that we have.
    And fortunately, our fire scientists have done a really 
good job with models to be able to say, given a certain, 
whether it be a climate type or the forest type, what you can 
expect in terms of the amount of material left on the floor, 
what the fire cycle might be, and can give us some good 
predictions with reasonable accuracy, I would say, over time. 
So we are very fortunate that the science has been there for a 
while to build that database.
    Mr. Holt. Does it make sense--I mean, is it possible to do 
the fire prevention by doing the clearing, the cleaning only in 
patterns around boundaries, in a checkerboard pattern, whatever 
it would be, and leave large areas untouched for wildlife or 
other forest processes?
    Mr. Truesdale. Yes. In fact, if you look at some of our 
estimates in the cohesive strategy, our initial estimates of 
those acres at risk in the West were 56 million acres, and that 
since has been refined since folks have gone through that. Our 
most aggressive strategy that we felt was even remotely 
possible at one time would only address 50 percent of those 
acres over a 15-year period. So the patterns that you are 
talking about are natural that are fire cycle anyway. When a 
fire burns through, it produces patterns.
    And with the wild and urban interface, homes, protected 
areas, watersheds, if you are only going to be able to get half 
of it at a very aggressive strategy over 15 years, that is 
exactly the process that we would use to pick those priorities 
and address those areas that were the most critical to start 
with--around the edges, around communities, municipal 
watersheds, those sorts of things.
    Mr. Holt. Thank you, Mr. Chairman.
    Mr. McInnis. I wish to thank the panel. We appreciate your 
time. Mr. Inslee?
    Mr. Inslee. Thank you, Mr. Chair, for that courtesy. You 
have got this prime interest of having a program that wants 
scientific decisions made by an agency that does not have a 
self-interest in maximizing the removal of fiber from the 
forest, and we also want to have usage for what ends up being 
removed. To accomplish both of those objectives, does it not 
make sense to segregate the stream of income realized from the 
agency making the decision?
    I guess what I am saying is, does it not make sense to have 
funds realized from the sales of material used in the fire 
remediation projects to go straight to the Federal agency 
without stopping by the Federal trust funds for the Forest 
Service, which at least in some people's mind gives the Service 
some self-interest in this issue. Does it not make sense to do 
that segregation for the public trust in this program?
    Ms. Bartuska. Certainly, that would be one way to be able 
to keep that separation clean. I think the only key we have is 
that part of those funds that are realized through the sale of 
material are cycled back to the forest to get more work done. 
If that work could be done through other ways, then what you 
are talking about would certainly work, and I think that is 
where we would have to manage the expectation of how much does 
it cost to really do the job out there and have sufficient 
resources to do that.
    Mr. Inslee. Thank you very much, Mr. Chair.
    Mr. McInnis. Again, thank you, panel. I appreciate your 
time and your testimony. I found it very interesting.
    Mr. McInnis. We will call up our second panel of witnesses. 
I thank the second panel, Ms. Smith, Mr. Carlson, Mr. KenCairn, 
and Mr. Holmer. Again, if you have just come into the hearing 
room, we are going to have to adhere to the 5-minute rule. I 
would appreciate your consideration in that regard.
    We will begin our testimony with Ms. Smith. You may 
proceed.

   STATEMENT OF MEGAN SMITH, CO-DIRECTOR, AMERICAN BIOENERGY 
                 ASSOCIATION, WASHINGTON, D.C.

    Ms. Smith. Thank you. Mr. Chairman and distinguished 
members of the Subcommittee, thank you for allowing me this 
opportunity to testify on behalf of the members of the American 
Bioenergy Association, of which I am a Director.
    The United States is at a critical time for the development 
of alternative energy sources, both for transportation and 
electricity. Our dependence on foreign oil has put our economy 
and national security at great risk. At the same time, 
catastrophic forest fires have reached historic proportions in 
the Western United States. These two issues increase energy 
demand and the need for forest fire abatement has put us at a 
crossroads today where creating a win-win situation is more 
than just possible. However, any plan regarding removal of 
large amounts of small-diameter forest material must include a 
market strategy for ridding of this low-value biomass. The ABA 
believes the solution to be biomass conversion to energy and 
chemicals.
    Biomass is any matter composed of three components, 
cellulose and hemicellulose, which are two types of sugar 
polymers, and lignin, which is the glue holding these two sugar 
chains together. The lignin, which is the precursor to coal, 
has the same energy content as a high BTU-grade coal but 
without the ensuing pollutants. It is capable of supplying a 
biomass power plant with additional energy or a biomass ethanol 
plant with all of its electricity needs. Examples of biomass 
include wood waste, agriculture residues, fast-growing grasses 
and trees, and the paper component of solid waste.
    Low-value biomass can be converted to several high-value 
products, such as electricity, ethanol, and chemicals. Markets 
will determine which of these three is the highest value in a 
particular situation and industry will adapt its bio-refineries 
accordingly.
    The first area is biomass power. I would like to allow a 
colleague, Bill Carlson of Wheelabrator, to update the 
Committee on the current biomass power industry with just a few 
additional comments.
    There are a small number of utility-sized biomass 
gasification plants at different phases of construction which 
will act as test facilities for the future industry. The major 
power plants include the Burlington, Vermont, gasifier project, 
which has added a 50-megawatt gasifier pilot plant to its 
existing facility and successfully attained full operation in 
August 2000, and the Chariton Valley Resource Conservation and 
Development project, which is growing switchgrass on 35,000 
acres of underutilized cropland for gasification purposes.
    The second area is biomass ethanol. The current corn-based 
ethanol industry converts to ethanol only part of the available 
sugar in the corn plant. The National Renewable Energy 
Laboratory, along with industry, have new technologies for 
biomass conversion to ethanol which have shown conservative 
estimates for energy efficiencies at four-to-one, that is, four 
energy units in output compared to energy use during 
production. This is largely due to the use of lignin's high 
energy content. In addition, some circumstances may even allow 
these bioethanol plants to sell excess power to the electrical 
grid, which would be an obvious benefit in locations such as 
California.
    The world's first biomass ethanol plant with expected 
start-up in 2002 will be located in Jennings, Louisiana, and 
will use sugar cane bagasse as its feedstock, as well as wood 
waste and rice hulls in the future. Other plants under 
development include the City of Gridley rice straw project. 
This plant will use forest residues, as well, collocated within 
an existing biomass power facility. The Collins Pine Companies 
project in Chester, California, is planning to build an ethanol 
plant fed by sawmill residues as well as small-diameter forest 
material from private land. This project is well into 
feasibility studies, showing very positive results, and will 
use biomass derived from the Quincy Library Group's project, as 
well.
    The third area is biomass chemicals. The area of biomass 
conversion to chemicals may provide to be the largest market 
potential for cellulose in the future. This November, Cargill 
Dow will start up a plant that will make polylactic acid, or 
PLA, from corn. From PLA beads, Cargill Dow will produce such 
products as carpets, clothing, and plastic cups which are all 
biodegradable and renewable. here are two such examples. The 
material in this shirt here and also this carpet was carbon 
dioxide in a farmer's cornfield just 1 year ago, if the clerk 
would not mind passing those up to the members to look at. The 
significance of this technology in decreasing our dependence on 
imported oil is great, as many products now used in the U.S. 
are derived from petroleum-based feedstocks.
    The ABA applauds the Lugar-Udall Biomass Research and 
Development Act of 2000, which did much to promote this concept 
of biomass. The ABA would like to highlight a few of its 
recommendations to help carry out what we believe is the true 
intention of the statute.
    ABA recommends authorization for biomass research, 
development, and deployment programs of the U.S. Department of 
Energy, including increases of at least 20 percent per year for 
the next 10 years.
    ABA recommends no monies be authorized and appropriated for 
fiscal year 2002, starting at $2 million and increasing an 
additional $2 million each year thereafter, for funding the 
biomass energy pilot programs at the Forest Service.
    ABA is convinced that long-term reliable feedstock 
contracts of at least five to 10 years be put in place.
    The ABA recommends that the definition of allowable biomass 
for the 1.5-cent per kilowatt hour closed-loop production tax 
credit be opened up to include open-loop biomass plants.
    Thank you, Mr. Chairman and members of the Subcommittee, 
for allowing me to speak on the many benefits of biomass 
conversion to energy and chemicals for a cleaner and stronger 
nation for future generations to come.
    Mr. McInnis. Thank you, Ms. Smith. By the way, the only 
timer in the room that works is the one over by Mr. Holt, so 
pay attention to that.
    [The prepared statement of Ms. Smith follows:]

 Statement of Megan Smith, Director, The American Bioenergy Association

             BIOMASS ENERGY FOR FOREST FIRE FUEL REDUCTION
Introduction
    Mr. Chairman and distinguished members of the Subcommittee, thank 
you for allowing me this opportunity to testify on behalf of the 
members of the American BioEnergy Association, of which I am Director. 
The United States is at a critical time for the development of 
alternative energy sources, both for transportation and electricity. 
Our dependence on foreign oil has put our economy and national security 
at great risk. At the same time, catastrophic forest fires have reached 
historic proportions in the Western U.S. These two issues--increased 
energy demand and the need for forest fire abatement--has put us at a 
crossroads today where creating a win-win situation is more than just 
possible. However, any plan regarding removal of large amounts of 
small-diameter forest material must include a market strategy for 
ridding of this low-value biomass. While many small-scale solutions are 
being considered within rural communities throughout the West, a large-
scale solution must be adapted for the more extensive rural/urban 
interfaces. After considerable analysis by the Western Biomass 
Consortium, a group funded in the past by the U.S. Departments of 
Energy and Agriculture, this solution appears to be the selective 
mechanical thinning of small-diameter material in our over-stocked 
forests coupled to producing domestically based, renewable, and 
environmentally friendly energy and chemicals, using biomass as 
feedstock.
Background
    What is biomass? Biomass is any matter composed of three 
components: cellulose (a 6-carbon sugar chain, or polymer), 
hemicellulose (a polymer of mostly 5-carbon sugars) and lignin (the 
``glue'' holding these sugar chains together). Roughly speaking, 
biomass is composed of 50% cellulose, 25%hemicellulose, and 25% lignin, 
which is the precursor to coal. The lignin component has the same 
energy content as a medium- to high-BTU grade coal, but without the 
ensuing pollutants of sulfur and nitrogen, and is capable of supplying 
a biomass power plant with additional energy feedstock, or an entire 
biomass ethanol plant with all of its electricity needs. Examples of 
biomass include wood waste, agriculture residues, fast-growing grasses 
and trees, and the paper component of municipal solid waste.
    The U.S.' ever-increasing dependency on petroleum (or hydrocarbons) 
has put us in a precarious position both with respect to our economy 
and national security, as energy is the lifeblood of this great 
country. If we could begin to phase-down our hydrocarbon use and phase-
in our biomass, or carbohydrate, use, the impact would be tremendous. 
We would start down a critical path of true energy security, while 
helping to stabilize our economy overall, increasing jobs around the 
U.S. for many put out of work in rural areas where the majority of 
biomass is grown.
    Low-value biomass can be converted to several high-value products, 
such as electricity, ethanol for transportation, and chemicals. Markets 
will determine which of these three is the highest-value in that 
particular situation, and industry will adapt these ``bio-refineries'' 
accordingly. Below is a brief review of each technology.
Biomass Power
    Biomass is currently being used for conversion to electric power 
through conventional combustion technology. The current biomass power 
industry is composed of approximately 350 plants with combined capacity 
of approximately 7,800 megawatts (MW), employing 66,000 people. Of 
those plants, 45 recently lay idle for various reasons, with 655 MW of 
unrealized capacity going to waste. The dormancy of these plants is 
largely due to the past low-cost of competing energy sources. However, 
with recent escalation of electricity prices, some plant are coming 
back on-line. But more of these biopower plants could be built 
throughout the U.S., particularly the West, where biomass is abundant 
as a forest residue and electricity is badly needed.
    Currently, there are a small number of utility-size biomass 
gasification plants at different phases of construction which will act 
as test facilities and pilot plants for the future industry. The major 
pilot plants include:
     LBurlington, Vermont, Gasifier Project--Burlington 
Electric Department's McNeil Generating Plant has been producing wood-
fired biomass power at its 50 MW per year plant, but has recently 
integrated a new gasification technology to add more capacity. DOE, 
along with the technology licensee Future Energy Resource Corporation 
(FERCO), has added a 15 MW per year gasifier as a pilot plant, and 
successfully attained full operation in August 2000 using FERCO's 
``SilvaGas'' technology, producing electric power directly from biomass 
in a conventional gas turbine.
     LChariton Valley Resource Conservation and Development 
(RC&D) Project--This Iowa project encompasses a public/private 
partnership between U.S. Department of Energy, U.S. Department of 
Agriculture, and the Chariton Valley RC&D Area, under DOE/USDA's 
Biomass Power for Rural Development initiative. Approximately 500 local 
farmers and landowners are aligned with the combined research and 
investment power of 14 organizations. The project will be growing 
switchgrass on 30,000 to 40,000 acres of underutilized, marginal 
cropland.
    In addition to the above technologies, there is growing interest 
amongst the coal industry and utilities to co-fire biomass with coal, 
reducing some pollutants such as sulfur and nitrogen oxide. The TVA and 
the Northern Indiana Public Service Company (NIPSCO) are just a few 
that are investigating biomass co-firing with coal.
Biomass Ethanol
    The current corn-based ethanol industry converts to ethanol only 
part of the available sugar in the corn plant, i.e., the starch inside 
the corn kernel itself. The remainder of the kernel is converted to 
products such as animal feed, corn oil and syrup. While the USDA 
recently determined that today's ethanol plants have increased 
production efficiencies to reflect a net energy gain of 25%, DOE's new 
highly efficient technology for biomass conversion to ethanol (or 
bioethanol) could increase efficiencies for corn ethanol plants even 
further, through conversion of corn fiber and stover. Predicted 
efficiency improvements from these additional conversions would allow 
some of these corn ethanol plants in increase their outputs on the 
upwards of 15% from the current capacity. Conservative estimates for 
energy efficiencies for a stand-alone biomass ethanol plant is 4:1, 
that is, four energy units in output compared to energy used during 
production. One of the predominant reasons for this difference between 
starch and cellulose conversion to ethanol is use of the lignin 
contained in the biomass itself. The high-energy content of lignin 
allows a stand-alone biomass ethanol plant to be self-sufficient, that 
is, to not require an outside energy source, instead combusting the 
lignin in a standard boiler for energy use. In addition, some 
circumstances may even allow these bioethanol plants to sell excess 
power to the electrical grid. In locations such as California, this 
would be another obvious benefit. Because of its efficiencies, 
bioethanol will only require the ethanol incentive for a short period 
of time, with goals to compete effectively with gasoline prices by 2010 
or sooner.
    The world's first biomass ethanol plant will be located in 
Jennings, Louisiana, and will use sugar cane bagasse as its feedstock. 
BC International (BCI) has a patented technology that it hopes to use 
in the future on wood waste and rice hulls at this plant as well. BCI 
is currently coming to financial closure on its plant, with expected 
start-up in 2002.
    Using waste feedstock such as forest and agriculture residues helps 
to make these first bioethanol plants that more profitable. Other 
plants under development include:
     LCity of Gridley--In California, BCI will use its 
technology on waste from rice in the form of rice straw, alleviating 
open-field burning. This plant may use forest residues as well, co-
locating with an existing biomass power facility.
     LCollins Pine--The Collins Pine Companies, a family-owned 
private timber firm out of Portland, Oregon, with a facility in 
Chester, California, is planning to build a plant fed by small-diameter 
forest material. The plant will be sited by an existing sawmill 
operation, also using mill residues. This project is well into a 
feasibility study showing very positive results, and will use biomass 
from both private and public lands, deriving some feedstock from the 
Quincy Library Group's project.
     LMasada Resources Group--In Middletown, NY, Masada will 
use its technology to convert the cellulose stream of municipal solid 
waste to ethanol, garnering a tipping fee to help make the plant more 
profitable.
Biomass Chemicals
    A rapidly expanding area in biomass utilization which may provide 
the largest market potential in the future, is the area of biomass 
conversion to chemicals. Large companies such as Dow Chemical and 
Dupont are currently looking at high-value chemicals from biomass. One 
such chemical is polylactic acid, or PLA. Cargill Dow LLC is currently 
constructing such a plant in Blair, Nebraska, with start-up operation 
slated for November of this year. From PLA ``beads'', Cargill Dow and 
its business associates will be able to produce such products as 
carpets, clothing, and plastic cups which are all biodegradable and 
renewable. The significance of this technology in decreasing our 
dependency on imported oil is great, as many products now used in the 
U.S. are derived from petroleum-based feedstocks. Using biomass instead 
of petroleum for such products would allow us to save our precious oil 
for higher-value markets, stretching out our dwindling supply of oil. 
While the Cargill Dow plant will use corn starch short-term, it will 
soon use cellulosic biomass as well.
The Bio-Refinery Concept
    The bio-refinery is a relatively new concept developed largely by 
the U.S. Department of Energy. It essentially mimics a petroleum 
refinery in that it would produce many different products from one 
plant. For instance, many oil refineries produce multiple products, 
such as gasoline, natural gas and chemicals. At a bio-refinery, 
industry could produce ethanol, electricity and chemicals as well. In 
the end, the highest valued product would most likely be produced in 
the largest amounts, through a simple ``flip of a switch'' in these 
flexible plants.
Benefits
    The benefits of biomass conversion are numerous and great. Of most 
interest to this Subcommittee, forest fires stemming from immense fuel 
loading have severely threatened human life and property, particularly 
in the Western U.S. The Department of Energy's National Renewable 
Energy Laboratory (NREL), located in Golden, Colorado, has been working 
closely with the timber industry and local communities to investigate 
the potential for conversion of sawmill and forest residues to biomass 
ethanol and power; results from the composition analysis of mill 
samples sent to NREL from different locations around the U.S. are very 
promising. Co-locating a biomass ethanol plant to an existing lumber/
saw mill or biomass power plant makes the economics of the bioethanol 
that much more attractive through shared capital expenses, such as 
boilers and wastewater treatment facilities. In addition, not only does 
this technology have the potential to create jobs in rural communities, 
but it will also help keep our forests safe and healthy by creating a 
market for the small-diameter trees and brush which are fueling these 
fires.
    Feedstocks such as agricultural and municipal solid waste, many of 
which are troublesome to the environment and communities nationwide, 
can also be used. For example, many areas of the United States have 
become extremely burdened with solid waste disposal, causing landfills 
to turn away waste only to find there are few other disposal options. 
In California, even simple refuse such as yard trimmings is piling up 
at a high rate of speed; this debris could also be converted into 
energy or chemicals. And one extreme example: New York state has an 
enormous pile of old wooden pallets just outside of Manhattan which 
could supply enough feedstock to support a 100 million gallons per year 
ethanol plant. This is a tremendous figure, considering the total 
ethanol production of the U.S. currently stands at 1.5 billion gallons 
a year.
    Agriculture residues have also increased the burden on landfill 
sites. For example, in 1990, California's legislature mandated the 
phase-out of rice straw burning by farmers at a rate of 10% reduction 
per year with the phase-down now complete, leaving the farmers no 
choice but to plow the straw under. This is costly and greatly 
increases the risk of disease while reducing rice yields. California 
also has legislation in place disallowing 50% of municipalities' solid 
waste going to landfill sites. As a result, the rice farmers have been 
forced to find an alternative disposal system for their crop residue 
that is being turned away from landfills. The California legislature 
appointed a Committee on Alternatives to Rice Straw Burning which 
determined conversion of rice straw to ethanol as one of the few viable 
options. Other agriculture residues such as orchard trimmings and pecan 
shells are being turned away from landfill sites as well. Although this 
refuse is a detriment today, it may in the future actually acquire 
value, increasing farm income.
    Congress will begin deliberating agriculture issues this year in 
preparation of Farm Bill reauthorization. Diversification of farm crops 
is critical for latter year production on farms. Eventually, crops like 
fast growing trees (e.g., poplars) and tall grasses (e.g., switchgrass) 
will encourage both sustainable agriculture and clean energy production 
for the United States. There is also significant effect on global 
warming. For example, production of dedicated energy crops and use of 
bioethanol reduces the net release of carbon dioxide by 90% or more, 
helping to reduce greenhouse gas emissions significantly. Few other 
options are available to the transportation sector to achieve this 
reduction.
Recommendations to the Subcommittee
    Department of Energy Biomass Authorization--The ABA applauds the 
Lugar/Udall ``Biomass Research and Development Act of 2000'', which did 
much to promote the concept of biomass in the Congress and within the 
USDA and DOE. We appreciate the efforts of its sponsors and hope to 
continue working with Congress to advance the use of biomass in the 
U.S. The ABA would like to recommend two areas to help carry out what 
we believe is the true intention of this statute:
    1) the USDA's requests for proposals (RFPs) that were used to 
fulfill the biomass authorization directive only allowed for starch-
based crops and long-term cellulosic crops, therefore no short-term 
cellulosic biomass plants, such as those using agriculture or forestry 
residues, were recipients of the allocation; we would like to recommend 
an expansion of the biomass definition to include these residues in any 
future solicitations at the USDA.
    2) the DOE biomass programs were not authorized under this bill, 
which includes research and development allocations for power, fuels 
and chemicals. If the United States' goal is to achieve a tripling of 
biomass utilization by 2010 as has been suggested, this will require 
significant increases to these DOE biomass budgets, which totaled 
approximately $110 million in fiscal year 01. An increase of at least 
20% per year is recommended for DOE biomass programs. It is imperative 
that both research and commercialization efforts be funded to the 
greatest possible level to avoid the technological ``Valley of Death'', 
an end many government-funded technologies have met in the past.
    Funding for Biomass Energy Pilot Plants at USFS--The aforementioned 
DOE biomass authorization will allow for monies for both biomass 
research and support of ongoing biomass energy pilot plants. However, 
there is currently no line item in its appropriations bill for 
supporting these plants at the Forest Service. While the National Fire 
Plan of last year allowed for very limited solicitations for these 
types of projects, the allocation was not enough to make an impact on 
future forest fire abatement. Region 5 alone received $40 million worth 
of solicitation responses from hundreds of applicants facing the threat 
of fire, only to be able to fund approximately $1.2 million in the end. 
It is astonishing that of the $1.8 billion Congress allocated in 
Emergency Supplemental appropriation monies last year for the Fire 
Plan, only this small amount was set aside for large-scale pilot 
facilities. This lack of resources will not serve in finding a solution 
to the immense problems facing forest fire abatement tactics using fuel 
treatment and disposal. DOE is currently burdened with funding all of 
these pilot plants, several of which are addressing the forest fire 
issue. Therefore, ABA would recommend new monies to be authorized and 
appropriated for fiscal year 02 starting at $10 million, and increasing 
an additional $10 million each year thereafter. In addition, we would 
recommend long-term funding of the National Fire Plan overall.
    Long-Term Feedstock Contracts--There is a dire need for reliable, 
long-term biomass feedstock contracts for biomass energy plants, 
particularly ones using forest thinnings. While long-term contracts 
have had a tumultuous history, there has been no greater need for these 
contracts than today. To be succinct, if long-term, reliable feedstock 
contracts (at least five to ten years) are not put in place, biomass 
energy plants will not multiply anytime in the near future in great 
numbers, that is, enough to make a difference in a forest fire 
abatement plan. Financial institutions are very unlikely to back a 
project, particularly a new technology such as bioethanol, unless there 
is a guarantee for long-term feedstock contracts. While ABA understands 
that this is a lot to ask of a Congress that works on a year-to-year 
basis on many issues, it is imperative in helping support a robust 
fledgling biomass industry. ABA cannot stress this point enough.
    Tax Incentives--There are several types of tax incentives which 
would help support both existing and new biomass facilities:
    1) Open-Loop Biomass Tax Credit--Tax incentives for biopower plants 
are essential for their existence under the current restructuring of 
electricity markets. Currently, existing biomass power plants cannot 
capture the 1.5 c/kWh production tax incentive because the biomass must 
be dedicated for the use of producing energy, or ``closed-loop'' 
biomass plants; no such plants exist today. ABA recommends that the 
definition of allowable biomass for this tax credit be opened up to 
include ``open-loop'' biomass plants, such as ones using wood and 
agriculture residues throughout the U.S.
    2) Biomass Co-Firing with Coal Tax Credit--Many coal plants as well 
as utilities in the U.S. are becoming more interested in co-firing 
biomass with coal to help back out their pollutants. States having both 
coal plants and excess biomass find this idea particularly attractive. 
ABA recommends that co-firing biomass with coal be given a 1.0 c/kWh 
production tax credit for that portion of electricity generation which 
is derived from biomass. Most co-firing facilities will co-fire between 
5% and 15%of biomass with coal.
    3) Incentive for Pro-active Fuels Reduction--Private forest 
landowners should receive incentives for pro-actively thinning their 
forest stands for biomass use in a biopower or bioethanol plant. This 
tactic would also help aid overall forest fire abatement. While most of 
the timber controversy surrounds public lands, these forests should not 
be overlooked. For example, a California state law provides a $10 per 
ton incentive directly to the biomass energy plants for material coming 
from fuels reduction projects. Any incentive that would help off-set 
the very expensive practice of mechanical thinning of biomass and 
transportation to a biomass facility would greatly help the biomass 
industry.
Conclusion
    As you can see, conversion of biomass to energy and chemicals is a 
win-win situation all around, having both short- and long-term 
implications. Here are just a few examples of the benefits:
     Lhelps control forest fires and improve forest health by 
alleviating fuel loading in our forests.
     Lcreates new bio-based industries which are 
environmentally sound.
     Lproduces new energy for the electrical grid for our 
current and future energy needs, helping abate future energy crises.
     Lhelps stabilize the U.S. economy, creating jobs in both 
the forestry and agricultural communities.
     Lhelps energy security by decreasing our dependency on 
foreign oil
     Lrids of burdensome waste materials normally going to 
overstocked landfills.
     Lhelps clean up our air through reduction of emissions.
     Lhelps the farmer through sustainable agriculture and 
energy crop production, providing an alternative to reliance on 
agriculture subsidies.
     Lhelps initiate a carbohydrate-based (versus hydrocarbon) 
economy with major economic and job creating multipliers.
    And most importantly:
     Lhelps wean the United States from its foreign oil 
dependency and strengthen our nation's competitive edge by producing a 
domestic fuel from our own resources.
    Thank you, Mr. Chairman and members of this Subcommittee, for 
allowing me to speak on the many benefits of biomass conversion to 
energy and chemicals for a cleaner and stronger nation for future 
generations to come.
                                 ______
                                 
    Mr. McInnis. Mr. Carlson, you may proceed.

 STATEMENT OF BILL CARLSON, GROUP VICE PRESIDENT, WHEELABRATOR 
          ENVIRONMENTAL SYSTEMS, ANDERSON, CALIFORNIA

    Mr. Carlson. Mr. Chairman, members of the Subcommittee, I 
appreciate the opportunity to be here today to discuss a 
concept that we have worked on now for about 15 years. With 
perhaps 90 million acres in the West needing treatment, and 
optimistically, 20 years to get the job done, and perhaps 50 
tons of excess biomass per acre, we are looking at billions of 
tons needing disposal by either burning or removal.
    In a 20-year program, if we mechanically thin 50 percent of 
all acres treated, over 100 million tons of material will be 
removed per year. The only potential uses that could come close 
to utilizing this amount of material are transportation fuels 
and chemicals, which Megan just discussed, and electric 
production. I will focus on electric production, which is our 
business, and draw upon 25 years of experience.
    These thinnings would fuel 7,300 megawatts of biomass 
power, an amount that would nearly double nationwide biomass 
capacity. In actuality, because of the salvaging of higher-
value products, such as those that were discussed earlier by 
the Forest Service, the needed new biomass power plants would 
total only perhaps 3,000 to 4,000 megawatts. This is only 4 
percent of the installed capacity in the West and is less than 
20 percent of the expected new capacity needed over the 10 year 
buildout that might be required for these new plants. Thus, 
incorporating this new power into the Western grid is clearly 
not a problem.
    Drawing on 15 years of biomass power experience in Northern 
California using thinnings off both public and private lands, 
let me state that neither the plants nor the thinning 
techniques require further pilot studies or demonstrations. 
Both the plants and the results of thinning are widely accepted 
and supported.
    Let us discuss the economics, both of the land treatment 
and for the power plants, to see if this thesis is supportable. 
The alternative, prescribed fire, would take 15 to 25 years to 
achieve the same desired forest condition and in total would 
cost perhaps $400 to $500 per acre. Properly done, mechanical 
thinning followed by a light fire could do the same or better 
job in less than 5 years at perhaps no cost to the taxpayer.
    Our experience demonstrates that a thinning designed to 
achieve a forest condition not unlike that existing at the time 
of Western settlement will remove about 50 tons of material per 
acre while still leaving the larger trees properly spaced and 
in the species that existed historically. Among this 50 tons of 
material will be 2,000 to 5,000 board feet of small logs, whose 
value will pay the total cost of the thinning plus subsidize 
the delivery to market of the 29-ton biomass fuel fraction, if 
necessary. The Forest Service could receive a gross profit of 
$180 to $700 per acre with which to pay their administrative 
costs.
    Let me emphasize here, however, that these numbers cannot 
be achieved if we place roadblocks, such as arbitrary maximum 
size limits, on the thinning. Instead, we must select the trees 
to stay to meet the objectives of a healthy fire-resistant 
forest and let the contractor remove the rest.
    In the West, the infrastructure exists to utilize the small 
logs that are produced in large quantity, though much of that 
is now closed and will need to be retooled. A large-scale, 
long-term commitment to this thinning program will restore this 
infrastructure without the need for public funds.
    The biomass power infrastructure of perhaps 100 to 150 30-
megawatt plants is trickier, since such plants exist now only 
in California. These $60 million facilities will produce 
electricity for about six cents per kilowatt power while paying 
transportation costs for the fuel from the woods. While this is 
a very competitive price in today's Western power market, it is 
expected to be as much as two cents per kilowatt hour above 
market once gas prices return to earth and new plants are 
online.
    The solution for new and existing biomass plants is the 
passage by Congress of the open-loop biomass tax credit, which 
Megan just described, which would have a before-tax value of 
about 2.5 cents per kilowatt hour. This change to Section 45 of 
the Code is currently included in draft energy legislation on 
both the Republican and Democratic sides. This credit, coupled 
again with a long-term commitment to a large-scale thinning 
program, will pave the way to construction of plants, again 
without reliance on public funding.
    The conclusion, then, is that a large percentage of the 
forest health problem in the West can be solved without public 
funding by an integrated forest thinning/biomass power program. 
In addition to improving forest health and reducing fire 
potential, the program would accomplish the following: Reduce 
by 98 percent the amount of air pollution resulting from 
burning the same biomass via prescribed fire; replace the 
volume of Federal timber lost over the last decade in the 
region; dramatically increase the amount of renewable power in 
the region at a time of rising oil and natural gas prices; 
allow private capital to replace Federal dollars while solving 
the problem; and is a solution that has been proven to bring 
diverse interests together in support.
    For this to happen, Congress needs to move in three key 
areas. First, establish a long-term commitment to forest 
thinning as the primary mechanism for treating Western forests 
and establish broad principles for its implementation.
    Second, authorize Federal land managers to enter into long-
term stewardship or service contracts that measure success on 
the basis of acres treated and not as a traditional timber 
sale.
    Third, pass the open-loop biomass provision during this 
year's reauthorization.
    With these actions, the program to reclaim our Western 
forests from disease, insects, and fire can gain needed 
credibility and we can begin to see private capital flow toward 
a solution to this massive problem. That problem may well 
become a well-disguised opportunity. Thank you.
    Mr. McInnis. Thank you.
    [The prepared statement of Mr. Carlson follows:]

  Statement of William H. Carlson, Vice President & Alternate Energy 
    Group General Manager, Wheelabrator Environmental Systems, Inc.

      Use of Forest Thinnings as Fuel for Biomass Power Facilities
    With a US Forest Service estimate of 89 million acres within the 
National Forests of the West at moderate to high risk of catastrophic 
fire, we have a mighty job on our hands if we are to remove hazard 
fuels before these lands burn catastrophically. If we give ourselves 
two decades to complete this task, and we will be lucky if we have that 
long, we would need to treat 4.5 million acres per year. With perhaps 
50 tons of excess fuel per acre needing to be removed, a total of 225 
million tons annually of excess fuel would need to be burned under 
controlled conditions or mechanically removed from the site.
    When you talk in quantities of 225 million tons per year, you 
quickly settle your potential solutions on extremely high volume uses, 
such as the potential to produce transportation heating fuels or 
electricity, two of the very largest industries in America. You could 
continue to burn up this material in prescribed fires, but at 30 lbs. 
of particulate matter per ton burned, it is unlikely that the agency 
would be allowed to introduce an additional 3.4 million tons of 
particulate annually into western skies.
    If we assume a 50/50 split of prescribed fire and mechanical 
thinning due to slope limitations, etc., each would be performed on 
2.25 million acres annually, producing over 110 million tons of excess 
biomass annually, still clearly a massive undertaking.
    We will now focus exclusively on the production of electric power 
from biomass to see if it is potentially up to the task of utilizing 
most or all of this material. Currently, the DOE estimates that there 
are 7,800MW of biomass electric power in 350 individual plants, most 
associated with the forest products industry. A typical base loaded 
biomass plant will consume 15,000 tons/MW annually (8,000 bone dry 
tons) of fuel. The 110 million tons of thinnings to be consumed would 
fuel 7,300MW of new capacity, essentially a doubling of the current 
industry.
    Since biomass is a very bulky, low value fuel, the plants must be 
located quite close to the resource (within a 50-75 mile radius). 
Consequently, if we are to build plants to take thinnings from 2.25 
million western acres annually for 20 years, all the plants must be 
located in the West. With the exception of Alaska, all the 89 million 
acres of overstocked western forests lie within the interconnected 
western electric grid of the Western Systems Coordinating Council 
(WSCC). This grid, which has a peak load in excess of 100,000MW, has 
recently been growing at a rate of 2-5% annually. Thus, the region 
needs 2-5,000MW of new capacity annually just to keep its head above 
water. Over a 10-year buildout period for the biomass plants, the 
region would need 20-50,000 new MW's, of which the 7,300MW's would be 
biomass, a comfortable fraction.
    As a further sales pitch for biomass power, let me add that these 
plants need no pilot studies; either for the plants, the economics or 
the thinning techniques. For the last 15+ years in Northern California 
these plants have been reliably producing power, partially fueled by 
forest thinnings. Nearly a million acres of both private and public 
lands have been thinned to produce a ``desired forest condition'', and 
the results are there for all to see. The results on the land and in 
the plants are heavily supported by local government agencies, state 
forestry officials, air quality officials, the California Energy 
Commission, local environmental groups and the public. The success of 
these plants and their positive impact on the land is what led this 
body to pass the Quincy Library Group bill a couple of years ago with 
only one dissenting vote.
    Let us turn now to the economics of using biomass power plants as a 
sink for large quantities of forest thinnings; both the economics of 
the plant and the economics on the land. Beginning with the land we 
find that if the U.S. were to commit to a 20-year program of fuel 
reduction on USFS lands in the West, it would take a massive amount of 
money. To treat completely 4.5 million acres annually with prescribed 
fire until the ``desired forest condition'' is achieved would likely 
cost in excess of $400 per acre (Figure 1), or $1.80 billion annually 
for 20 years. Clearly, we must look for a lower cost and more 
environmentally benign option.
    Our 15 years of experience in forest thinning for both public and 
private landowners has convinced us that there is a lower cost option 
involving mechanical thinning that can, under certain conditions, 
actually return a profit to the landowner. Figures 2 and 3 represent 
two thinning scenarios, one with and one without pulp chip removal, 
that both result in a positive return to the landowner.
    The key to operating a cost-effective thinning operation is to 
create no artificial or arbitrary barriers to thinning. The single 
criteria is to establish a ``desired forest condition'' that is a 
forest that resembles presettlement condition and thus is both healthy 
and fire resistant. The trees that are to be left are then marked, 
providing the proper mix of sizes, spacing and desired species. 
Thickets or openings can be incorporated for specific wildlife 
purposes. Basically, you are removing the small trees beneath the big 
trees.
    Once marked, the unit is then turned over to a thinning contractor 
who removes the unmarked material. The contractor then sorts through 
the removed material to find products having a value greater than that 
of mere fuel. In our experience an acre thinned from below to produce 
the ``desired forest condition'' will yield, in addition to 29 tons of 
fuel, some 2-5000 board feet of small logs. It is the value of the logs 
that allows the thinning cost to be completely paid by the contractor, 
often returning a small profit to the landowner ($180/acre). If pulp 
chips have a ready market in the area, the economics prove even better 
($700/acre). Both of these examples assume fuel has no value and has to 
be delivered to a power plant for free. If the power plant can pay 
transportation costs, the economics improve further.
    Thus, it is possible to thin large acres of national forest land in 
the West at no cost to taxpayers, provided there is an infrastructure 
of biomass power plants and forest products mills, and provided no 
arbitrary constraints (i.e. maximum diameter limits) are placed on the 
operation. If the criteria is simply to remove excess fuels and return 
our western forests to a presettlement condition, it can be 
accomplished very cost effectively and environmentally beneficially 
with mechanical thinning.
    In nearly all the West, the infrastructure of forest products mills 
already exists, though a high percentage are currently closed due to 
recent dramatic curtailments in Federal timber sale levels. Many would 
have to be retooled to handle the predominantly small logs that this 
type of operation produces.
    An infrastructure of biomass power plants does not currently exist, 
however, except in California. To create these plants in the West 
within 5-10 years will require a sound economic basis for the 
investment. Figure 4 is a set of economics for a 30MW biomass power 
plant located in the rural west and built at a cost of $60 million. The 
debt is financed over a 20-year period. The total expense for the 
plant, on a per kWh basis, is slightly in excess of 6 cents/kWh which 
is a reasonable cost in today's western electric markets. That cost is 
assumed to be as much as 2 cents/kWh over market once natural gas 
prices return to past levels.
    To cause these plants to be built in support of a large scale 
forest thinning program, it will be necessary to incentivize them in 
the form of a Federal biomass tax credit which is currently only 
available to ``closed loop'' biomass plants. ``Closed loop'' is made up 
of fuel sources that are grown exclusively for burning, clearly not the 
case in this example. The change in the tax code to allow ``open loop'' 
plants a credit has been close to passage each of the last two years 
and is currently included in both the Republican and Democratic 
versions of proposed energy legislation. The minor change in tax law is 
certainly something that could happen this year.
    Clearly, mechanical thinning of overstocked national forest lands 
in the West over the next two decades can solve a major share of the 
forest health and fire potential problems. Though the quantities of 
materials that must be removed are staggering, they could be 
accommodated in forest products mills and biomass power plants without 
unrealistic changes to the region's infrastructure. In addition to 
being an environmentally superior method of reestablishing our western 
forests, the proposal has the following additional benefits:
     LRestores large-scale economic activity in areas of the 
West that have suffered great economic distress.
     LAvoids the massive air pollution and threat of escape 
that plagues a large scale prescribed burning program (Figure 5).
     LReplaces the volume of Federal timber lost over the last 
decade in the region, albeit with smaller logs.
     LDramatically increases the amount of renewable energy 
produced in the West, taking pressure off our fossil fuel needs, much 
of which is imported.
     LAllows private capital to replace Federal dollars in 
solving our forest health problems.
     LCan be a solution that brings together diverse interests 
in support (see attached brochure).
    For the above-described scenario to develop, it is a rather short 
list of things that Congress must do:
     LEstablish a long-term commitment to forest thinning as 
the primary mechanism for reestablishing health in western forests and 
establish broad rules for it implementation.
     LAuthorize Federal land management agencies to enter into 
long term stewardship contracts that are measured on an ``acres 
treated'' basis rather than a traditional timber sale basis.
     LPass the ``open loop'' biomass provision in the IRS 
Section 45 Tax Credit for Wind and Biomass that is due to be 
reauthorized this year.
    The forest products and biomass energy industries stand ready to 
invest many billions of private capital to create an infrastructure to 
cost effectively solve the forest health and fire potential problems in 
the West in an environmentally superior way. For that to happen, 
however, it will require a long-term commitment on the part of Congress 
and the President to the process described in this paper. While changes 
in Federal law required are few, they will be somewhat controversial 
initially, but will ultimately be proven to be the best approach, both 
environmentally and economically, as they have been in Northern 
California. We urge you to move quickly, as another fire season 
approaches. We do not need more studies or pilot programs; we need 
action from this Congress before the rest of the western forests go up 
in smoke.
                                 ______
                                 
    [Figures referred to in Mr. Carlson's testimony follow:]

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    Mr. McInnis. Mr. KenCairn?

   STATEMENT OF BRETT KENCAIRN, PROGRAM DIRECTOR, INDIGENOUS 
           COMMUNITY ENTERPRISES, FLAGSTAFF, ARIZONA

    Mr. KenCairn. Good afternoon, Mr. Chairman and members of 
the Subcommittee. My name is Brett KenCairn and I am the 
Executive Director of Indigenous Community Enterprises in 
Flagstaff, Arizona. We are an organization that was founded 
explicitly to find uses for the small-diameter thinnings from 
restoration treatments that benefit local communities. I am 
pleased to work on this topic with you, as I have 10 years' 
experience working on this in both the Northwest and the 
Southwest.
    I have four issues that I want to raise for you with regard 
to this and the considerations that you should, I think, have 
with it. First is the issue of scales we talked about last 
week. As I noted in my testimony last week, the scale of 
operations in wood products facilities is extremely important. 
The choice of scale will affect not only the distribution of 
the benefits but also how much wood is used and how long it 
will take to develop these facilities.
    As an example, in the biomass industry, my organization is 
working right now to evaluate the implementation of a small-
scale biomass facility associated with the rounded processing 
facility that we are building in the Navajo mission. We are 
looking at a facility of about a half a megawatt to a megawatt 
in size, would cost about $1 million to establish, and would 
use about a truckload to two truckloads a day of material. That 
is a level at which the local entrepreneurs can actually make 
that happen on a community-based scale.
    In contrast, many of the other alternatives being 
considered are facilities in the 30- to 50-megawatt range that 
would cost, as we have heard, about $60 million to establish. 
That is going to be very difficult for a local community to be 
a major partner in the ownership of such a facility and it is 
going to require a substantial volume of material, on the scale 
of 20 to 30 truckloads a day. It has been my experience working 
in forestry for 10 years that we are not yet at the point that 
we can actually guarantee that level of material, and so it 
could create this sort of conflict that we have been gridlocked 
with for about 10 years.
    The second major issue is time frames for implementation. 
It has been my experience that these community-scale 
enterprises, such as the ones that we are working on in 
Northern Arizona, California, and the others that you have seen 
are much quicker to market. We believe that we can put a round 
wood processing facility and a biomass facility online in 12 to 
18 months. Oftentimes, these larger-scale facilities would 
take, on a minimum, two to 4 years to establish.
    The third issue is the distribution of benefits. Again, if 
we look at creating a few large-scale concentrated facilities, 
that is going to concentrate the economic benefits in a few 
locations. By creating a more disperse set of facilities across 
rural communities would mean we can distribute those benefits 
more broadly and make them more compatible with the 
characteristics of supply that exist in that area.
    And fourth, of course, the economic influences of 
management that one member has mentioned. There is a 
substantial public distrust of economic motives and one of the 
best assurances that we have against economic motives driving 
this process is to keep the scale reasonable to the locale and 
to the forest.
    I would like to then briefly describe the work that we are 
doing in Northern Arizona. We, about 2 years ago, as we were 
looking for other types of uses for this material, we were 
pushed by the Navajo, who said hat in their community, there 
was a substantial need for wood products. Seventy percent of 
that community still heats with wood and there is a huge need 
for housing. About 60 percent of the Navajo population either 
does not have their own home or is living in very substandard 
conditions. In addition to that, the community has about a 50 
percent poverty rate and about 50 percent of their students are 
not even graduating from high school. So we saw this as an 
opportunity for not only using this material but also creating 
an economic development benefit, as well.
    What we have been developing, then, for the past year is 
the establishment of a round wood processing facility, state of 
the art, in fact, that could produce not only affordable 
housing in the shape of Hogans of traditional Navajo design, 
but a whole series of other products that could be used in both 
local and other markets. By doing so, we are also developing 
and testing technologies that would be relevant to other rural 
communities in other locations, not only our area, but across 
the West. We believe that there is strong support for this, not 
only in our community, but we have a strong pledge from the 
Navajo president himself.
    The summary of all this, I would say in terms of the scale 
issue, is that we believe that community-based, community-
scaled enterprises can create more and lasting benefits for 
rural communities. Those benefits can be more equitably 
distributed. The implementation and time to market is much 
shorter, and we can actually create immediate opportunities for 
utilization of some of these forest fuels and thinnings. And 
finally, that we would reduce the perverse incentives, if you 
want to call it that, of economic interests that have become 
too big for that region.
    To accelerate this, though, we have two recommendations. 
The first is that we need to move research and development out 
of academic centers and urban centers and into the rural 
communities that are actually doing this work themselves. I 
have already talked with Tom Hamilton and others at the lab who 
have been very supportive of this to begin working right in the 
communities there are trying to develop the businesses with 
this research and development. We have some ideas with this 
regard that we have actually been working on and we would like 
to start sharing with your staff soon.
    The second is that we really need for you to be a watchdog 
on the Forest Service and others to make sure that the drive to 
implement this forest management does not lead to contracts 
that are so large that our locally-scaled enterprises can no 
longer compete for those contracts because they have become too 
big.
    And finally, as we have said before, the economic action 
programs have been extremely successful in trying to inspire 
this innovation and development and we would like to continue 
to have your support for those and, in fact, see those funding 
levels increased.
    I would also just note in passing, as I close, that Tom and 
his lab have done a yeoman's work and I think that they have 
been substantially underfunded and we hope that they get more 
funding to help support this work, as well. Thank you, Mr. 
Chairman.
    Mr. McInnis. Thank you, Mr. KenCairn. I will appreciate you 
visiting with the staff on moving it out to the rural areas.
    [The prepared statement of Mr. KenCairn follows:]

Statement of Brett KenCairn, Director, Indigenous Community Enterprises

    Dear Mr. Chairman and members of the Subcommittee:
    Good morning, my name is Brett KenCairn. I am the Executive 
Director of Indigenous Community Enterprises, a non-profit organization 
based at Northern Arizona University in Flagstaff, Arizona. ICE was 
founded for the explicit purpose of creating new economic and 
enterprise opportunities in rural and Native communities associated 
with public forest restoration in northern Arizona. Our primary focus 
of development over the past 18 months has been creating new uses for 
the small diameter trees being removed in restoration treatments. Prior 
to helping found ICE, I worked for almost 15 years on forest 
restoration and community development issues in both the southwest and 
the northwest. I have worked with the Forest Products Lab and other 
institutions for over six years looking for new uses for the byproducts 
of restoration, and I also worked on more than a dozen community 
initiatives attempting to build economic development opportunities 
using these small diameter trees and other restoration byproducts.
    It is my understanding that a central purpose of this hearing is to 
examine options for achieving three broad goals associated with finding 
uses for forest fuel materials:
     LCreation of viable uses for restoration by-products,
     LDevelopment of enterprises that strengthen and diversify 
rural economies,
     LReduction of the dependence on and use of fossil fuels
    To address these goals, I would like to structure my presentation 
today in three parts. First, I would like to suggest a conceptual 
framework with which to consider how to best make use of small diameter 
trees and the key obstacles and opportunities we face with each major 
strategy. Second, I will describe briefly the work of my organization 
and how it illustrates the key issues related to biomass utilization. 
Finally I will outline a strategy we believe could substantially 
accelerate the evolution of wood product and biomass strategies that 
benefit both communities and forests.
Forest Fuels Utilization Options
    For me it has been useful to recognize that there are three broad 
categories of potential uses for the small diameter tree byproducts of 
restoration. These are:
     LBreakdown into dimensional lumber e.g 2 x 4, 4 x 4 etc.;
     LConversion into raw fiber/biomass;
     LProcessing as roundwood (post and pole type material).
    These distinctions help us to recognize where there is already 
substantial research and development taking place. They also indicate 
consequences about choices of scale for enterprises of each type. The 
different choices among these three approachs will also effect the 
relative costs and time-to-market that each strategy will require. 
Finally, we can compare how particular strategies will effect local 
communities.
    As an example, in 1997 I participated in a proprietary evaluation 
of the viability for establishing a state-of-the-art one-pass saw mill 
in the southwest. This is technology that uses laser optimization and 
other advanced techniques to cut an entire log into the opitimal mix of 
dimensional lumber in one pass. This approach would have cost around 
$10-15 million to establish, and could have been economically viable at 
the scale of as little as 15 million board feet of base material 
annually. Start up time for a facility of this type is probably 6-9 
months. Although relatively expensive, it is potentially within the 
range of existing more established local entrepreneurs in some 
locations.
    In contrast, a biomass facility on the scale typically proposed 
(30-40 megawatts) is going to cost in the neighborhood of $25-50 
million to capitalize. This amount almost guarantees that local 
investment will be insufficient. Often majority ownership of these 
types of facilities is held by interests outside the community. A 
biomass facility at this scale will require 30-40 million board feet of 
material, and it will, depending on environmental permitting and other 
compliance issues, take 2-4 years to establish. This is not, however, 
the only scale of biomass that can be developed. Smaller scale systems, 
in the range of 1/2 to 1 1/2 megawatt facilities are now viable and can 
be capitalized for around a million dollars.
    The final utilization option I want to describe today is roundwood. 
Rather than cut small diameter trees into boards, or grind it into 
chips or sawdust, we can also leave it in the form that nature 
engineered it (round). In this form it is stronger and has less 
propensity for defect. Milling small logs often results in high 
proportions of defect or low grade lumber even using the best of 
technologies. Leaving small trees in their round form also creates 
opportunities for utilizing the unique aesthetic properties of this 
material. These roundwood uses are currently the least well explored. 
The Forest Products Lab has done its best to provide support given very 
limited budgets for this topic. No other research organization in the 
country has made a substantial effort to investigate these issues, 
largely because they have not been of interest to the large companies 
that typically shape research priorities. This is, however, an area of 
particular interest to community-based initiatives because it 
represents uses that are more congruent with local skills and 
experience and has lower barriers to entry (capital, expertise, 
available markets).
The Navajo Hogan/Roundwood Manufacturing Project
    My own experience illustrates this situation and the potential for 
both roundwood and community-based community-scaled initiatives. While 
working with the Grand Canyon Forests Partnership, I was looking at a 
wide variety of options for making use of the low-grade small diameter 
trees being removed in restoration treatments on public forestlands. 
During that time I was approached by several Navajo people who 
suggested that there was a huge need for wood products on the Navajo 
Nation. First, over 70% of Navajo families still use wood as their 
primary source of heat. Second, there is a huge housing shortage on the 
Navajo Nation. The Navajo Division of Economic Development reports that 
there is a need for over 30,000 new homes on the Nation. This 
represents probably 60% or more of the total population that either has 
no home of their own or is living in seriously substandard housing.
    In our conversations with Navajo people we learned that there was a 
strong desire to return to more traditional housing designs, namely the 
octagonally shaped, log built Hogans. These structures were 
traditionally built from logs of about the same diameter as those we 
are currently attempting to find uses for. So began a year long process 
to work with Navajo elders and others to develop Hogan designs that 
could incorporate small diameter logs, maintain traditional design 
features, but have the more modern amenities that Navajos would also 
like to enjoy (indoor plumbing, electricity, well insulated space). ICE 
recruited a diverse set of partners including ASU's School of 
Architecture, NAU's Colleges of Forestry, Engineering, and Business, 
the Forest Service and Grand Canyon National Park, and private sector 
partners to begin developing and evaluating these opportunities. I have 
included computer renderings of the designs that we have developed in 
this process.
    A core goal in this development process was to create a strategy in 
which the use of small diameter trees and the creation of affordable 
community housing could also create economic opportunities for 
community residents. Per capita income on the Navajo Nation is less 
than $6,000, barely 1/4 of the national average. Over 50% of Navajo 
live below the poverty line. Unemployment rarely drops below 40-50%, 
and a high school drop out rate of nearly 50%. By creating a 
manufacturing facility Cameron, Arizona, a rural community in the 
western portion of the Navajo Nation, we believe we can address all 
three of these issues--wood use, affordable housing, and economic 
development'simultaneously.
    Throughout this process we continue to work very closely with 
community members. We recently held meetings at both the community 
level and with the President of the Navajo Nation in Windowrock, 
Arizona. A number of elders from the community joined us in this recent 
meeting with the President and were the ones who impressed on him the 
importance of supporting this community-based project. As a result of 
this meeting, the President pledged funding to assist with the 
renovation of a currently unused industrial building in the community 
we have targeted for the manufacturing facility.
    A key element in this development has been to identify the most 
effective ways to process small diameter trees into roundwood building 
materials. We have looked at technology both nationally and 
internationally and at a series of machines that can create uniform 
dimension material ideal for mass building applications. Our goal is to 
create not only Hogan structures, but a wide array of products--
gazebos, shade structures, fencing, panelized building products, 
fencing, furniture--from small diameter wood.
    At the same time, we want the facility to operate at a scale that 
is well suited to the current social, economic, and ecological 
situation. We anticipate a start-up cost of around $1-1.5 million. We 
project direct employment of 15-20 people when we reach full 
production. This does not count support jobs created. At this scale we 
would utilize between 1-2 million board feet per year depending on 
other product development. Far more than this amount already exists on 
the Kaibab and Coconino National Forests in sales that are through the 
NEPA process and sit on the shelf without bidders due to the lack of 
uses for small diameter trees.
    Despite this apparently modest use of wood, our estimates suggest 
that this facility would enable the treatment of over 1,000 acres of 
forestland annually, several times more than is currently being treated 
in our area. Most important, this facility would be far more flexible 
and adaptive to changes in resource flows and would not require 
guaranteed contracts of large volumes of biomass in order to assure 
capitalization.
    As a companion to our wood product facility, we are also currently 
evaluating a range of small-scale biomass technologies. Again, the 
emphasis is on a scale that is within the capacity of a community-based 
enterprise to establish and maintain, utilizes volumes of biomass that 
are well within the range of what is available, and can be established 
in a relatively short timeframe. We are evaluating several types of 
technology that range in size from 100 Kw to 1 Mw. Material demands 
would be from 2-20 tons of biomass day (compared to 600-700 tons/day 
for many biomass facilities). Again, capitalization costs are 
relatively small--around $1 million--and could be established in 9-12 
months.
    Finally, we feel that this approach is much more politically viable 
than strategies that create large capital intensive facilities with 
large wood volume needs. Benefits of this smaller scale approach 
clearly flow to local people, both in the products and in the 
employment opportunities associated with those products. The business 
development strategy builds community assets and human capital. The 
types of materials the project has been designed around do not require 
any of the larger trees generally at the heart of many timber sale 
disputes. The scale of the operation makes more flexible and adaptive 
to changes in resource flows, thus reducing the propensity that an 
economic interest will attempt to direct forest management to maintain 
its material flows.
Accelerating Appropriate Scale Development
    To summarize my statements to this point, I have asserted that 
smaller scale, community-based wood products and biomass enterprises 
will:
     LCreate more, and more lasting, rural community benefits,
     LBe 1-2 times faster at scaling up to implementation,
     LEnable more immediate implementation of strategic fuel 
reduction treatments,
     LEngender more political support (fewer appeals).
    However, based on the experience of many of us who have been 
working for over 10 years in partnerships and forest-based community 
development, I believe the current structure of research and 
development necessary to support these appropriate scale, community-
based strategies is inadequate. There are several major deficiencies 
that need to be addressed:
     LInadequate funding, particularly for community-based, 
community-scaled alternatives;
     LToo great a distance between research facilities and 
areas attempting to innovate; and
     LLack of an immediate connection between research and 
implementation.
    As practitioners we feel strongly that a new approach to research 
and development needs to be created. In this model, research and 
development would be based in rural communities with academic and 
institutional support being provided based on the particular 
innovations being attempted in that context specific situation. In this 
way, research results would be directly relevant to the problems being 
encountered, and results would feed directly into support for 
enterprises that are creating local jobs and using restoration by-
products. We refer to these rural-based facilities as Innovation and 
Development Centers to indicate their focus on developing and applying 
new strategies as quickly as possible, rather than become preoccupied 
with research alone.
    We imagine a series of these facilities, both in the West and in 
other portions of the country where community-based approaches need to 
be developed. At the same time, we feel there is a particular urgency 
to create these centers in the West given the challenge created by the 
substantial funding currently going towards removal of forest fuels. An 
existing network of community-based forestry initiatives already exists 
and has been working on these issues for the past decade. This network 
would be a logical starting point for establishing these types of 
facilities. As a network of non-profits, these organizations are 
committed to the larger goal of assisting all forest-based rural 
communities find viable economic diversification strategies.
    It is important to recognize the existing programs that are working 
and could be expanded to support such efforts. The Economic Action 
Program run through the State and Private Forestry program of the US 
Forest Service has been one of the most successful vehicles for 
spawning and supporting innovation at the local level. Because of their 
direct presence in rural communities, the Forest Service has been much 
more effective at delivering both funding and technical assistance to 
rural communities than comparable programs such as USDA Rural 
Development or other state and Federal programs.
    Congress should also monitor the contracting procedures being used 
by the Forest Service and BLM to insure that an adequate share of these 
restoration services (thinning, burning, watershed restoration etc) and 
byproducts (e.g. small diameter thinnings) are being secured by smaller 
local contractors.
    We look forward to working with Congress to find ways to implement 
these and other strategies currently being developed. We believe we 
have a great deal to offer in finding solutions that are economically 
practical, socially equitable, ecologically responsible, and 
politically viable.
    Thank you for the opportunity to present to you today.
                                 ______
                                 
    Mr. McInnis. Mr. Holmer?

STATEMENT OF STEVE HOLMER, CAMPAIGN COORDINATOR, AMERICAN LANDS 
                   ALLIANCE, WASHINGTON, D.C.

    Mr. Holmer. Great. Thank you for this opportunity to 
testify. The American Lands Alliance supports a smart response 
to meet our energy needs that focuses on greater efficiency, 
alternative energy development, and reducing demand. We do not 
believe important wild lands, such as the Arctic Wildlife 
Refuge and the front range of the Rockies, wilderness areas and 
national monuments, for example, should be sacrificed for 
energy development. We also do not believe that it is 
responsible to consider intensive logging and expansion of 
biomass that could put more pressure on our forests.
    In particular, I would just like to say that the best 
example that we have right now of a similar technology is chip 
mills in the Southeast United States. When this technology was 
first proposed, the idea was utilization of second-growth 
forests and engineering developments to utilize these 
plantations that are there. So plants started getting situated 
all across the Southeast, and then what we have now is a 
situation where the forests are being over-cut. According to 
Forest Service data, softwood extraction is now currently 
exceeding growth, and within the decade, the same will be true 
for hardwoods. And so we are very concerned that introduction 
of biomass across the Western United States could ultimately 
lead to over-cutting of the forests.
    We also have some very substantial concerns about the 
hazardous fuel program that everyone is predicating will make 
this material available. Just to give an idea of some of the 
concerns the environmental community has about the hazardous 
fuel program, I would like to request that this letter be 
included in the official record, and I can make copies 
available to all the members. This was a sign-on letter 
endorsed by all the national environmental groups that said 
that mechanical fuels treatment should be focused on the urban-
wildlands interface, and we believe that, according to Forest 
Service data, should be about 200 feet from the actual 
structures and communities. So when you look at those lands, 
the vast majority of those lands are, in fact, privately held, 
not national forest lands, and certainly not back-country areas 
or roadless areas. And so we would like to see the mechanical 
fuels program focused on those areas.
    Mr. Holmer. We would also like to see substantial 
environmental safeguards included to the program--protection 
for old growth, protection for roadless areas, protection for 
riparian areas and sensitive habitats for endangered and 
threatened species. And right now, we have very serious 
concerns that the direction the Forest Service is taking with 
this program is not in keeping with those principles.
    For example, the Forest Service currently admits that only 
25 percent of the projects under the fuels program are anywhere 
close to the urban-wildlands interface. We also strongly 
disagree with how broadly the agency has defined the urban-
wildlands interface. The fact is, we do not see any solid 
criteria defining these areas or prioritizing the treatments. 
How do they figure out where they should start and what are the 
priority restoration needs for that given area? So we do feel 
like we need better ecological analysis to happen before any 
activities take place.
    Similarly with biomass, we feel like there needs to be a 
broad-scale cumulative impact analysis to make sure that if 
there is going to be sourcing from forests, that, in fact, it 
is not going to lead to over-cutting. We do see a lot of 
potential for biomass using urban waste streams, using 
agricultural waste, but given all the pressures and controversy 
surrounding forest management, we simply do not see a massive 
expansion of this program being appropriate at this time.
    We also see some other very substantial problems with this 
program, and some of this was brought out in other testimony. 
For example, one testimony is calling for long-term feedstock 
contracts. There is a long history of these lengthy contracts, 
in Alaska for pulp and paper, for example. These contracts have 
led to unsustainable logging, and, in fact, illegal logging at 
times because the pressure to produce the volume was so 
powerful. So we do not think that these kinds of long-term 
contracts are appropriate.
    Another key idea is that these plants are going to need tax 
incentives and subsidies in order to continue forward, and I do 
not know if Congress is currently prepared to continue spending 
the billions of dollars that were appropriated last year, but 
that is precisely what would be necessary in order to keep a 
program like that moving. In our view, that money would be much 
better spent on other areas--improving energy efficiency, 
dealing with the private landowners, rather than logging on the 
public lands.
    So those are some of our general concerns. I would be happy 
to answer any questions that you all might have about our 
testimony.
    I did want to make one other comment, which has to do with 
post-fire salvage logging. The Forest Service has endorsed a 
report called the Beschta Report, which recommends the complete 
prohibition of salvage logging in severely burned areas. In our 
view, post-fire salvage should have no part in the hazardous 
fuel program or as a feedstock for biomass plants. Thank you 
for this opportunity to testify.
    Mr. McInnis. Thank you, Mr. Holmer, for your information 
and that of the other witnesses.
    [The prepared statement of Mr. Holmer follows:]

    Statement of Steve Holmer, Campaign Coordinator, American Lands 
                                Alliance

INTRODUCTION
    In response to the wildfire season last year the Forest Service has 
announced a new National Fire Plan which the agency is using to justify 
a massive increase in yearly Congressional appropriations to pay for 
more mechanical fuels reduction treatments and more commercial 
``thinning'' projects. The Plan sets the stage for the 
industrialization and mechanization of forest restoration by advocating 
a massive ten to fifteen year hazardous fuels reduction program that 
will eventually affect most National Forests. Without additional 
analysis, development of criteria and environmental safeguards, we are 
concerned that forest ecosystems will be put at risk by mechanical 
fuels reduction projects.

HAZARDOUS FUELS PROJECTS LACK ENVIRONMENTAL SAFEGUARDS
    There is a real risk that ecologically harmful projects will be 
common place because there are no safeguards to exclude projects from 
roadless, old growth, and other ecologically important areas that don't 
need fuels reduction treatments. Projects are already emerging and 
there is growing concern about the emphasis on commercial commodity 
production and the lack of emphasis on doing projects--where the work 
needs to be done--in the urban/wildlands interface.

ROOT CAUSES NOT BEING ADDRESSED
    According to a Dec. 5 Congressional Research Service report 
``Forest Fire Protection,'' historic grazing and logging practices (by 
encouraging growth of many small trees) and especially fire suppression 
over the past century, appear to have contributed to unprecedented fuel 
loads in many areas. However, under the current Fire Policy, it appears 
that grazing is being ignored and that more logging (mechanical fuels 
treatment) and fire suppression are being prescribed as the solution. 
This contradicts common sense and will in the end lead to further 
degradation of forest ecosystems. If we are to seriously talk about how 
to restore ecosystems it is necessary to reform the logging, grazing, 
and fire suppression programs that are at the root of poor ecosystem 
conditions.

URBAN/WILDLANDS INTERFACE UNDEFINED
    An issue that is of primary importance in the Forest Service's 
presentation of the National Fire Plan is their unwillingness to define 
the urban/wildland interface zone. The Forest Service has failed to set 
hard criteria about how to choose the communities in most need for 
fuels reduction. One of the major components to the National Fire Plan 
is to carry out most of the first and second year projects in the 
communities most ``at risk.'' However, the communities that the Forest 
Service is evaluating as the most ``at risk'' comes from a laundry list 
of communities published in the Federal Register on January 4, 2001. 
The Governors and the National Association of State Foresters created 
this community list without any criteria about what a community at risk 
is. We are very concerned that to date, the Forest Service has ignored 
the intent of Congress to focus fuel reduction projects on the urban/
wildlands interface to save lives and property. Instead, the Forest 
Service recently admitted that only 25% of the current projects are in 
the area they define as the interface/zone. In addition, we are also 
concerned that the definition being by the agency is overly broad by 
including power lines, roads and other structures.

INCREASED PRIORITY NEEDS TO BE PLACED ON PROTECTING COMMUNITIES
    Homeowners must be educated about the danger associated with the 
wildland-urban interface zone and the necessity to do their part to 
reduce the risks. Jack Cohen, research scientist at the U.S. Forest 
Service's Fire Sciences Lab in Missoula, Montana, has demonstrated that 
to reduce fire risks in the urban/wildland interface zone, removing 
fuels from within 40 meters of a structure and reducing the 
flammability of the structures are more effective and efficient than 
landscape wide thinning. According to Cohen, ``The evidence suggests 
that wildland fuel reduction for reducing home losses may be 
inefficient and ineffective. Inefficient because wildland fuel 
reduction for several hundred meters or more is greater than necessary 
for reducing ignitions from flames. Ineffective because it does not 
sufficiently reduce firebrand ignitions.''
    Congress should encourage state and local governments to require 
homeowners living in the interface zone to protect their own private 
property through common- sense fire safety practices, such as the use 
of fire-resistant roofing material and the clearance of brush and other 
flammable materials near homes.

CONDUCT ECOLOGICAL ASSESSMENTS FOR ALL FUEL REDUCTION PROJECTS
    The Forest Service should be required to identify restoration 
priorities before any restoration or fuels reduction activities take 
place. This assessment should involve the public and provide a broad 
array of alternatives--not just commercial thinning--to address 
priority needs in the area. For many areas, removing roads, invasive 
species, and cows combined with prescribed burning would the best 
prescription for ecological restoration.

HAZARDOUS FUELS PROJECTS SHOULD NOT MIX WITH THE TIMBER PROGRAM
    We are concerned that fuels reduction projects are being conducted 
as part of or conjunction with timber sales. This could allow funds 
intended for fuels reduction to be used to subsidize logging on the 
National Forests. Mixing these funds, are allowing for the appearance 
that hazardous fuels reduction is being used to bolster the timber 
program could ultimately undermine public support and the program's 
effectiveness.
    Attached to this testimony is a sign on letter endorsed by over 
seventy-five national, regional and local environmental and grassroots 
forest protection groups urging environmentally responsible direction 
for the fiscal year 2001 fuels reduction funding. It represents a 
consensus from the environmental community on the types of projects we 
will support. Projects that fall outside of these guidelines are 
considered fair- game by environmentalists for protests, appeals and 
litigation.
    Congress should prohibit the use of commercial timber sales and 
stewardship contracts for hazardous fuels reduction projects. 
Commercial logging removes the most ecologically valuable, most fire-
resistant trees, while leaving behind highly flammable small trees, 
brush, and logging debris. The use of ``goods for services'' 
stewardship contracts also encourages logging larger, more fire-
resistant trees in order to make such projects attractive to timber 
purchasers. The results of such logging are to increase fire risks and 
fuel hazards, not to reduce them. The financial incentives for abusive 
logging under the guise of ``thinning'' must be eliminated.

ESTABLISH SEPARATE CONTRACTS FOR FIRE HAZARD REDUCTION PROJECTS
    All fuels reduction projects should be paid for with appropriated 
dollars. Any material of commercial value must be sold in a separate 
contract and all revenues must be returned to the Treasury. This would 
eliminate the current incentive to include larger, more valuable, fire-
resistant trees in order to make timber sales a.k.a. ``fuels reduction 
projects'' more attractive to timber companies.

COMMERCIAL LOGGING INCREASES FIRE RISK
    There is strong evidence that commercial logging increases fire 
risk. According to the Congressional Research Service, the remaining 
limbs and tree tops or slash substantially increase fuel loads on the 
ground, at least in the short term, until the slash is removed or 
disposed of through burning. The government's Interior Columbia Basin 
Management Project found that logging slash increased fire risk for up 
to thirty years. The Sierra Nevada Ecosystem Project confirmed that 
commercial logging had been the single greatest contributor to higher 
fire risks in the region stating, ``Timber harvest, through its effects 
on forest structure, local microclimate and fuel accumulation, has 
increased fire severity more than any other recent human activity.''

POST FIRE SALVAGE LOGGING SHOULD BE PROHIBITED
    There is no scientific evidence that post-fire salvage logging 
reduces the future risk or severity of wild fires. There is also 
substantial evidence that this form of logging causes significant 
environmental harm by disturbing already impacted soils and vegetation, 
removing canopy cover, removing woody debris needed to create new 
soils, harming wildlife and plants that depend on recently burned 
areas. Post-fire salvage logging should have no place in the hazardous 
fuels program.
    The 1995 report, ``Wildfire and Salvage Logging, Recommendations 
for Ecologically Sound Post-Fire Salvage Management and Other Post-Fire 
Treatments'' known as the Beschta Report found considerable evidence 
that post-fire salvage logging would likely result in persistent, 
significant adverse environmental impacts. The Beschta Report was 
prepared by an expert team of agency and university scientists and was 
endorsed the Forest Service. The report recommends the complete 
prohibition of salvage logging in severely burned areas, on erosive 
sites, on fragile soils, on steep slopes and any other sites where 
accelerated erosion is possible. The Six Rivers National Forest has 
released a Draft Environmental Impact Statement (EIS) outlining a 
proposal to salvage log in the 1999 Megram Fire area west of the 
Trinity Alps Wilderness. The proposed ``Fuels Reduction for Community 
Protection-Phase I'' project would log approximately 1,050 acres of 
ancient forests in the Mill, Horse Linto, Sharber, and Quinby Creek 
watersheds, including within unprotected roadless areas. Approximately 
0.4 miles of new temporary roads would be constructed, and another 2.65 
miles of previously used roads would be reconstructed, to facilitate 
the logging.
    Despite the name, the project has nothing to do with either fuels 
reduction or community protection. The proposed logging and road 
construction is located miles away from any community, and will more 
likely increase the risk of fire rather than decrease it. The forests 
and streams in the area provide critical refuge for a host of plants, 
fish and wildlife species, including rare orchids, salamanders, 
northern spotted owls, goshawks, fishers, steelhead, chinook, and coho 
salmon. The proposed logging and road construction threatens to 
severely impact these species, as well as domestic water supplies in 
Hoopa and other Trinity River communities. To avoid citizen challenges, 
the Six Rivers NF has announced that it is seeking an ``Emergency 
Situation'' determination that would exempt 863acres of the project 
from the appeals and litigation process. The Six Rivers NF is claiming 
that unless an emergency situation is declared, the administrative 
appeals process could prevent them logging for another year, at which 
point the burned trees would be so decayed that it would not be 
economical to log them. The Six Rivers NF is attempting to circumvent 
the ability of citizens to force the agency to obey the law, and are 
using a thinly-veiled ``emergency'' to get the cut out.
    There is no need to log within the Megram Fire area. The agency 
should instead work to restore past impacts the area from logging, 
roads, grazing, and fire suppression. The Forest Service should also 
withhold the emergency exemption for the proposed timber sale. There is 
no ``emergency'' in the area, the only reason the Six Rivers NF is 
seeking the exemption is for economic purposes, and that the proposed 
exemption would seriously undermine the public's trust in the agency.

ENVIRONMENTAL LAWS AND PUBLIC PROCESSES MUST BE FOLLOWED
    Environmental laws, the NEPA process or ESA consultation should not 
be suspended, expedited, or streamlined. According to the Congressional 
Research Service, the extent to which fuel management might reduce the 
extent, damage and control costs of wildfires has not been precisely 
quantified. Given this uncertainty and lack of scientific evidence that 
mechanical fuels reduction benefits forest ecosystems, it is necessary 
that a complete review of each project take place. Streamlining laws 
and shutting the public out of these projects will only lead to 
mistrust and a greater likelihood for public opposition, appeals, and 
litigation.

ROADLESS AREAS AND FIRE RISK
    The roadless policy contains broad exemptions for fuel reduction 
and restoration projects and the Forest Service has testified that the 
roadless policy will not prevent the agency from meeting its 
firefighting responsibility. In addition, agency research indicates 
that roadless areas are in general not the areas most at risk and 
contain few communities nearby. In addition, increased human access 
leads to more fire ignitions--88% of the fires from 1988-1997 were 
caused by humans, with only 12% caused by lightning. Scientific 
analysis of the 2000 fire season revealed that the vast majority of 
burned acres were located in previously logged and roaded areas, not in 
roadless or wilderness areas.

BIOMASS POWER GENERATION
    The American Lands Alliance views the combustion of agricultural 
and urban wastes to generate electricity as a potentially promising 
source of closed CO2-cycle power. The use of trees for this purpose, 
however, may pose many problems. We are opposed to any biomass 
proposals that involve the chipping of whole trees or the degradation 
of forest or other natural ecosystems. The growth of biomass for power 
generation should not result in harm to intact, recovering, or 
potentially recoverable natural ecosystems. Practices and outcomes that 
should not be part of the production of biomass for power generation 
include:
    1. The harvest of natural ecosystems, e.g. primary or second growth 
natural forests.
    2. The conversion of natural or recovering natural ecosystems to 
plantations, or of lands that are plausibly candidates for recovery.
    3. The use of whole trees for biomass power generation.
    4. The shortening of the rotation interval between timber harvests.
    5. The increased use of herbicides, pesticides and fertilizers to 
accelerate the growth of trees, as these chemicals are likely to 
degrade water quality and ecosystem function, and to threaten 
populations of native fish, wildlife, and plants.
    6. The use of genetically modified trees and/or invasive tree 
species. The ability of invasive species to harm natural ecosystems is 
well established. The impacts of genetically modified trees have not 
been adequately assessed, particularly in regards to their invasiveness 
potential, effects on the food chain, and possible unforeseen impacts.
    7. The degradation of soil through erosion or other processes.
    8. Negative impacts on the amount, timing, temperature, sediment 
load, and other measures of the quality of natural bodies of water. 
Some candidate tree species for biomass power generation are said to 
require intense irrigation.
                                 ______
                                 

    [The letter submitted by Mr. Holmer follows:]

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    Mr. McInnis. If you request that exhibits be entered into 
the record--one of them a half-an-inch thick--we are not 
putting that in the record, but we will put it in the file. But 
your comments are certainly noted, and if you have smaller 
documents in length, those certainly can be submitted.
    Mr. Holmer. Yes. This document is only a couple pages long, 
actually. I provided extra copies for everybody.
    Mr. McInnis. Oh, those are extra copies. You had me in fear 
we were going to use a lot of logs printing that thing up.
    Mr. Holmer. We use only 100 percent post-consumer waste 
paper.
    Mr. McInnis. That is my guy right there. We will go to Mr. 
Peterson to proceed with questions.
    Mr. Peterson. Just one quick question for Mr. Holmer. How 
would you deal with the fire threat in our forest land?
    Mr. Holmer. Well, as this letter indicates, in the urban-
wildlands interface, we are willing to support thinning, 
provided the right environmental safeguards are attached to 
that, I think that that is the most likely response, since 
reintroducing prescribed burning in some of these areas is 
going to be very difficult, if not impossible.
    But for the rest of the landscape, we do think ultimately 
restoring fire regimes, natural processes, is the way to go. 
There is a debate on whether thinning is required before you do 
burning. I think that the evidence is a little sketchy on that. 
In some places that might be necessary. But in any case, we 
think the thinning should only take place once and then 
prescribed burning should then take care of the job.
    There has been a lot of discussion about putting forests 
into a particular condition. Logging does not mimic fire in a 
lot of very important respects. Most of them are chemical. Fire 
does a lot of work in terms of recycling nutrients that does 
not happen when you log. Logging also is known to have very 
severe impacts on soils, on wildlife. Removing the forest 
canopy can actually dry out the forest and lead to an increased 
risk of fire. And historically, there has been a terrible 
problem where slash has not been cleaned up after logging 
operations and that greatly contributes to the fire risk.
    Mr. Peterson. Would you like to react to that, Mr. Carlson?
    Mr. Carlson. Yes. Thank you, Mr. Peterson. I mean, you can 
talk all you want about that thinning may introduce some stress 
on the land temporarily, but not nearly the stress you see from 
the large-scale wildfires we see today, as we found out on 
seven million acres of the West last summer. And basically, my 
personal opinion is that we have about 20 years to do this job 
if we are going to have a national forest left in the West, 
because this problem just continues to escalate.
    The word ``logging'' continues to be used to describe the 
process of thinning the forest, but that is really a 
substantial misnomer because what you are trying to do is 
create a desired forest condition and you mark the trees that 
you want to save, the healthiest, the largest, the species that 
you prefer on that site, which will get it as close to its 
natural condition before we started suppressing fires 100 years 
ago. And if you remove the excess of that, the analogy, really, 
that logging is more similar to when you raise your radishes in 
your garden. I mean, you always plant more seeds because you 
know they are not all going to come up. When they do come up, 
you want to remove some of those so that the others that are 
left can have more nutrients, more sunlight, more water and 
grow to be a substantial product. That is what this process 
does, rather than the traditional logging.
    Mr. Peterson. If Mr. KenCairn could go a little further, 
you made a comment toward bringing the--I am reaching in my 
mind what you were talking about--
    Mr. McInnis. He spoke about bringing the study of it out to 
the rural areas.
    Mr. Peterson. Yes, and not having this done in the research 
universities. Could you expand on that just a little more?
    Mr. KenCairn. Yes. In the project that I am working on, my 
organization is actually currently sponsored by Northern 
Arizona University and I have worked with the lab for now 
almost 8 years, as well. And so the project that we are doing, 
I think it is an example of what I am trying to illustrate.
    We have connections with the School of Engineering, the 
School of Business, and the School of Forestry at NAU and the 
ASU School of Architecture. However, the research that we are 
doing is really out on the ground, and when we establish the 
manufacturing enterprise that will actually be doing product 
development and testing, it will be in the community. It will 
provide jobs in that community and most of the innovation will 
be directly witnessed by the people and simulated by them. If 
that were taking place in Flagstaff, 50 miles from the Navajo 
nation, it would be like worlds away.
    And so what we are encouraging is that we actually move the 
research and development sites into the communities themselves, 
continue to have very close linkages with the lab and other 
academic institutions, but have that innovation going on 
directly located near the places where we are going to put this 
into business.
    Mr. Peterson. Thank you. Is my time up?
    Mr. McInnis. Go ahead, Mr. Peterson.
    Mr. Peterson. Megan Smith, the Department of Energy's 
Natural Renewable Energy Laboratory located in Colorado has 
been doing research in the area of biomass ethanol since the 
oil embargoes of the 1970's. Can you tell us where that 
research has led us?
    Ms. Smith. Yes. Actually, because of the innovative 
technologies, there have been incremental improvements in that 
area. They started out making biomass ethanol about $4 a gallon 
and today it is down to about $1.20. Industry wants to drive 
that down further so that within five to 7 years, it could be 
competitive with gasoline. Therefore, you could take biomass 
ethanol off of the ethanol subsidy that many in Congress are 
concerned about. Thank you.
    Mr. Peterson. What will it take to triple the use of 
biomass by 2010, as has been suggested, and how important would 
supplies from the Federal lands be in helping to achieve that 
goal?
    Ms. Smith. It is going to take a lot of Congressional 
support. It is going to take appropriations for research, 
development, and deployment. It is going to take the tax 
incentives that we have talked about for the biomass tax credit 
and other things that are contained in my testimony.
    I am sorry, the second part of your question?
    Mr. Peterson. Is it important that Federal land be 
available?
    Ms. Smith. I believe so. Certainly, the private is going to 
be limited, and for long-term feedstock contracts, which are 
really necessary to get these biomass power and ethanol and 
chemical plants off the ground, we are going to need those 
long-term contracts, because when you get into the financial 
community, they want to know that you have these long-term 
contracts in place.
    Mr. Peterson. Thank you, and I thank the Chairman for his 
patience.
    Mr. McInnis. I might add, Mr. Peterson, we have got to 
include Federal lands out in the West because that is about all 
we have. I mean, we have a lot of them, and for us to receive a 
benefit, regardless of the fire plan, we need to have it in the 
West, as well.
    Mr. Otter?
    Mr. Otter. Thank you, Mr. Chairman. It seems to me that 
everybody here thus far today has been dividing up the money we 
have not gotten yet. But we are in Washington, D.C., so I 
suppose that is part of the options as that goes on here.
    Let me just give you a few figures. In Idaho, we have got 
21.5 million acres of ground that is called Federal ground and 
we also have quite a little bit, in other words, another 14 
million acres of BLM land. So roughly 65 percent of the State's 
land mass is property, is ground that basically is controlled 
by somebody other than those of us in the State.
    However, in its benevolence, when we became the 43rd star 
in that American flag, the Federal Government gave us two 
sections out of every township, Section 16 and 36 out of every 
township, and the result from that is supposed to go into our 
education fund. Interestingly enough, a lot of that ground for 
our endowment of education is now locked up and worthless 
because there were not many roads built across that Federal 
ground that surrounds our sections. So we have lost the 
possibility or will lose the possibility of being able to 
manage those grounds to maximize the return to our endowment 
funds for our children's education.
    Now, quite frankly, everybody has got something to do with 
those Federal grounds in the State of Idaho, and so do we. But 
the most important thing to us is that revenue stream. Clearing 
a half a million acres of Federal ground in Idaho right today 
means $17.3 million. That is 80 cents an acre. However, 
Potlatch and Boise Cascade and Plum Creek and all of these free 
enterprises, these terrible free enterprise companies, pay us 
an average of $8.82 into our local tax base.
    Now, members of the panel and Mr. Chairman, I quite frankly 
am at the point that everybody has got some more things to do 
with these lands than I do. I am just saying, if everybody else 
that wants to do something with these lands will pay their tax 
bill, equivalent to what we make, $800 a year on a 10-year 
average off of our State lands, $8.82 average off of our 
private grounds, we will bring the Federal Government's tax 
bill and all the rest of the States paying to the State of 
Idaho paying for the land mass within our State to 
$173,728,000. Quite frankly, you can do whatever you want to 
with it. But until we arrive at that point, you are chipping 
away at the local tax base.
    Now, you can make $1 million, Mr. KenCairn, you can make a 
$1 million plant, and that would be great, two or three 
megawatts, whatever it is, and add that to the grid. I think 
that would be great, and your taxes on that would be about 
$10,000 a year, roughly 1 percent of the value.
    But quite frankly, if I can get a $60 million piece of 
equipment in there to support my education system, my fire 
department, my local infrastructure, my town that is there, I 
would rather have the $60 million mill.
    So I am kind of frustrated with not only what I hear other 
members of this Committee talking about the assets that are 
taken away from my school children in Idaho, that have shut 
down 44 lumber mills in the last administration, that have 
continued to take more and more acreage out of production and, 
therefore, the only monies we used to get was when they cut a 
log off the ground. We are losing. Now, we are really starting 
to lose some stuff that ought to be important to everybody 
else.
    The Clearwater elk herd was the most famous gene pool in 
the Western United States, in fact, probably in the contiguous 
48, and that was because we produced 28 calves per every 100 
cows of calf-bearing age. Today, we are down to three calves 
per 100 cows. Reason? Several. Wolves, number one, but the 
biggest part is our loss of habitat. And every time you talk 
about this ground out West, you always talk about how crowded 
the floor is and stuff like that. Quite frankly, that is our 
problem. Our problem is that we have got way too many great big 
trees on just a few acres, and so we do have a canopy that 
closes off the sunlight efficiency to the ground for the browse 
for the elk, or certainly at least the habitat. And heaven 
forbid we should cut a log off that and get $320 a thousand 
foot, which returns some money to our school children, returns 
some money to our local fire department and police department.
    So it is quite frustrating for me, and I am sure it is for 
other members of our Western group, to sit up here and listen 
to how everybody has got something planned while my tax base 
continues to drop and go away and my poverty levels continue to 
increase. Everybody seems concerned about the poverty except 
the poverty in Idaho, and it just keeps growing. Every time you 
close down a mill, another little town dies or tries to die.
    I guess I really do not have a question, but what I would 
like you to do is while you are putting stuff in our record, 
put what I just said in your record, and when you take that 
back, put that into your scheme of things on what to do with 
1,222,000 people and their livelihood in the State of Idaho. 
Thank you, Mr. Chairman.
    Mr. Holmer. May I comment, please?
    Mr. Peterson. [Presiding.] Briefly. You do not get as much 
time as he did. You can get 5 minutes.
    Mr. Holmer. Regarding roadless areas, there are some broad 
exemptions in the roadless plan, both to allow for road 
construction and to access inholdings. The agency does retain 
discretion on how the actual route would be planned to do that. 
And there is also discretion for the agency to do thinning in 
roadless areas. We were not happy about that exemption, but it 
is in there. They can even build roads if they feel that public 
health and safety are at risk. So we feel that the roadless 
plan is pretty wide open in terms of being able to take care of 
things that need to be taken care of, and which is something 
that is under debate.
    In terms of the citizens of Idaho, the environmental 
community would strongly support an expanded restoration 
program for the forests in Idaho. We feel that there is 
extensive work that could be done fixing roads, for example. 
There is huge problems with weeds and invasive species. And so 
when we look at the landscape, we see a lot of work that could 
be done out there, and rather than shifting money into a 
further expansion of mechanical fuels treatment, we do see 
alternatives out there that could create jobs and improve the 
landscape.
    So we are cognizant of these issues and are trying to do 
our best to develop an ecologically sound restoration program 
that the scientific community, the worker outfits, like Bradis 
Wood, can support these things, and so I think that there are 
people seriously looking at these issues and trying to work on 
it.
    Mr. Peterson. Would anyone else like to make a comment.
    Mr. Carlson. I would if I could, please.
    Mr. Peterson. Mr. Carlson, please proceed.
    Mr. Carlson. The program that I described, Mr. Otter, 
would, over time, probably reopen those 34 sawmills that you 
are talking about. They would do it with much smaller logs in 
recognition that the world has changed out there. We are not 
going after the big logs anymore. Those trees are going to be 
left standing. It would thin the forests over time. At the rate 
that I was talking about, a 20-year program, 21.5 million 
acres, we would be thinning about a million acres a year in 
Idaho. I would expect those calf counts to go back up as you 
open the forests back up and the grass grows again.
    We thinned about a million acres using these techniques in 
Northern California over the last 15 years and the results are 
basically spectacular, and you ought to all come and see them 
because we are encompassing exactly the same things that you 
talked about. The restrictions become greater all the time and 
the Forest Service is basically a non-participant in that 
program now, but the private landowners have continued to 
participate in it, and their lands, quite honestly, are in far 
superior shape to the Federal lands, and I know they are in 
Idaho, as well.
    Mr. Peterson. Yes, Brett?
    Mr. KenCairn. Mr. Chair, I deeply respect your frustration. 
I work in a community that has 50 percent unemployment and 50 
percent poverty. I have worked in the Northwest in communities 
that had comparable numbers. I have been in the midst of the 
conflicts directly between environmentalists and loggers. I am 
intimately familiar with this.
    I am also intimately familiar with the fact that there is a 
substantial amount of the public that no longer trusts 
commercial motives on public lands. It has been my sense and my 
experience as a community development specialist that our best 
hope is to create smaller-scale, ecologically-scaled, 
community-scaled enterprises and a vaster network of them that 
may, in fact, distribute those benefits, not that we are trying 
to create one boutique effort in one community, but that we are 
actually trying to create a network of such enterprises that 
can begin to demonstrate to the American public that we can 
have responsible levels of utilization that are ecologically 
and community scaled.
    Mr. Peterson. Does anybody else have a comment? Take a 
whack at it.
    Ms. Smith. Sure.
    Mr. Peterson. Go on, take your best shot.
    [Laughter.]
    Ms. Smith. ABA supports what Brett KenCairn's group is 
doing with the smaller scale, and I think that is great, but we 
cannot afford to do that because economies of scale a lot of 
times are that the smaller entrepreneur type of projects in 
small communities, they cannot even afford a small power plant. 
Ethanol plants at that scale are very difficult.
    So I kind of see both working at the same time. Where they 
can do it at a smaller scale, that is great. Where there is 
public support and local support for the larger projects, I 
think those should be carried out, as well.
    Mr. Peterson. Does the gentlelady from Minnesota have any 
questions?
    Mrs. McCollum. No.
    Mr. Peterson. One final question. Do you agree that the 
mechanical fuels reduction treatments and commercial thinnings 
will lack environmental safeguards and put national forests at 
risk?
    Mr. KenCairn. I believe our experience is very varied on 
this topic. I can tell you, as a member of a community that is 
in the midst of one of the most highly researched and publicly 
watched efforts at forest restoration, that I have watched as 
the best science has attempted to implement forest restoration 
treatments and been surprised themselves at their own results.
    So I think that we can do mechanical thinning that is 
ecologically compatible and responsible. However, I do not 
think it is as easy as some people have portrayed, and I think 
that the crux of this issue is substantial monitoring, and that 
one of the things we must be doing, in fact, is increasing the 
agency's budgets in monitoring and increasing the involvement 
of all parties in that monitoring so that we can be certain 
that those treatments are responsible.
    Mr. Peterson. I would like to thank the panelists. I hope 
this hearing can be the starting point for this Subcommittee to 
work with the Forest Service, the panelists, and others to 
develop any legislation that we may need to help achieve the 
dual goals of reducing hazardous forest fuels and to make such 
actions affordable for the taxpayers. Contributing to energy 
and other economic uses while reducing fire risk is a win-win 
situation. I look forward to working with my colleagues toward 
this end and I again would like to thank all the panelists for 
their time today and the Committee for its participation.
    This hearing is adjourned.
    [Whereupon, at 4:37 p.m., the Subcommittee was adjourned.]
    [A statement submitted for the record by Craig Thomas, Conservation 
Director, The Sierra Nevada Forest Protection Campaign, follows:]

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