[Senate Hearing 107-838]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 107-838
 
        COMMUNITY-BASED FOREST AND PUBLIC LANDS RESTORATION ACT
=======================================================================

                                HEARING

                               before the

                SUBCOMMITTEE ON PUBLIC LANDS AND FORESTS

                                 of the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                                   on

                                S. 2672

  TO PROVIDE OPPORTUNITIES FOR COLLABORATIVE RESTORATION PROJECTS ON 
  NATIONAL FOREST SYSTEM AND OTHER PUBLIC DOMAIN LANDS, AND FOR OTHER 
                                PURPOSES

                               __________

                             JULY 25, 2002







                       Printed for the use of the
               Committee on Energy and Natural Resources

                                     ______

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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman
DANIEL K. AKAKA, Hawaii              FRANK H. MURKOWSKI, Alaska
BYRON L. DORGAN, North Dakota        PETE V. DOMENICI, New Mexico
BOB GRAHAM, Florida                  DON NICKLES, Oklahoma
RON WYDEN, Oregon                    LARRY E. CRAIG, Idaho
TIM JOHNSON, South Dakota            BEN NIGHTHORSE CAMPBELL, Colorado
MARY L. LANDRIEU, Louisiana          CRAIG THOMAS, Wyoming
EVAN BAYH, Indiana                   RICHARD C. SHELBY, Alabama
DIANNE FEINSTEIN, California         CONRAD BURNS, Montana
CHARLES E. SCHUMER, New York         JON KYL, Arizona
MARIA CANTWELL, Washington           CHUCK HAGEL, Nebraska
THOMAS R. CARPER, Delaware           GORDON SMITH, Oregon
                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
               Brian P. Malnak, Republican Staff Director
               James P. Beirne, Republican Chief Counsel
                                 ------                                

                Subcommittee on Public Lands and Forests

                      RON WYDEN, Oregon, Chairman
DANIEL K. AKAKA, Hawaii              LARRY E. CRAIG, Idaho
BYRON L. DORGAN, North Dakota        CONRAD BURNS, Montana
TIM JOHNSON, South Dakota            PETE V. DOMENICI, New Mexico
MARY L. LANDRIEU, Louisiana          DON NICKLES, Oklahoma
EVAN BAYH, Indiana                   GORDON SMITH, Oregon
DIANNE FEINSTEIN, California         CRAIG THOMAS, Wyoming
CHARLES E. SCHUMER, New York         JON KYL, Arizona
MARIA CANTWELL, Washington           RICHARD C. SHELBY, Alabama

  Jeff Bingaman and Frank H. Murkowski are Ex Officio Members of the 
                              Subcommittee

                         Kira Finkler, Counsel
                Frank Gladics, Professional Staff Member

















                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Bingaman, Hon. Jeff, U.S. Senator from New Mexico................     2
Craig, Hon. Larry E., U.S. Senator from Idaho....................    13
Dearstyne, Joyce, Framing Our Community, Elk City, ID............    18
Enzer, Maia, Program Director, Healthy Forests, Healthy 
  Communities Partnership, Sustainable Northwest, Portland, OR...    22
Holmer, Steve, Campaign Coordinator, American Lands Alliance.....    28
Hughes, Jim, Deputy Director, Bureau of Land Management, 
  Department of the Interior.....................................     3
Mills, Thomas J., Deputy Chief, Business Operations, Forest 
  Service, Department of Agriculture.............................     9
Schulke, Todd, Forest Policy Director, Center for Biological 
  Diversity, Pinos Altos, NM.....................................    34
Small Business Administration....................................    39
Wyden, Hon. Ron, U.S. Senator from Oregon........................     1















        COMMUNITY-BASED FOREST AND PUBLIC LANDS RESTORATION ACT

                              ----------                              


                        THURSDAY, JULY 25, 2002

                               U.S. Senate,
          Subcommittee on Public Lands and Forests,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:30 p.m., in 
room SD-366, Dirksen Senate Office Building, Hon. Ron Wyden 
presiding.

 OPENING STATEMENT OF HON. RON WYDEN, U.S. SENATOR FROM OREGON

    Senator Wyden. The subcommittee will come to order.
    Let me first apologize to all our guests. This is a 
particularly hectic week in the Senate where we are being 
pulled in a variety of different directions as we try to get a 
number of important issues resolved before the summer recess. 
So, I am going to begin this hearing and then Chairman Bingaman 
will take over for a bit, and I will return. But I want to 
apologize to all our witnesses and our guests at the outset.
    Today we are going to get testimony on a very important 
bill, S. 2672, the Community Based Forest and Public Lands 
Restoration Act. I am pleased to be a cosponsor of this 
important legislation. Chairman Bingaman, Senator Craig, and 
others have been doing, I think, very good work on an important 
issue, and I am pleased that the subcommittee is looking at 
this legislative initiative today.
    And I am also pleased to welcome Ms. Enzer from Sustainable 
Northwest which is based, of course, in Portland. In recent 
months the Subcommittee on Forest and Public Lands has 
repeatedly looked at the impact of land management on forest- 
based communities in addition to a field hearing on rural 
resource-dependent economies that was held in Redmond, Oregon.
    The subcommittee has looked at a number of issues involving 
fire prevention, logging, thinning, and old growth protection. 
Right now in Oregon the catastrophic fires have taken an 
enormous toll and are certainly an indication of the need to 
restore our forests and public lands. To date, more than 
190,000 acres of Oregon have burned, and it is my view that the 
best way to proceed to successful and meaningful forest 
restoration is to ensure that rural communities play an active 
role. S. 2672 is going to make that possible by bridging the 
gap that now exists between Federal land management agencies 
and rural communities adjacent to national forests and public 
lands.
    Certainly, there have been bitter debates in the past on 
natural resources issues that have battered rural communities, 
forests, and Federal land managements agencies alike, and it 
seems to me that with legislation like this, it is possible to 
move beyond some of the polarization, towards a more 
collaborative and community based approach.
    Many prominent Oregon individuals and organizations support 
this bill, including Governor Kitshaber, Wallowa County Board 
of Commissioners, Sustainable Northwest and other resources 
organizations.
    Let me turn to our chairman, who has done, as I say, very 
good and bipartisan work on this issue, and I thank him for his 
courtesy in terms of the scheduling this afternoon and look 
forward to seeing this bill move quickly.

 STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW MEXICO

    The Chairman. Well, thank you very much, Chairman Wyden, 
for scheduling the hearing on this bill.
    This is an important bill, in my view. It is one that we 
developed on a bipartisan basis with Senator Craig. And Kira 
Finkler deserves particular credit for her good work in 
bringing this together, and other staff for Senator Craig, as 
well.
    Today rural communities that have traditionally relied on 
neighboring forests for their economic well-being are faced 
with enormous challenges. They are faced with environmental 
issues some of which are new. They are faced with unemployment, 
with changes in forest management policies, and of course, the 
economic uncertainty that comes with being in a global economy. 
So without a committed effort to help these communities from 
the national level, I am concerned that many of them will not 
survive.
    As you know, Mr. Chairman, we have had several hearings on 
this general subject. And based on those hearings two important 
facts became clear: First, forest and adjacent communities 
depend on one another for their long-term sustainability. And 
second, the national forests and public lands are in desperate 
need of restoration to establish healthy fire-adaptive 
ecosystems and to improve water quality and quantity.
    As a result of those findings, Senator Craig and I began 
working on this legislation to integrate communities and the 
restoration efforts so that both the forests and the 
communities can survive and thrive. S. 2672 represents the 
culmination of those efforts.
    And I want to particularly thank Senator Craig for his 
willingness to work with us in drafting this bipartisan bill. 
He has been a true champion, as you have, for rural natural 
resource-dependent communities for many years on this 
committee.
    This bill is modeled in part on legislation that I 
introduced 3 years ago to establish a collaborative forest 
restoration program in New Mexico. Ultimately that was enacted, 
and it has been implemented, and the success to date has been 
impressive. Unfortunately, our restoration program in New 
Mexico is now on hold because the funding for it was recently 
frozen in order to pay for emergency fire fighting, and we are 
trying to get that sorted out here in Congress.
    But communities cannot restore our national forests and 
public lands by themselves. The Federal Government is an 
important partner in the effort, and this legislation, S. 2672, 
provides much needed new authority and programs to improve that 
partnership between the Federal agencies and the communities in 
this effort to restore the forests.
    So, I look forward to the witnesses, to hearing from the 
witnesses, and again, I thank you for convening the hearing.
    Senator Wyden. Very good.
    Let us hear now from Jim Hughes, Deputy Director of the 
Bureau of Land Management and Mr. Tom Mills, Deputy Chief for 
Business Operations with the Forest Service.
    Gentlemen, welcome. We will make your prepared statements a 
part of the record, and if you could take 5 minutes or so and 
summarize your major concerns, that would be great.
    Mr. Mills. Okay. Do you want to go?
    Mr. Hughes. Okay.

   STATEMENT OF JIM HUGHES, DEPUTY DIRECTOR, BUREAU OF LAND 
             MANAGEMENT, DEPARTMENT OF THE INTERIOR

    Mr. Hughes. Mr. Chairman and members of the committee, I am 
Jim Hughes, Deputy Director of the Bureau of Land Management at 
the U.S. Department of the Interior.
    I thank you for the opportunity to provide the Department's 
views on S. 2672, The Community-Based Forest and Public Lands 
Restoration Act. Let me begin by stating that the Department 
supports efforts to provide additional tools to help restore 
forests and rangelands, and we appreciate your efforts in this 
regard.
    However, while we support a collaborative approach to 
forest and rangeland restoration efforts, we have serious 
concerns with the possible unintended impacts of this 
legislation should it become law. We would like to work with 
the committee to address these concerns.
    And at this point I would like to say: This bill has been 
looked at the highest levels of the Department, including the 
Secretary, Secretary Norton, Assistant Secretary Rebecca 
Watson, and the Director of the Bureau of Land Management, 
Kathleen Clark. And we have looked long and hard at this and we 
do really mean we want to work with the committee, because we 
recognize Congress's efforts and our efforts to try and come 
together and get into those forests and make them healthy and 
get them restored.
    Clearly, the resource management decisions we make can 
greatly impact local communities and the people who live in 
them. Often these impacts are especially felt by the 
communities adjacent to our Federal lands. As a result, it is 
critical that we work in partnership with the people who live 
on the private lands that border our national parks, wildlife 
refuges, and our other Federal lands.
    Secretary Norton has advanced the concept of a new era of 
conservation, a new environmentalism, that will help build a 
healthy environment, a healthier environment, create dynamic 
economies and sustainable communities. At the center of the 
Department's plan to implement this new environmentalism are 
Secretary Norton's Four C's: Communication, consultation, 
cooperation, all in the service of conservation. And I would 
like to say it fits into, I think, what you or what Chairman 
Bingaman and yourself want to see in this collaboration with 
the people out there on the ground.
    In May 2002, Secretary Norton joined with Secretary Veneman 
of the U.S. Department of Agriculture and the Western Governors 
Association to endorse a historic 10-year comprehensive 
strategy to reduce the risk of wildfire. That strategy and its 
implementation plan seek to promote community assistance, 
reduce hazardous fuels, and maintain and restore fire-adapted 
ecosystems by establishing a collaborative performance-based 
framework that calls on local agency managers to work with 
States, tribes, local governments, and citizens to carry out 
those plans.
    Thus, as we make our way through one of the worst fire 
seasons in memory, we are pleased that the bipartisan call for 
active management in forest and rangelands supports the 
direction that the department is trying to take on these 
issues.
    As I noted above, although we support the concepts and 
intentions behind this legislation, we have some concerns with 
the practical implementation of the legislation as it affects 
other forestry programs.
    I would like to say, we are looking for a toolbox that we 
can go out and address these issues out there as an agency. 
What we are looking for are additional tools, and we want to 
keep the tools we have. And I think that is where we are trying 
to mesh your ideas with ours, with some of our concerns and see 
if we can work with you to get this done.
    Our first concern with the bill is the requirement in 
section 6(a), that by the fifth year of the program, ``50 
percent of all contract dollars shall be awarded to the 
specific categories of entities listed in subparagraphs A 
through E.'' First, given the nature of the problem, we believe 
this requirement may be too prescriptive in that it mandates 
generally to whom the department shall be awarding contracts.
    Secondly, we believe the scope may be too broad by 
including, among other things, all timber salvage and sales 
contracts. The provisions would affect existing forest program, 
and that is where, you know, we want to make sure we are not 
going to end some of our programs by what we have in your 
proposed legislation.
    Section 3 of the bill also changes the Small Business 
Administration definition for small business that the 
Department has traditionally employed. This may have the 
additional unintended consequences of excluding legitimate 
small businesses from participation in the work described in 
the legislation while further curtailing that flexibility that 
we are seeking out there.
    We do have some concerns with the monitoring section. The 
administration supports monitoring as a tool to increase 
accountability, but the language provided in the bill, we 
think, may be too vague to be effective. To be specific, the 
bill requires ``multiparty monitoring, evaluation, and 
accountability process that shall include any interested 
individual or organization.''
    We have previous experience in forest management programs 
that have an interested observer component. An interested 
individual and organization can be virtually anyone whether 
they live in the immediate area in the State or back in New 
York City.
    Finally, much of the work proposed by the value-added 
centers created under section 5 of the legislation is currently 
carried out through, in some cases, through other means. For 
example, cooperative education study units at various 
universities provide education and research. The Jobs in the 
Woods Program specifically provides workforce training, and the 
Small Business Administration provides marketing and business 
support.
    We feel if the existing programs are not achieving the 
desired objectives, then we should work to modify those 
programs, do that rather than establish competing and perhaps 
duplicative new programs.
    And finally, one thing that we strongly support, and I 
think it can be tied into your bill, is the concept of 
stewardship contracting with local communities and businesses. 
As noted before, we are looking for tools to go out there and 
address issues, and stewardship contracting authority is that 
kind of tool that would allow agencies to engage non-Federal 
partners in ecosystem restoration by awarding multiyear 
performance-based contracts and to offer forest products in 
exchange for the restoration services.
    The exchange of goods and services which may be authorized 
in stewardship contracts is an innovative way to provide 
additional resources for habitat restoration on additional 
acres of land, thus making it possible to conduct habitat 
restoration work that may otherwise never be completed.
    This is, or I think this is one area where we could really 
work closely, you know. I think both the people in Congress and 
the administration are heading down the same road.
    The Forest Service has had stewardship contracting 
authority on a pilot basis since 1999 and has many success 
stories to tell. We have not had that authority in the Bureau 
of Land Management, and we strongly would support gaining that 
authority.
    Even with the enactment of stewardship contracting and 
community-based restoration programs as proposed in S. 2672, 
underlying statutory, regulatory, and administrative issues 
need to be addressed for forest management programs to be 
successful. For example, in fiscal years 2001 and 2002 nearly 
half of Forest Service mechanical thinning projects designed to 
improve forests conditions were appealed.
    At the Department, 30 percent of our timber sales are 
appealed. On average it takes nine months to process those 
appeals and it can take as much as three to four years. The 
Department is looking at this process issue.
    Senator Wyden. Mr. Hughes, I think you are considerably 
over 5 minutes.
    Mr. Hughes. Okay.
    Senator Wyden. Can we, perhaps, have you highlight the rest 
of your concerns?
    Mr. Hughes. Sure.
    Senator Wyden. Great.
    Mr. Hughes. Finally, we think Congress, itself, has 
recognized some of the problems we are facing by some recent 
action in the supplemental appropriation bill. Although we do 
not believe that such, you know, broad exemptions from 
environmental laws are appropriate solutions, we do believe 
that this dramatic action by the Congress in the supplemental 
is indicative of the problems we face in completing important 
stewardship projects in a timely manner.
    We want to work with you. The Secretary wants to work with 
you, and we look forward to doing that in the coming weeks, 
sir.
    Senator Wyden. Very good.
    [The prepared statement of Mr. Hughes follows:]
   Prepared Statement of Jim Hughes, Deputy Director, Bureau of Land 
                 Management, Department of the Interior
    Mr. Chairman and Members of the Committee, I am Jim Hughes, Deputy 
Director of the Bureau of Land Management (BLM) at the U.S. Department 
of the Interior (Department). I thank you for the opportunity to 
provide the Department's views on S. 2672, ``Community-Based Forest and 
Public Lands Restoration Act.''
    Let me begin by stating that the Department supports efforts to 
provide additional tools to help restore forests and rangelands, and we 
appreciate your efforts in this regard. However, while we support a 
collaborative approach to forest and rangeland restoration efforts, we 
have serious concerns with the possibly unintended impacts of this 
legislation, should it become law. We would like to work with the 
Committee to address these concerns.
                  collaborative approach to management
    Clearly, the resource management decisions we make can greatly 
impact local communities and the people who live in them. Often these 
impacts are especially felt by the communities adjacent to our federal 
lands. As a result, it is critical that we work in partnership with the 
people who live on the private lands that border our National Parks, 
National Wildlife Refuges, and other federal lands, and work on or have 
access to resources on those lands. In this context, the Department is 
very supportive of a collaborative approach to forest and range 
rehabilitation, and we appreciate your interest in promoting these 
projects through S. 2672.
    Secretary Norton has advanced the concept of a new era of 
conservation a ``new environmentalism''--that will help build a 
healthier environment, dynamic economies, and sustainable communities. 
At the center of the Department's plan to implement this new 
environmentalism is Secretary Norton's ``Four C's'' Communication, 
Consultation, and Cooperation, all in the service of Conservation. The 
``Four C's'' emphasizes that enduring conservation springs from 
partnerships involving the people who live on, work on, and love the 
land.
    The Department's land managing bureaus, specifically BLM, the U.S. 
Fish and Wildlife Service, the National Park Service, and the Bureau of 
Indian Affairs, are implementing this collaborative approach in their 
on-the-ground resource management decisions. We believe that the basic 
concepts embodied in this legislation have the potential to be an 
additional tool to further help us reach our resource management goals 
while supporting local economies and strengthening partnerships with 
communities throughout the West. Indeed, small businesses are the 
backbone of many rural economies. The Department feels strongly that 
improved communication and coordination is the key toward cooperative 
restoration of the lands under our jurisdiction.
    In May 2002, Secretary Norton joined with Secretary Veneman of the 
U.S. Department of Agriculture and the Western Governors Association to 
endorse an historic 10-year comprehensive strategy to reduce the risk 
of wildfires. That strategy, and its Implementation Plan (Plan), seek 
to promote community assistance, reduce hazardous fuels, and maintain 
and restore fire-adapted ecosystems by establishing a collaborative, 
performance-based framework that calls on local agency managers to work 
with states, tribes, local governments and citizens to carry out the 
plan.
    One important component of that agreement, supported by all of the 
signatories to the Implementation Plan, is active management. In this 
context, active forest and rangeland management includes thinning that 
produces commercial or pre-commercial grade products, biomass removal 
and utilization, prescribed fire and other fuels reduction tools to 
simultaneously meet long-term ecological, economic, and community 
objectives.
    Thus, as we make our way through what has become one of the worst 
fire seasons in memory, we are pleased that the bipartisan call for 
active management in forests and on rangelands supports the direction 
that the Department is taking on these issues. As I noted above, 
although we support the concepts in and intentions behind S. 2672, we 
have concerns with the practical implementation of this legislation as 
it affects other forestry programs. What follows is a brief review of 
our concerns, followed by some suggested changes that we believe will 
better enhance our resource management capabilities, particularly with 
regard to wildland fire management.
                         concerns with s. 2672
    Our first concern with the bill are the requirements at Section 
6(a) that, by the fifth year of the program, fifty percent of all 
contract dollars shall be awarded to the specific categories of 
entities listed in subparagraphs (A)-(E). First, given the nature of 
the problem, we believe this requirement is too prescriptive in that it 
mandates generally to whom the Department shall be awarding contracts. 
Second, we believe that the scope of the provision is too broad. By 
including, among other things, all timber salvage and sales contracts, 
the provision would affect existing Departmental forest management 
programs. The issue presented by this legislation is whether it 
provides an additional set of tools for forest and rangeland 
restoration, or whether it replaces existing programs.
    In this regard, the Department's agreement with the Western 
Governors' Association, the National Association of Counties, the 
National Association of State Foresters, and the Intertribal Timber 
Council, which endorsed a collaborative approach to decision-making, 
specifically states that:

        [t]he projects and activities carried out under this 
        implementation plan are in addition to other federal, state, 
        and tribal forest and rangeland management activities. 
        (Emphasis added.)

    We believe it is unintended for the authority in this legislation 
to supplant existing timber and salvage sale authority of the Bureau of 
Land Management's Public Domain and Oregon & California Land Grants 
Forest Management programs. We will work with the Committee to correct 
this oversight as this bill proceeds through the legislative process. 
If it is the intent for this program to replace or supplant existing 
authorities, we will need to carefully research the impact the 
legislation will have on income derived by Tribes, receipts provided to 
states and counties, and the abilities of already existing private 
sector companies in the diminished public lands logging industry to 
continue to participate in forestry management programs.
    For example, we are concerned that meeting the numeric targets in 
subsection (a)(2) may actually result in a concomitant reduction in 
existing timber salvage and sales operations conducted by the BLM. As 
noted above, we do not believe that this practical consequence was 
intended. Given the need to thin what the Ten-year Implementation Plan 
calls unnaturally dense, diseased, or dying forests, we must maintain 
the flexibility to efficiently implement all programs.
    Section 3 of the bill also changes the Small Business 
Administration definitions for ``small business'' that the Department 
has traditionally employed. This may have the additional unintended 
consequence of excluding legitimate small businesses from participation 
in the work described in the legislation, while further curtailing our 
flexibility.
    An additional concern focuses on the monitoring requirement in 
Section 4(c)(1) of the legislation. The Administration supports 
monitoring as a tool to increase accountability. But the language 
provided in this bill is too vague to be effective. To be specific, 
this bill requires a multi-party monitoring, evaluation, and 
accountability process that ``shall include any interested individual 
or organization.'' We have previous experience in forestry management 
programs that have an ``interested observer'' component. An interested 
individual and organization can be virtually anyone, whether they live 
in the immediate area or in New York City. This requirement would add 
an additional broad layer of review that may unnecessarily slow 
important restoration efforts and increase the cost, complexities, and 
time to complete any review. Timeliness in forest management decisions 
can be critical. We would like to work with the Committee to ensure an 
effective provision.
    Finally, much of the work proposed for the Value-Added Centers 
created under Section 5 of the legislation is currently carried out 
through other means. For example, Cooperative Education Study Units at 
various universities provide education and research; the Jobs-in-the-
Woods program specifically provides workforce training; and the Small 
Business Administration provides marketing and business support. If 
existing programs are not achieving the desired objectives, we should 
work to modify those programs rather than establish competing and, 
perhaps, duplicative new programs.
    While we believe our concerns are significant, particularly those 
with regard to Section 6, we also see an opportunity in the general 
concepts advanced by S. 2672 to provide clear authority to land 
management agencies for stewardship contracting with local communities 
and businesses. We believe that such authority would be an 
extraordinarily good fit with the objectives of the National Fire Plan.
                            necessary tools
    As I noted above, this has been a record year for severe wildfires. 
Our latest figures indicate that 102 million acres managed by the 
Department in the lower 48 states are at a high risk of catastrophic 
fire. Federal, state, local, and Tribal officials agree that the past 
century's traditional approaches to land management and treatment of 
wildland fire have resulted in unnaturally dense, diseased, or dying 
forests which have contributed to the increased severity of wildland 
fires. In response, a March 2002 study by the Western Forest Fire 
Research Center concluded that treated stands experience lower fire 
severity than untreated stands that burn under similar conditions.
    Against this backdrop, stewardship contracting authority is an 
additional tool that would allow agencies to engage non-federal 
partners in ecosystem restoration by awarding multi-year, performance-
based contracts, and to offer forest products in exchange for the 
restoration services. The exchange of goods and services which may be 
authorized in stewardship contracts is an innovative way to provide 
additional resources for habitat restoration on additional acres of 
land, thus making it possible to conduct habitat restoration work that 
may otherwise never be completed. Restoration of fire-adapted 
landscapes would occur as communities, agencies, states, tribes, and 
others collaborated to fashion a holistic management program to 
maintain healthy ecosystems. Community assistance would be promoted 
through increased, long-term economic opportunities resulting not only 
from the contracted treatments, but also from the use of biomass 
generated through the contractor's work.
    The Forest Service has had stewardship contracting authority on a 
pilot basis since 1999, and has many success stories to tell. Extending 
this authority on a permanent basis to the Department of the Interior's 
land management bureaus and to the Forest Service would improve both 
Departments' ability to coordinate with local communities in 
restoration efforts, while at the same time supporting rural economies.
    In a final note, we believe long-term commitment is an important 
part of the stewardship concept. Small, independent companies may be 
unwilling to enter into a contract that, at a maximum, lasts three 
years, because the financial risk may be too high. Therefore, we 
believe an important part of any stewardship contracting authority 
necessarily includes enough flexibility to allow agencies to enter into 
extended-year contracts. We believe that such working partnerships will 
work to increase economic stability in many rural communities.
    Even with the enactment of stewardship contracting and community-
based forest restoration programs, as proposed in S. 2672, underlying 
statutory, regulatory, and administrative issues need to be addressed 
for forestry management programs to be successful. For example, in 
Fiscal Years 2001 and 2002, nearly half of the Forest Service's 
mechanical thinning projects designed to improve forest conditions were 
appealed. All such projects for northern Idaho and Montana were 
appealed. At the Department, 30% of our timber sales are appealed. On 
average, it takes nine months to process those appeals, and it can take 
as much as three to four years.
    The Department is looking at these process issues. The Forest 
Service is looking at its processes, as well, after concluding a nine-
month review of its regulatory and administrative framework. Forest 
Service officials have estimated that ``planning and assessment consume 
40% of total direct work at the national forest level. That would 
represent an expenditure of more than $250 million per year.'' The 
benefits of these reviews and subsequent improvements can be applied to 
both stewardship contracts and community-based reform bills.
    We note as well that Congress itself has made the decision, in the 
conference document on H.R. 4775, the supplemental appropriations bill, 
that legislative action is needed to expedite agency action to restore 
healthy forests. H.R. 4775 includes language authorizing the Secretary 
of Agriculture to take actions, including timber activities, to address 
the risk of wildfire and insect infestation in portions of the Black 
Hills National Forest. Significantly, the provision recognizes the 
``extraordinary circumstances'' of the situation and, in response, 
would exempt authorized activities from all environmental laws and 
judicial review. While we do not believe that such broad exemptions 
from environmental laws are an appropriate solution, we do believe that 
this dramatic action by the Congress is indicative of the problems we 
face in completing important stewardship projects in a timely manner. 
We are willing to work with Members of Congress to ensure that our 
bureaus have the tools to carry out management activities where they 
are needed.
                               conclusion
    In conclusion, while the Department has concerns with the practical 
impacts of implementing this legislation, should it become law, we 
agree with the general goal to provide additional tools that can help 
restore forest and range health. In that regard, we stand ready to work 
with the Committee toward a mutually agreeable solution.
    Mr. Chairman, this concludes my testimony and I am pleased to 
answer any questions you or the Members of the Committee may have.

    Senator Wyden. Mr. Mills.

     STATEMENT OF THOMAS J. MILLS, DEPUTY CHIEF, BUSINESS 
     OPERATIONS, FOREST SERVICE, DEPARTMENT OF AGRICULTURE

    Mr. Mills. Mr. Chairman, and members of the subcommittee, 
first of all, I would like to apologize that our testimony 
arrived late. I really do appreciate the opportunity to be able 
to appear before the committee to comment on S. 2672 today.
    We support the intended concepts embodied in this bill, but 
we do have some serious reservations about some provisions of 
the bill as currently drafted, and would be happy for the 
opportunity to work with the committee to address those 
concerns and very much appreciate the opportunities we have had 
to work with committee staff to date.
    There is clearly a necessity to connect rural communities 
with the activities to restore and maintain healthy ecosystems 
in the national forests that surround them, and active land 
management is a component of that interaction that needs to 
take place.
    Mr. Hughes has already commented on the activity earlier 
this year with Secretary Veneman, Secretary Norton, and Western 
Governors to endorse a 10-year comprehensive strategy to reduce 
fire risks. And S. 2672 would facilitate the development of 
some important mutually respectful collaborative relationships 
with communities and other players to address the needs of that 
strategy.
    However, we do have several concerns, and I would like to 
highlight a few, and we will submit to the subcommittee a 
comprehensive list of the amendments that we would ask be 
considered.
    First of all, the Forest Service and the Bureau of Land 
Management work closely together on many, many issues. And yet 
there are a few provisions of the bill, such as some of those 
for funding of the restoration and value-added centers, which I 
think need to be revisited so that those relationships are 
accurately reflected.
    Secondly, we believe that the statute should, or the bill 
should designate the Department level as a responsible 
official, leaving the Secretary the responsibility to delegate 
authorities down or responsibilities down into the Department. 
And right now there are some regional foresters, State 
directors of Bureau of Land Management, for example, that are 
mentioned specifically in the bill.
    Thirdly, we agree with the Bureau of Land Management that 
there are some provisions of the bill that are overly 
prescriptive. One is the direction to hire additional personnel 
to work on contracting and grants and agreements. Although we 
clearly recognize that those activities need to be improved, we 
have some activities underway now, and we believe the Secretary 
should be given the latitude to pursue those goals in the most 
effective manner possible rather than prescribing hiring of 
personnel.
    Fourth, similar to the testimony that Mr. Hughes just gave, 
we are extremely concerned about the current provisions of 
section 6(a) that would limit competition for a wide range of 
activities to a specific list of entities. The combination of 
designating which activities are covered with a provision about 
which entities would count toward some percentage goal, and 
that percentage goal being a hard target written into the 
legislation, could in all likelihood create situations where 
the provisions of the bill simply could not be met and lead to 
unintended consequences. One or two large contracts to small 
businesses that are small but still larger than the entities 
listed in the current bill, for example, could preclude the 
achievement of those percentages.
    Lastly, Mr. Chairman, we would like to propose an addition 
to S. 2672, and we concur with the testimony of BLM that the 
Congress should provide both agencies with permanent 
stewardship contracting authority along the lines currently 
provided only to the Forest Service and only on a pilot basis 
in the annual appropriations laws.
    The pilot projects are testing a number of new contractual 
and financial authorities. We have some independent third party 
reviews of those pilot authorities now. We believe that they 
are demonstrating improved work efficiencies and have a 
significant potential to increase local participation, 
collaboration, and investments in land management activities to 
restore and maintain national forest lands.
    That concludes my summary, Mr. Chairman. I would be happy 
to answer any questions the committee might have.
    [The prepared statement of Mr. Mills follows:]
         Prepared Statement of Thomas J. Mills, Deputy Chief, 
                  Business Operations, Forest Service
    Mr. Chairman and members of the subcommittee, thank you for the 
opportunity to appear before you today. I am Thomas J. Mills, Deputy 
Chief, Business Operations, USDA Forest Service.
    I am pleased to appear before you today to provide the views of the 
Department of Agriculture (USDA) on S. 2672, the ``Community-Based 
Forest and Public Lands Restoration Act'' introduced by the Chairman of 
the Energy and Natural Resources Committee, Senator Bingaman, and co-
sponsored by Senator Craig, Senator Wyden and Senator Smith. While we 
do have serious reservations with the bill as drafted, USDA does 
support collaborative stewardship as envisioned under S. 2672.
    Mr. Chairman, I would like to note for the record that the 
committee staff provided the Forest Service an opportunity to review 
and comment on a draft version of this legislation several weeks ago. A 
number of these technical comments on that draft bill are reflected in 
S. 2672. The Department believes we can continue that productive 
relationship and we are committed to work with you and the staff toward 
resolving our concerns with the bill.
    S. 2672 addresses a legitimate issue: the necessity to connect with 
the small rural communities that are neighbors to national forests and 
other public lands and that are directly affected by the land 
management decisions made regarding those public lands. These 
communities are very important to our agencies. This is where our 
employees live, too. Our employees and their families are vitally 
interested in the economic and social well being of their communities.
    We have much more than a parochial interest, however. To manage 
national forests and public lands effectively, three critical 
components are necessary. When one of these components is missing, it 
becomes extremely difficult to manage forests and public lands for all 
the range of amenities that the public demands.
    First, there must be a healthy and resilient forest resource.
    Second, the communities near these resources must be healthy and 
viable, economically and socially to assist the agencies in conducting 
the day-to-day stewardship.
    Third, there must be a forest products and stewardship industry 
base to serve as the mechanism by which forest management activities 
are achieved.
    Historically the forest products industry included many small 
operators. However, over the past several decades, we have seen the 
demise of many small forest products businesses, consolidations of many 
larger forest products companies, and loss of industry capacity in many 
regions. This loss in capacity translates directly into reduced ability 
to conduct the active management necessary to restore and maintain 
healthy forest resources.
    Active land management is important to the success of the National 
Fire Plan. Hazardous fuels reduction in and around communities is 
critically important work, not just for resource protection and 
restoration but for community fire protection as well. Public lands and 
rural communities also directly benefit from watershed improvements 
that create clean water and remove invasive weeds.
    Earlier this year, Secretary Veneman and Secretary Norton joined 
with the Western Governors to endorse a 10-year comprehensive strategy 
to reduce the risk of wildfires. That strategy, and its Implementation 
Plan seek to promote community assistance, reduce fuels, and maintain 
and restore fire-adapted ecosystems by establishing a collaborative, 
performance-based framework that calls on local agency managers to work 
with states, tribes, local governments and citizens to carry out the 
plan.
    S. 2672 could facilitate the development of mutually respectful 
collaborative relationships between communities, local, state and 
federal entities, and non-profit organizations, conservation 
organizations, and other groups who are interested in restoring the 
diversity and productivity of watersheds along the lines called for in 
the Plan. We have several general concerns with the bill, which I'll 
highlight with specific examples. We will provide the Subcommittee a 
comprehensive list of amendments for its consideration.
    First, BLM and the Forest Service will work together to implement 
this bill if enacted. The two agencies work cooperatively on a range of 
activities. Our Service First initiative is an excellent example. The 
President's FY 2003 Budget included funding to complete 22 Service 
First collocations of Forest Service Bureau of Land Management (BLM) 
office by the end of 2005. I would note, however, that S. 2672 would 
require that both agencies have a role in designating and establishing 
the Restoration and Value-Added Centers, but the bill requires the 
Secretary of Agriculture to provide the annual funding to support the 
Restoration and Value-Added Centers' operating costs. Funding 
responsibility should be provided to both agencies.
    Second, authority for the programs and related activities proposed 
in the legislation should be designated at the Department level, 
leaving the Secretary to delegate responsibility as appropriate.
    The existing direction in Sec. 5 (d)(2) for Regional Foresters and 
State Bureau of Land Management Directors to issue requests for 
proposals to create Restoration and Value-Added Centers could result in 
a disjointed collection of Centers. What is needed is a cohesive 
network of centers that can better serve the intended purposes of 
providing integrated technical assistance to rural communities and 
disseminating on-the-ground ``best practices'' to other Centers and by 
extension, to other rural communities.
    Third, there are several overly prescriptive requirements contained 
in S. 2672 that should be amended to reserve administrative discretion 
for the Secretary.
    For example, Sec. 4(d) would require the Secretaries to hire 
additional outreach specialists, grants and agreements specialists and 
contract specialists to implement this bill. Such direction is 
inconsistent with the government-wide goals to improve federal 
management that are encompassed in the President's Management Agenda, 
which the Forest Service is committed to supporting.
    In that regard, the Forest Service has developed a workforce-
restructuring plan that includes significant management reforms to 
improve service to citizens and increase administrative efficiencies. 
The plan addresses: (1) reducing organizational layers, (2) reducing 
the time it takes to make decisions, (3) reducing the number of 
managers, (4) increasing supervisory span of control, and (5) ensuring 
accountability, and redirecting resources to direct service delivery 
and outreach positions.
    The Forest Service also plans to increase the use of competitive 
sourcing for agency commercial activities and performance-based service 
contracting. Such competitive sourcing initiatives could be effectively 
used to implement the provisions of this bill. If workforce 
restructuring or competitive sourcing, in the agency's view, represents 
a more efficient way to meet need for contracting, grants or agreement 
specialists, the agencies should have the discretion to pursue the 
option that would result in the improved service being provided to 
rural communities at the least cost.
    We're not waiting to improve our services to rural communities. The 
Chief of the Forest Service has recently charted a Partnership Re-
engineering Team of field and Washington Office staff that is working 
now to simplify the agency's internal partnership tools and processes. 
We expect to have revised processes in place early in 2003. A 
particular focus of that effort is going to be the administration of 
contracts, cooperative agreements, grants and other partnership 
instruments.
    Finally, we are extremely concerned with the requirements in Sec. 
6(a) that would limit competition for a wide range of activities to the 
specific categories of listed entities.
    As an example, the bill's existing mandates appear to ignore the 
Forest Service's current Memorandum of Understanding with the Small 
Business Administration (SBA) for special salvage timber sales, known 
as SSTS. Those sales are targeted for businesses with less than 25 
persons. It is also unclear how other the agency's other small business 
programs, which include both timber and procurement contracts, would be 
affected by the bill's mandates.
    In addition, Sec. 6(a) could be interpreted to apply literally to 
all contracts and agreements entered into by the agencies, not just 
those associated with the restoration activities conducted pursuant to 
the bill, which we hope is the intent. As written, the bill language 
could reach agency-wide contracts for computer equipment or other 
information technology.
    Even if the intent of the bill is to impose the limit on contracts 
and agreements for restoration projects, it is still highly 
problematic. Since the limitation is on a dollar basis, it may be 
difficult to offset 1 or 2 large contracts with entities that do not 
meet the standards with contracts with entities that do meet the bill's 
requirements. Many Western communities have few organizations that meet 
the requirements described in Sec. 6. The work of the agencies could be 
seriously impacted if there are not enough of these organizations in 
specific areas to attain the total values proscribed in the bill. 
Achieving the plan of work agreed to with Western Governors under the 
National Fire Plan would be seriously compromised.
    Mr. Chairman, we would like to propose several additions to S. 
2672.
    We concur with BLM that Congress should provide both agencies 
permanent stewardship contracting authority along the lines currently 
provided only to the Forest Service under annual appropriations law. 
The pilot projects are testing a number of new contractual and 
financial authorities that provide the Forest Service additional tools 
to achieve land management goals, including fuels reduction activities, 
that meet local and rural community needs. We believe the contractual 
and financial authorities being testing will demonstrate improved work 
efficiencies and the significant potential stewardship contracting 
holds for increased local participation, collaboration and investments 
in our land management activities.
    In closing, Mr. Chairman, the Forest Service knows we need to 
develop and maintain effective, consistent relationships with the local 
rural communities who are our neighbors just as we know there is a 
vital need to restore and maintain healthy forests. Communities are 
looking to public land management agencies to better integrate local 
concerns with the agencies' planning so that they can work 
collaboratively towards healthier ecosystems and healthier rural 
communities.
    This concludes my remarks on S. 2672. I will be happy to answer any 
questions the committee may have on this bill.

    Senator Wyden. Thank you, Mr. Mills.
    I hope that the list you are going to send us of additional 
changes you want is not too much more comprehensive because 
that looks like a lot of suggestions you already have. We are 
going to work with you on this, but it looks to me like the 
chairman and Senator Craig have a good bill, and I hope that we 
can move ahead promptly.
    And my question to you, I think, would be picking up on Mr. 
Hughes's point about the toolbox and making sure that there are 
tools. And my sense is that a better job can be done of using 
some of the programs that are out there, and part of the 
problems is that bridges are not being built to the 
environmental community, some of the opponents of the agencies 
that you two hail from, to try to bring people together and to 
try to find common ground the way the Senators are trying to do 
on this bill, and the way Senator Craig and I did on the county 
payments legislation.
    Tell me, and the one question I have--and the chairman was 
kind enough to say he would take over for a bit. Tell me what 
you are doing to reach out to some of the traditional opponents 
of your two agencies in order to try to bring people together 
so you can use the tools you have today?
    We will start with you, Mr. Hughes.
    Mr. Hughes. I think our resource advisory councils that the 
BLM has, which are made up of citizens from or that represent 
different categories of, you know, a cross-section of public 
land users, general public, elected officials, environmental 
groups, in all our States, have been instructed as one of their 
duties to reach out with the Secretaries for the Four-C thing 
in mind.
    I know Rebecca Watson, the Assistant Secretary for Land and 
Minerals, I know Kathleen Clark, and I know the Secretary has 
met with a number of groups and officials. In some cases we 
have been unsuccessful to start a good dialogue. In other 
cases, I think, like the Everglades, and the Bay Delta, and in 
some other areas, some agreements were made last year involving 
some endangered species issues in the Southwest.
    We have started to make some progress. I think it is 
obvious, and I do not think there is anybody who would disagree 
that when you go to litigation, it becomes costly. In a lot of 
ways, we are sort of spinning our wheels when we go to 
litigation and nothing, or it seems like nothing but the 
resource itself loses.
    Senator Wyden. Anything you want to add, Mr. Mills?
    Mr. Mills. Yes. I think you raise an excellent point, Mr. 
Chairman. One example of some work we have underway, in fact, 
was initiated by Senator Bingaman with this New Mexico 
Collaborative Forest Restoration Program, which certainly 
provides us an opportunity that we are taking as much advantage 
of as we can to bring multiple parties together, which includes 
some third party monitoring, as well.
    We have got some work with communities on the National Fire 
Plan. We have got numerous partnership groups that have been 
drawn together associated with individual national forests. But 
it is also true that these are issues about which reasonable 
people have quite different opinions, and getting people to the 
table to find common ground is a challenge for all of us.
    Senator Wyden. Well, there is no question about that, but 
they have got to be invited to the table and there has got to 
be an effort to try to build those kind of coalitions. And I 
look forward to making sure we get a full list of your concerns 
on this. And I will be back in a little bit, but I would like 
to see us move this bill quickly.
    Mr. Chairman, thank you for allowing me to take off a bit, 
and I will return.
    The Chairman [presiding]. Very good. Let me, before I ask 
any questions here, just see if Senator Craig wishes to make 
any opening statement. If he does, we are anxious to hear that 
at this point, and then we will go on with questions.

        STATEMENT OF HON. LARRY E. CRAIG, U.S. SENATOR 
                           FROM IDAHO

    Senator Craig. Well, Mr. Chairman, I do have an opening 
statement and let me ask unanimous consent that that full 
statement become a part of the record.
    The Chairman. It will be included.
    Senator Craig. First and foremost, I want to thank you for 
allowing us this opportunity to hear testimony on what I think 
is a very important piece of legislation.
    You are going to hear from someone from my State, Joyce 
Dearstyne, from Elk City. Joyce is out there, at the moment, 
and she is doing what many of our communities that were timber- 
dependent, and in many instances still are, in an effort to 
bootstrap themselves up in a ``Framing Our Community'' effort 
that she will speak about.
    So, I will not steal any more of her thunder, but it is so 
important that we attempt, as this legislation does, and as 
certainly was my goals in this legislation, to see if we cannot 
effectively bring together many efforts, efforts that Tom has 
just mentioned that you have going on.
    When you take a community of dependency from 10 million 
board--or 10 billion board feet to 1.5 billion board feet, you 
change the whole dynamics of an economy. And that is what 
Federal policy did in the timber-dependent communities of 
primarily the Great Basin West over the last decade. In a 
relatively short period of time, we turned the lights out in 
those communities for one reason or another. And now what we 
must do is attempt to help them.
    Collaborative programs, encouraging communities to 
cooperate, agencies to come together to pool resources to do 
the kinds of things necessary, is tremendously important, Mr. 
Chairman And if we do not get there, the dislocation that will 
continue, all in the name of one ``ism'' or another belief, 
does not serve the resource and does not serve a variety of our 
interests.
    We ought not be about pitting one group against the other. 
So, that has gone on for too long, too long and too many 
decades, and it brings us to where we are today.
    At the same time, I think we have to recognize, as we do in 
the West today, that our public lands need care. They need 
involvement. They need active management in so many ways that 
turning our back on them simply has resulted in the wildfires 
that now sweep across the West and in ways that are 
unacceptable to all of us, from the destruction of wildlife 
habitat to the phenomenal loss of a resource that, properly 
cared for, could retain its value for a variety of interests.
    So, I must tell you, Senator Bingaman, I believe a 
collaborative community-based consensus designed to improve the 
management of our public forests while helping our small rural 
resource-dependent communities has to be a high priority.
    I think it is that transitional tool that is so critical 
for all of us in many of our communities across New Mexico and 
Idaho and other States, that will always have a large stake in 
the public lands and the resources and the values those public 
lands can spread across the private landscape and the private 
resource.
    Thank you.
    [The prepared statement of Senator Craig follows:]
   Prepared Statement of Hon. Larry E. Craig, U.S. Senator From Idaho
    Mr. Chairman, thank you for scheduling this hearing. I am looking 
forward to the testimony of our witnesses this afternoon because I am 
committed to developing legislation that helps our rural communities 
and the workers that struggle to survive in those rural communities. I 
also want to welcome Joyce Dearstyne from Elk City, Idaho. Joyce and a 
group of people up there on the Nez Perce have been working on the vary 
kind of project that we hope S. 2672 will facilitate. I don't want to 
steal her thunder so I won't tell you to much about Framing Our 
Community and its efforts. Mr. Chairman many of our State's have these 
home grown efforts that show great promise, such as Framing Our 
Community, and we need to encourage these efforts.
    I think it is important to restate my goals concerning this 
legislation. First, I am concerned that many of the small resource 
dependent communities need extra assistance. I want to find ways to 
help the people in these communities to effectively compete for all 
contracts and work that are carried out by our federal land management 
agencies. Over the last decade the federal timber sale program has 
slipped from more than 10 billion board feet per year to only 1.5 
billion board feet. We cannot ignore our responsibility to help the 
communities that have been impacted by the failure of the federal 
timber sale program.
    In my estimation most of our past efforts to help the mill and 
woods workers have not been as successful as any of the architects of 
those programs had hoped. Thus, we need to continue to make efforts to 
find ways to help these workers and communities.
    Second, I believe that collaborative programs that encourage 
communication and cooperation between the agencies and the communities 
is preferable. When a small minority is willing to utilize procedural 
delay to negatively impact our ability to manage these lands, thus 
injuring the rural resource dependent communities, I think we must 
reward those who cooperate in finding ways to manage the land and to 
help these communities.
    Finally, I believe that anything this Congress does in relation to 
these communities should be additive. We cannot afford to pit one 
segment of the forest product industry against another segments of that 
industry. We should not pit small operators against large operators. We 
should not pit primary manufacturers again value-added manufacturers. 
We should not pit the alternative forest product companies against the 
traditional forest product companies. And finally, we should not pit 
companies that want to focus on providing forest management services, 
such as watershed assessments, stream restoration work or monitoring 
activities, against those companies that are needed to remove fiber 
from these forests to reduce the risk and intensity of catastrophic 
fires.
    Having read the testimony of the agencies and some of the 
witnesses, including the testimony of the Small Business Timber 
Council, I am convinced that this legislation must be modified to 
address the concerns that we have heard. First, it is impossible to 
undertake value-added manufacturing of wood products without a viable 
primary forest product manufacturing base. Given the current situation 
in Arizona and New Mexico and in most States with federal forests, I 
believe that we must find ways to preserve the remaining industrial 
infrastructure in these rural communities. Second, we are going to have 
to find a way to ensure that the existing Small Business Timber Sale 
Set-Aside program is maintained and that our legislation does not 
conflict with this important program.
    I look forward to working with you, as well as all those who have 
testified, to refine this legislation. Like Senator Bingaman, I believe 
a collaborative, community-based consensus designed to improve the 
management of our public forests, while helping the small rural 
resource dependent communities, must be our highest priority.

    The Chairman. Well, thank you very much.
    Let me just ask a few questions here.
    Mr. Mills, this bill, S. 2672, in section 5 of the bill, it 
requires agencies to provide cost share grants to create 
restoration and value added centers, to provide technical 
assistance to entrepreneurs and small business in marketing and 
workforce training and technology development for conversation-
based businesses.
    Now, we put this together based on our conversations with 
the Forest Service. And currently, it requires that the centers 
be ``easily accessible to rural communities adjacent to 
national forests or public lands.'' One of our witnesses on the 
next panel in her testimony states that, ``The centers should 
be located in rural communities not just accessible to those 
communities.''
    Do you agree with that, or do you think we should leave it 
the way it is?
    Mr. Mills. Well, I think I would say, Senator, that given 
the number of rural communities, it is hard or it would be hard 
to have the centers in each and every one of those, and so 
there are going to be some rural communities that do not have a 
center in them. And so I would expect that as long as they were 
fully accessible to all of the communities that needed their 
services, we would be more likely to be able to deliver their 
services efficiently than trying to identify all the rural 
communities associated with national forests and placing a 
center in them.
    The Chairman. Let me ask also about section 6 of the bill, 
which provides a local preference for contracting. I think you 
have indicated opposition to that. The purpose of this, 
obviously, is to try to ensure that these entrepreneurs, 
businesses in these local communities have reasonable access to 
these contracts.
    Do you think that provision, that local preference 
provision is objectionable? How do we meet this objective if we 
do not have something like that in the bill?
    Mr. Mills. No, sir, I do not think the intent is 
objectionable at all, and we are certainly supportive of the 
need for that capacity to exist and the mutually dependent 
relationship between those communities and healthy national 
forests.
    Our concerns deal with the current drafting of those 
provisions. And, as I tried to summarize earlier, we are 
concerned that the list of activities that would be counted 
towards these percentage goals in combination with restriction 
of entities that would count toward the goals--for example, the 
micro-enterprises, we end up with definitions quite, quite a 
bit smaller than small business definitions, for example. Those 
two provisions in combination with percentages that are listed 
as mandates rather than goals to achieve could lead to 
unachievable goals.
    And so although we concur very much with the intent, we are 
a little concerned about that the combination of those 
provisions could lead to consequences that were not intended by 
the drafters, nor achievable by us.
    The Chairman. Well, I do think we need to visit with you on 
your specific problems with the language. We tried to draft it 
in a way that gives an option as to how the goals are met, and 
one of the options is that the entity will hire and train local 
people to compete--or to complete the service or timber sale 
contract. That seemed to us to be pretty broad.
    Mr. Mills. Well, again, it also lists the kinds of projects 
that would count towards these percentages. We assume that what 
is meant are any projects that are associated with the 
achievement of the restoration of degraded lands which are 
listed as the purposes of the bill, so that making sure that 
the list in section A is consistent with that interpretation, 
and again, the size of the enterprises is one of the issues 
that we have some concern about. It is not that that is not a 
desirable goal, but whether it is achieved----
    The Chairman. Why do not we regroup with you on that and 
see if we cannot work out your concerns?
    Mr. Mills. Yes, sir.
    The Chairman. Let me ask Jim Hughes one question here.
    You expressed concern about the provisions in S. 2672 that 
require multiparty monitoring, indicating that was difficult. 
My understanding is that the stewardship contracting authority 
that you have requested also requires multiparty monitoring.
    I am confused about that. How do you accept it in that 
context but not in the one we are proposing here?
    Mr. Hughes. No, I think the issue is, again, is, ``Do you 
have to have someone from what was''--the issue that has been 
raised to us is: Do you have to have someone or allow someone 
from back East to monitor an activity in Catryn County or in 
Reba County? Or can you, or is it sufficient to have those 
people from your own State, from northern New Mexico or from 
southwestern New Mexico? I think that is the issue that has 
been raised to us. It again is how prescriptive this is.
    The Chairman. So you do not mind the idea of multiparty 
monitoring----
    Mr. Hughes. No.
    The Chairman [continuing]. But you just think that----
    Mr. Hughes. Right.
    The Chairman. And the way that it is currently required and 
implemented with regard to this stewardship contracting 
authority, you think that is acceptable?
    Mr. Hughes. We do not have that authority in the BLM, and 
this is a concern that has been raised.
    The Chairman. I thought you were getting it each year in 
the appropriations bill.
    Mr. Hughes. No. No, that is limited to the Forest Service, 
sir.
    The Chairman. Oh, just the Forest Service. Okay.
    All right. Let me ask if Mr. Mills has any comment about 
this multiparty monitoring issue and how it works in the case 
of stewardship contracting.
    Mr. Mills. Well, if I could speak to--and thank you for 
that opportunity. If I could speak to the provisions of the 
bill as it is currently drafted, we certainly agree with 
multiparty monitoring, and we know we need to move more 
aggressively in that direction and provide some real good 
opportunities for a number of views to be brought together.
    The two particular provisions as currently stated here 
says, ``The Secretary shall include any interested individual 
or organization.'' And any interested individual could be a 
whole, whole bunch, and it could easily get to the point where 
it is unmanageable.
    The second one, it talks about monitoring at the project 
scale rather than bundles of projects or what has happened on a 
broader watershed, ecosystem basis. And monitoring project by 
project,for as many projects as I am sure we both want to 
achieve, could lead to an extremely expensive monitoring 
program.
    The Chairman. We took the language that we included in this 
bill out of the language that currently exists in law where it 
talks also about any interested groups or individuals with 
regard to this multiparty monitoring on stewardship 
contracting.
    If you could, look at it. I mean, you may still have a 
valid concern, but I guess we were trying to have some 
consistency, and we would be anxious if you would look at that 
and tell us how to achieve that.
    Mr. Mills. We would be happy to.
    The Chairman. Well, I thank you both. I think this has been 
useful testimony, and we appreciate it very much.
    We will go ahead to the second panel, second panel of 
witnesses.
    Mr. Mills. Thank you, sir.
    Mr. Hughes. Thank you.
    The Chairman. I think the second panel was introduced 
earlier by Chairman Wyden, but let me introduce them again: 
Joyce Dearstyne who is with Framing Our Community in Elk City, 
Idaho; Steve Holmer who is the campaign coordinator with The 
American Lands Alliance here in Washington; and Maia Enzer who 
is the program director with Healthy Forest, Healthy 
Communities Partnership in the Sustainable Northwest in 
Portland. Thank you all for being here. Appreciate it very 
much.
    Ms. Dearstyne, is that the right pronunciation?
    Ms. Dearstyne. Yes, it is.
    The Chairman. Why don't you go ahead and start? Again, we 
will include all of your entire statements in the record. If 
you could take 5 or 6 minutes each and summarize the main 
points you think we need to be aware of, that would be greatly 
appreciated.

STATEMENT OF JOYCE DEARSTYNE, FRAMING OUR COMMUNITY, ELK CITY, 
                               ID

    Ms. Dearstyne. Okay. Good afternoon, Mr. Chairman and 
members of the subcommittee.
    My name is Joyce Dearstyne, and I am the program director 
of a small nonprofit organization located in the middle of the 
Nez Perce National Forest in North-Central Idaho. I live in a 
county that is larger than the State of Connecticut, 83 percent 
of which is Federal or State land and is directly affected by 
your decisions in Washington, D.C.
    Idaho County, my county, has been identified by the Bureau 
of Economics as a low income and high unemployment area. Fifty 
percent of our children live in poverty, and 91 percent of our 
local children were enrolled in the free and reduced lunch 
program by the end of this past year.
    Our high school children must board out with friends, 
family, and even strangers to complete their secondary 
education. This does not work for every child or every family, 
and some just get left by the wayside with few options for 
their future.
    In 1999, a small group of dedicated people decided to 
become proactive and formed Framing Our Community. Since that 
time we have conducted an open, inclusive community development 
process. And in the summer of 2001, we conducted a feasibility 
study that laid out a plan for an incubation company that would 
create jobs which provided year-round employment, paid a living 
wage, offered benefits and health insurance, would educate 
small business owners on running a successful business, would 
offer a safe working environment where accidents were not 
likely to occur, would support existing local businesses, and 
would improve the health and quality of the forest by utilizing 
small diameter, standing dead, and diseased timber from the 
local forest.
    The incubator's slogan is, ``Developing products that last 
longer than it took the tree to grow while improving the health 
of the rural community.''
    During this process, Framing Our Community has found that 
there is a huge void in the funding arena for projects like 
ours. Even though our products are natural resource-based, we 
are not covered under the Farm Bill, nor do we fit the intent 
of the Forest Service Rural Communities Assistance Program. 
Funding for our work, thus far, has come from private 
foundations and companies with roots in the Northwest or who 
have concerns for the Northwest and the State of Idaho.
    Among these are the Weyerhaeuser Family Foundation, 
Sustainable Northwest, Avista Corporation, Wells Fargo Bank, 
and the Rural Community Block Grant program initiated by 
Governor Kempthorne. The only Federal funding we fit the intent 
of is the National Fire Plan Economic Action Program.
    Needless to say, we are very excited by the prospect of the 
Community Based Forest and Public Lands Restoration Act. It is 
the first Federal action that truly addresses the depressed 
economy of the rural timber-based communities who derive their 
income from the national forests and public lands that surround 
them.
    We do have a few concerns in relation to the definitions, 
time line, and wording of this bill. For example, in section 3-
10 the definition of ``rural'' or ``rural area'' is defined as 
not greater than 50,000 and does not even come close to our 
definition of rural. We would like an opportunity to work with 
you on this definition because our town now has a population of 
400 and our county has a population of 15,000.
    Section 4-c(1), Monitoring, should include economic benefit 
so that it would read, ``Assessing the cumulative 
accomplishments, economic benefits, or adverse impacts of 
projects.'' We are results based.
    Section 5(a), Establishments, we would like you to include 
value-added product development because secondary products have 
a high rate of return and will have a greater impact on rural 
communities.
    Section 5(d), Locations, every restoration and value-added 
center needs to be surrounded by national forest or other 
public lands; and where that is not possible, easily accessible 
to the rural communities. The communities that have been 
impacted the most by what has occurred over the last decade are 
those that are in the national forests.
    Section 4(d), subsection 2, delineates that the Regional 
Forester and State Bureau of Land Management Director will 
issue requests for proposals, but no time line has been set for 
when this program should be up and running. We would hate to 
see the potential good here get bogged down by an uncertain 
time line.
    It is also essential that these centers be given the 
authority to utilize funds provided for infrastructure, 
capacity building, product development, technical and financial 
assistance directly to the small or micro enterprises.
    I could not help but listen to Mr. Hughes state that money 
has been given for research to universities. That does need to 
be done, but none of that research reaches the ground. They 
have no mechanism to deliver it. Business incubators like ours 
could take their ideas that are developed and actually put them 
on the ground.
    The residents of Elk City trust that you will see this bill 
through the appropriations process, and would like to thank you 
for giving Elk City and other small rural communities an 
opportunity to provide comments.
    S. 2672 provides the means for a collaborative restoration 
process that includes those rural communities that live, work, 
and play within the boundaries of our public lands.
    Given the tools and opportunity, organizations like Framing 
Our Community can help build viable conservation-based 
economies across the West.
    Thank you.
    [The prepared statement of Ms. Dearstyne follows:]
       Prepared Statement of Joyce Dearstyne, Program Director, 
                  Framing our Community, Elk City, ID
    Good afternoon. My name is Joyce Dearstyne and I'm the Program 
Director of Framing our Community, a small nonprofit organization 
located in the middle of the Nez Perce National Forest. I live in a 
county that is larger than the state of Connecticut. Eighty three 
percent of the county is federal or state land and is directly affected 
by your decisions here in Washington D.C.
    Idaho County has been identified as the Bureau of Economics (REIS) 
as a low income and high unemployment area. Fifty percent of our 
children live in poverty and ninety-one percent of our Elk City 
children were enrolled in the free and reduced lunch program by the end 
of the past school year.
    Prior to experiencing double-digit unemployment rates, we boasted a 
population of 1,500 people, most of whom have left to find jobs. Our 
population has been reduced to a mere 400 residents. Our high school 
children must board with friends, family and even strangers to complete 
their secondary education. This doesn't work for every child or family 
and some get left by the wayside with few options for their future.
    In 1999 a small group of dedicated people decided to become 
proactive and pull themselves up by the bootstraps. Since that time we 
have conducted an open, inclusive community development process that 
asked our community members what type of economic development they 
wanted, assessed the raw materials that were accessible and what 
infrastructure was in place.
    The method of change selected was a Small Timber Business 
Incubator. In the summer of last year, FOC hired Harry Watt of Wood 
Management Systems, Inc. to conduct a Small Diameter, Timber Frame, and 
Secondary Products Business Incubator Feasibility Study. (a copy of 
this study is available).
    This study identified:

   Available timber resources
   Markets
   Transportation strategy and cost
   Product Development
   Employee skills and development
   Facility layout and costs

    This study laid out a plan for an incubation company that would:

   Create jobs which provide year round employment that pay a 
        living wage and offer benefits and health insurance
   Educate small business owners on running a successful 
        business
   Offer a safe working environment where accidents are not 
        likely to occur
   Support existing local businesses, and
   Improve the health and quality of the forest by utilizing 
        small diameter, standing dead and diseased timber from the 
        local forest

    The Incubator's slogan is ``Developing Products that Last Longer 
than it Took the Tree to Grow While Improving the Health of the Rural 
Community.''
    The next steps were to define our goal and then produce a five-year 
business plan. Our goal is to create a business incubator that fosters 
the development of value-added wood products and other inter-related 
businesses and can create a significant economic benefit for the 
region.
    To meet this goal we needed to:

          1. Build a modern production facility
          2. Offer tenants a low initial rental fee
          3. Provide equipment for shared tenant use

    We also needed to offer:

          1. Business management and development training
          2. Marketing training
          3. Connections to brokers and markets
          4. In-house bookkeeping and marketing services for those who 
        did not wish to do their own
          5. Advertising on an incubator web site
          6. In-house e-commerce for immediate payment of orders

    Next we worked on an in-depth five-year business plan that 
outlined:

          1. Business fundamentals and development
          2. Startup financing
          3. Markets
          4. Customer profiles
          5. Competitor and industry reviews
          6. Sales and distribution
          7. Pro-forma balance sheets and income statements
          8. A contingency plan
          9. Building and equipment expenses, and
          10. Needed business services and training

    During this process, FOC has found that there is a huge void in the 
funding arena for projects like ours. Even though our products are 
natural resource based, we are not covered under the Farm Bill nor do 
we fit the intent of the Forest Service Rural Community Assistance 
Program. The funding for our work thus far has come from Private 
Foundations and companies with roots in the Northwest or have concern 
for the Northwest and the state of Idaho. Among these are the 
Weyerhaeuser Family Foundation, Sustainable Northwest, the Titcombe and 
Summit Foundations, Avista Corporation, Wells Fargo Bank, Bennet Lumber 
Products and the Rural community Block Grant program initiated by 
Governor Kempthorne. The only federal funding we fit the intent of is 
the National Fire Plan Economic Action Program.
    Support comes in many forms other than financial, like the sharing 
of lessons learned from community to community and organization to 
organization, and increased capacity to make us effective in our 
efforts. Wallowa Resources of Enterprise, OR and The Watershed Research 
and Training Center of Hayfork, CA have both come to Elk City and 
shared their successes and failures. This sharing of lessons learned 
has saved us much time and many mistakes and has moved us forward at an 
unprecedented speed. Thank goodness, for time to save our forest and 
community is short.
    Needless to say, we are very excited by the prospect of the 
``Community-Based Forest and Public Lands Restoration Act'' passing. It 
is the first federal action that truly addresses the depressed timber 
based economy of rural communities who derive their income from the 
national forests and public lands that surround them.
    We do have a few concerns relation to the definitions, timeline, 
and wording of this bill. For example in Section 3-10, the definition 
of rural or rural area is defined as less than 50,000 and does not meet 
our needs or come even close to our definition of rural. We would like 
the opportunity to work with you on this definition, because our town 
has a population of 400 in our county has a population of 15,500, 
therefore anything over 10,000 is an urban area to us. In fact, the 
closest urban area to us is Lewiston, Idaho, which has a population of 
35,000 and is a two and one-half hour drive for us in good weather.
    In Sec. 4c(1) Monitoring should include Economic Benefit, so it 
would read, ``assessing the cumulative accomplishments, economic 
benefits, or adverse impacts of projects. . . .
    Sec. 5a) Establishments--We would like you to include value-added 
product development because secondary products have a higher rate of 
return and will have a greater impact on rural communities than sawn 
lumber.
    d) Locations--every Restoration and Value-Added Center should be 
surrounded by National Forest System or other public lands and where 
that is not possible easily accessible to rural communities that are 
adjacent to National forest System or other public lands throughout the 
region. In the past, monies that have gone to institutions like the 
University of Idaho for research and development have never reached the 
rural unemployed nor have they revered the depressed timer based 
economy. Rural based organizations like FOC have the business 
experience, engineering, natural resource and community development 
background that is necessary to reverse this downward economic spiral 
and would immediately utilize these monies to achieve on the ground 
results and begin the revitalization of our rural communities. We hope 
you will give us the chance by passing this bill.
    Sec. 4(d) Locations subsection (2) delineates that the Regional 
Forester and State Bureau of Land Management Director will issue 
requests for proposals, but no timeline has been set for when this 
program should be up and running. I would hate to see the potential 
good offered get bogged down by any certain time, and time is of the 
essence for our forest as well as others.
    It is also essential that these Centers be given the authority to 
utilize the funds provided for:

   Infrastructure (equipment and building construction and/or 
        purchase)
    Capacity building (training and tools for towns and 
        organizations to become strong and independent)
   Product development, technical and financial assistance 
        directly to small and micro-enterprises in the form of grant, 
        revolving loans or lines of credit or other means to provide 
        access to grow capital

    The residents of Elk City trust that you will see this bill through 
the appropriations process and would like to than you for giving Elk 
City and other small rural communities an opportunity to provide 
comments on the Community-Based Forest and Public Lands Restoration 
Act. Bill S. 2672 provides the means for a collaborative restoration 
process that includes those rural communities that live, work and play 
within the boundaries of our Public Lands. Given the tools and 
opportunity organizations like Framing Our Community can help build 
viable, conservation-based economies across the West.

    The Chairman. Thank you very much for your testimony.
    Ms. Enzer, go right ahead?.

  STATEMENT OF MAIA ENZER, PROGRAM DIRECTOR, HEALTHY FORESTS, 
    HEALTHY COMMUNITIES PARTNERSHIP, SUSTAINABLE NORTHWEST, 
                          PORTLAND, OR

    Ms. Enzer. Thank you. I want to thank you, Mr. Chairman, 
and members of the committee for your leadership on this bill. 
I am very excited to be here, and I appreciate the opportunity 
today.
    I am Maia Enzer, and I am the program director at 
Sustainable Northwest for the Healthy Forests, Healthy 
Communities Partnership. Sustainable Northwest is a Portland, 
Oregon-based nonprofit founded in 1994, and our mission is to 
promote environmentally sound economic development in 
communities across the Pacific Northwest.
    This bill incorporates the core values of community-based 
forestry. It is about creating a collaborative process which 
enables everyone to have a meaningful role in the care of our 
public lands. It is about restoring our national forests in a 
manner that does not exploit the land or the worker or deny the 
role of the private sector.
    It is about monitoring, ensuring that we all take a role in 
understanding the ecologic and economic impact of our actions. 
And it is about using the public dollar to reinvest in the land 
we have taken so much from and reinvest in rebuilding the 
capacity of rural communities who are inextricably linked to 
our ability to care for our forests, rivers, rangelands, and 
the many species that depend on them. In essence, this bill 
addresses issues from the watershed to the wood shop.
    I am going to focus the rest of my comments on the 
importance of contracting as a vehicle for collaboration and 
for building a consistent program of work for rural 
communities, as well as building forest-based economies through 
the proposed restoration value-added centers.
    The communities with which Sustainable Northwest works have 
experienced many problems with the current contracting system, 
which I have detailed in my written testimony. What I will say 
is the bill's focus on best value contracting places the 
emphasis on getting the highest quality work for the best 
price, justly spending the public's dollar.
    The other provisions will help small and micro businesses 
build their capacity to become strong viable enterprises and to 
access the higher-value contracts. These provisions should be 
about building high-scale durable jobs in rural communities. It 
is not just about the number of jobs, or the number of 
contracts that are awarded. It is also about the value of those 
contracts. So, for us, the contracting provisions, simply put, 
will help us begin to create new tools for new times.
    The bill also makes important linkages between forest 
restoration and value added manufacturing, and it does this by 
focusing resources on developing a rural-based, value-added 
sector that can capitalize on the unique wood, skills, and 
heritage of western communities.
    The small and micro businesses involved in the Healthy 
Forests, Healthy Communities Partnership primarily use the wood 
that comes from restoration projects. They work with small 
diameter wood, such as the suppressed Doug Fir and many western 
hardwoods, like Madrone. And they make a full range of 
products, flooring, paneling, custom and round wood furniture, 
gifts, and accessories.
    But despite their commitment to innovation, these small 
rural businesses face many financial and technical challenges, 
but by working together they are finding ways to overcome those 
obstacles. For example, in southern Oregon, several businesses 
are sharing resources, allowing them to become more competitive 
in the flooring and paneling markets. However, despite their 
efforts to create markets, the lack of investment and forest 
restoration has made their endeavors more difficult.
    The flooring broker that we work with has done a good job 
of building strong markets for suppressed Doug Fir flooring. 
However, the business members that I work with do not have a 
consistent supply of suppressed Doug Fir, despite the severe 
forest health problem and the predominance of that species 
across our landscape. Therefore, they are having trouble 
meeting the market demands they have created. This is a very 
big challenge if you are trying to introduce a new product into 
the market.
    This project, as well as the others described in my 
testimony, demonstrate the promise and the potential of these 
restoration and value added centers. As models, they outline 
the various forms that the centers may take based on the 
appropriate community context. These centers have the potential 
to create real change in communities like Hayfork, California, 
Elk City, Enterprise and Lakeview, Oregon, Twisp, Washington, 
and countless other small communities that I know this 
committee has heard from.
    The bill should ensure that the centers do not become 
another program or field office of the agency or large 
educational institution. However, those entities should be 
important partners in this endeavor. They are critical to the 
process, but the centers should be about helping communities to 
rebuild their institutional capacity and positioning them to 
build strong conservation-based economies as they envision 
them.
    The centers should be bringing expertise into the 
community, rather than forcing people to leave home to find 
help or other resources. The centers will not be successful if 
they adopt a traditional approach of economic development by 
locating them on primary transportation corridors in emerging 
urban centers or existing cities. It is important that the 
centers be located in rural communities close to the resources 
and the businesses they will serve.
    This will also ensure that the centers are operating under 
the same constraints and the same environment that we expect 
these types of business to thrive under.
    Thank you very much for the opportunity to comment on this 
important piece of legislation. Your bipartisan work to create 
opportunities for communities and to restore public lands is 
providing a lot of hope for the communities and business that I 
work with.
    We do support the concepts of this bill and hope that our 
feedback will help ensure that the provisions in the 
legislation provide opportunities for implementation rather 
than increased process or bureaucracy. Attached to the 
testimony are section- by-section suggestions for improvements 
in the bill, and we look forward to working with you through 
this process.
    Thank you.
    [The prepared statement of Ms. Enzer follows:]
    Prepared Statement of Maia Enzer, Program Director, Sustainable 
                        Northwest, Portland, OR
    Thank you for the opportunity to provide comments on S. 2672 the 
Community-based Forest and Public Lands Restoration Act. This bill 
provides an opportunity to help rural communities play a meaningful 
role in the restoration of our public lands while simultaneously 
providing the tools to build viable, conservation-based economies in 
rural communities. We support the principles and concepts presented in 
the bill and are pleased to offer our perspective on the issues.
    I am Maia Enzer, Program Director at Sustainable Northwest for the 
Healthy Forests, Healthy Communities Partnership. Sustainable Northwest 
(SNW) is a Portland, Oregon-based nonprofit organization founded in 
1994 and dedicated to forging a new economy in the Pacific Northwest 
one that reinvests in the people, the communities, and the landscapes 
of the region. The mission of the organization is:

        To build partnerships that promote environmentally sound 
        economic development in communities of the Pacific Northwest.

    The Healthy Forests, Healthy Communities Partnership (HFHC) is a 
regional collaborative dedicated to building capacity in rural 
communities to perform forest restoration and ecosystem management 
services, and to manufacture and market the wood by-products of such 
activities. We have members in northern California, Oregon, Washington, 
and Idaho. Our partners are small and micro-businesses, community and 
regional non-profits, land management agencies, environmental groups, 
and others committed to promoting restoration in an environmentally and 
socially responsible manner. Towards that end, they have signed a 
Vision & Values statement, which guides our comments in this testimony 
(see attached Vision & Values statement).
    As a Partnership, we face many challenges, including: an 
inconsistent program of work around restoration; contracting mechanisms 
that are difficult for smaller businesses to access; and limited 
investment in rural entrepreneurs interested in value-added 
manufacturing. Senate bill 2672 appropriately addresses these 
challenges, providing opportunities to overcome them.
          creating an interdependence between healthy forests 
                        and healthy communities
    The Community-based Forest and Public Lands Restoration Act 
provides an integrated approach to the restoration of our public lands 
by providing mechanisms to restore and maintain healthy forests and 
healthy communities. It does this by creating a comprehensive program 
of forest restoration work. The core values of community-based 
forestry, echoed by many organizations and individuals across the 
Northwest, are incorporated into this bill. Senate bill 2672 provides 
direction to create collaborative processes that enable interested 
participants to have a meaningful role in the care of our public lands. 
It provides mechanisms to restore our national forests in a manner that 
cares for the land and the worker, and recognizes the critical 
contributions of the private sector in these efforts. Further, this 
bill recognizes the need for and provides the means to do monitoring, 
which the linchpin to successful restoration, from both an 
environmental and social perspective. And at its heart, the bill calls 
for using the public dollar to reinvest in the land that has provided 
so much, while also investing in rebuilding the capacity of rural 
communities to do restoration work and to create a viable economy based 
on this work.
    As we have seen in countless rural communities throughout the West, 
there is an inextricable link between the way we care for our lands and 
rural community well-being. This bill makes a positive contribution to 
improving both land and community.
                  removing barriers to implementation
Restoring Ecological Integrity
    Every summer destructive wildfires remind us that our public lands 
are not healthy enough to allow natural processes, such as fire, to 
play their appropriate role on the landscape. This summer is no 
different. Decades of fire suppression has led to problems with fuel 
loads, insects and disease, noxious weeds, and other threats to 
ecosystem health.
Overcoming institutional barriers in the Forest Service
    The Forest Service faces a number of institutional challenges that 
forces them to cobble together a program of restoration work. First, 
their budget and structure do not support the design and implementation 
of such a program. They are forced to use old budget structures to 
support restoration. Second, they must apply contracting and 
procurement rules that simply do not fit the objectives of restoration, 
nor support the new type of high-skill restoration worker. Third, 
monitoring, a crucial step for understanding impacts and being able to 
manage adaptively, is often left out of the work. Fourth, the Forest 
Service lacks the institutional structure to support a collaborative 
approach to working with the public.
    The barriers facing the Forest Service are not easily remedied, and 
we recognize that they cannot all be removed instantaneously or 
simultaneously. However, we strongly believe that Senate bill 2672 
places the correct emphasis on the fixing problem by focusing its 
purpose on creating, ``a coordinated, consistent, community-based 
program to restore and maintain the ecological integrity of degraded 
National Forest System and public land watersheds.'' The right 
combination of steps taken through this bill will go far in helping to 
facilitate implementation of sound restoration projects through 
collaborative processes.
                    we need new tools for new times
Supporting restoration and collaboration through contracting and 
        procurement
    Now I would like to address some of the specific attributes of the 
bill, starting with contracting reforms.
    The communities with which Sustainable Northwest works have 
experienced many problems with the current contracting system, which 
makes it difficult for small, local contractors to access forest 
restoration work. For example, on the Fremont National Forest between 
1994 and 1999 local firms captured 33 percent of all service contracts; 
however, of these, 83 (of 88) were valued at less than $25,000 and only 
one was over $100,000.\1\ In Trinity County, California local firms 
only capture approximately seven percent of the work. In Wallowa 
County, Oregon during the 2000 field season, local firms captured about 
20 percent of the service work, but the total value of these contracts 
was only $210,000 (and of this total, one contract was worth $150,000, 
leaving $60,000 worth of work in the remaining contracts). Clearly, it 
is not simply the number of contracts that matters, but also their 
value. These counties, and many others surrounded by public lands, are 
coping with high unemployment and increasing poverty. Meanwhile, the 
bulk of the valuable contracts go to large companies in urban areas, 
sometimes hundreds of miles away. Despite this seeming inequity, we 
recognize that this is not an 'either or' situation: we need businesses 
of all sizes to take on the important and vast scope of restoration 
work, but we also need to make room for small and micro-enterprises to 
access the full range of restoration work.
---------------------------------------------------------------------------
    \1\ Kauffman, Marcus. 2001. An Analysis of Forest Service and BLM 
Contracting and Contractor Capacity in Lake County, Oregon. Sustainable 
Northwest. Copies available on request.
---------------------------------------------------------------------------
    There has been considerable dialogue around contracting mechanisms 
used by the Forest Service, and we are encouraged by the continued 
experimentation with the National Stewardship Pilot Program. Many of 
the issues involved in contracting must continue to be tested through 
that venue. However, we know that the current system was created in a 
different social, ecological, political and economic context and has 
unintentionally created barriers for small and micro-businesses to be 
able to compete for work on public lands. The changes presented in 
Senate bill 2672 (Section 6) are a positive step in the right 
direction. While we have some suggested changes (see attached section 
by section comments) we applaud your efforts to create a better climate 
for competition by providing mechanisms that will help small and micro-
businesses to build their capacity to compete for this new kind of 
work. By focusing on best value contracting, you have placed the 
emphasis on getting the highest quality of work for the best price, 
justly spending the public's dollar.
    We are also pleased with the focus on collaboration in the bill. In 
the last decade, communities throughout the West have learned the 
central role of non-profit organizations in helping communities adapt 
to change, and have experienced the value of working in partnerships 
with local businesses to support their economic viability. This is 
especially true in relation to work on public lands. Many of the 
success stories about collaboration with the Forest Service have come 
through relationships initially built through State and Private 
Forestry branches of the Forest Service. In order to empower National 
Forest System employees to work with nonprofit entities, it is 
necessary that they have the authority to enter into cooperative 
agreements, an authority which they currently lack. We commend you for 
including this provision in the Community-based Forest and Public Lands 
Restoration Act (Sec. 4(b)).
                  building new forest-based economies
    One of the visionary attributes of this bill is the linkage made 
between forest restoration and value-added manufacturing. S. 2672 
focuses resources on developing a rural-based value-added sector that 
can capitalize on the unique wood, skills, and heritage of this region. 
This is a positive step forward in the level of investment which, to 
date, has been limited. We need investment to catalyze our business 
sector.
    Sustainable Northwest's Healthy Forests, Healthy Communities 
Partnership works with small and micro-wood products businesses 
throughout the Pacific Northwest who use the wood by-product from 
restoration projects. They work with small diameter wood (suppressed 
Douglas Fir) and underutilized or lesser-known species (i.e. Madrone, 
Tan Oak, and Juniper), to make a range of products including: flooring, 
paneling and molding; posts and poles; custom and roundwood furniture; 
and gifts and accessories. As rural businesses in the Pacific Northwest 
have been gearing up to utilize the by-products of restoration 
projects, they have become acutely aware of the challenges small 
businesses face in the global economy. Among these challenges are:

   Lack of capitalization to build inventory and expand 
        production capacity
   Isolation from transportation corridors and major 
        marketplaces
   An unreliable supply of raw materials for processing
   Unavailability of a trained workforce
   Need to build business skills necessary to take a business 
        ``to the next level''
   Few opportunities to exchange ideas, innovations, and 
        resources with peers

    While we have begun to address these challenges, a key lesson 
learned is the importance of public-private partnerships and business-
to-business relationships. Our most effective Partnership growth has 
occurred where groups of businesses have come together to address a 
common challenge.
    For example, in Southern Oregon, several businesses are sharing 
resources, allowing them to be more competitive in the flooring and 
paneling market. By having loggers, sawyers, lumber dryers, millers and 
brokers all working together, this group has developed a successful 
mini-industry that is creating jobs by adding value to the small 
diameter Douglas Fir which dominates the forests of the region.
    In Hayfork, California, a business incubator was developed to 
provide the resources that allow start-up entrepreneurs to build 
businesses based on the restoration of forests. By supplying the roof 
over their head, access to tools and business resources, and networks 
with peers, the incubator has created an environment of opportunity.
    Our community partners in Okanogan County, Washington have been 
piloting restoration projects on National Forest lands and assessing 
community capacity to utilize the materials that will flow from these 
projects. By evaluating the existing business infrastructure they have 
been able to determine products that can be manufactured now and areas 
where additional investment, such as equipment and inventory, may be 
needed. The local non-profits have also awakened regional enterprises 
to the opportunities that exist for building businesses around the 
restoration work and the processing of its residual material.
    Each of these projects demonstrates the promise and potential of 
Restoration and Value-added Centers. As models, they outline the 
various forms that Centers may take, based on the appropriate community 
context. Also, to meet our objectives of responsible forest restoration 
and community economic development, we need to foster and support many 
small enterprises - We need to do small scale on a large scale. Perhaps 
most importantly, ongoing efforts in the Pacific Northwest represent 
the necessity of a coordinated and well-supported approach to 
community-based forest restoration.
    We commend your inclusion of Restoration and Value-added Centers in 
the bill, as we believe they are a key element to helping mitigate the 
challenges these businesses face. Too many communities have lost the 
infrastructure they need to support existing businesses, or create new 
enterprises. We need to foster a business environment that will 
encourage the establishment and growth of small, but highly effective 
restoration-related enterprises. We need to encourage vertical 
integration at the community-scale. These Centers have the potential to 
create real change in communities like Hayfork, California; Elk City, 
Idaho; Enterprise and Lakeview, Oregon; Swan Valley, Montana; Twisp, 
Washington; and countless other small communities. These Centers offer 
rural-based businesses a way to build a future tied to their heritage 
in natural resources, their commitment to their community, and their 
vision for a future based on environmentally-sound economic 
development.
                      general comments of concern
    Our support for the concepts and principles of this bill 
notwithstanding, we do have concern about some of its aspects. I would 
like to highlight them:
1. Streamlining implementation and working within existing processes 
        and selection of projects
    We are concerned that there is not sufficient clarity in terms of 
how projects will be selected through this bill. It is important that 
this legislation help to facilitate implementation and not create 
unnecessary analysis or process. Currently other efforts are examining 
how to ensure that the existing planning and analysis processes can 
add-value to how projects are identified and implemented. We do not 
think it is necessary to create new process or to use this bill as a 
way to solve those process issues. This bill must remain focused on 
facilitating implementation within as many of the current laws and 
processes as possible. However, there is insufficient guidance on how 
to use those existing mechanisms. (please see suggested changes in the 
attached section-by-section comments).
2. Location of the Restoration and Value-added Centers
    These Centers need to be located in rural communities, not just 
accessible to them. The Centers will not be successful if they adopt 
the traditional approach to economic development of locating along 
primary transportation corridors in emerging urban centers or existing 
cities. S. 2672 shows genuine commitment to supporting rural 
communities and building viable economies through the restoration and 
maintenance of our public lands. It is critical that these Centers be 
located in rural communities, close to the resources and the businesses 
they will serve. This will also ensure that the Centers are operating 
in the same environment as the businesses they serve.
3. Definitions
    We are encouraged by the bill's focus on small, rural communities 
and small and micro-enterprises. However, some terms in the bill need 
to be more clearly defined or they may be misunderstood and misused, 
thus diminishing the positive contribution this bill can make in 
implementing its stated objectives. For example:
    Definition of Local: It is important to provide land management 
agencies with further guidance on what is meant by 'local' to ensure 
that those who live closest to the project site are able to access the 
work laid out in the provisions of the bill. (see attached section-by-
section comments).
    Definition of Rural: As currently written, the definition of rural 
is unclear. We need to look more carefully into this definition to 
recommend new language that will ensure that small rural communities 
are truly the beneficiaries of this legislation. The current language 
is not sufficient for the needs of the communities and businesses we 
work with.
                               conclusion
    Thank you for the opportunity to comment on this important piece of 
legislation. Your bi-partisan work to create opportunities for 
communities and to restore our public lands is commendable. We support 
the concepts of this bill and hope our feedback will help ensure that 
the provisions in this legislation provide opportunities for 
implementation, rather then increased process and needless bureaucracy. 
Attached to this testimony are section-by-section suggestions for 
improvements to this bill. We look forward to working with you through 
this process.

    The Chairman. Well, thank you very much for your testimony.
    Mr. Holmer, go right ahead with your statement.

STATEMENT OF STEVE HOLMER, CAMPAIGN COORDINATOR, AMERICAN LANDS 
                            ALLIANCE

    Mr. Holmer. All right. Thank you, Mr. Chairman. On behalf 
of American Lands Alliance, I just wanted to appreciate your 
leadership on this question, as well as you and Senator Craig.
    American Lands supports the intent of the Community-Based 
Forest and Public Lands Restoration Act to promote restoration 
and to foster community-based businesses and citizen groups in 
rural communities to carry out needed restoration projects. We 
believe this bill offers a critical opportunity that should not 
be passed up to further the dialogue on restoration.
    To this end, we have a number of suggestions that we 
believe will help the legislation better promote sound 
ecological restoration on the ground, and ensure that the 
Forest Service follows the intent of this program. 
Incorporating these suggestions will strengthen growing 
agreement among many sectors of the public on the need for an 
effective and ecologically sound approach to forest 
restoration.
    During the past year, the conservation community, together 
with input from forest practitioners and community forestry 
groups, has drafted restoration principles to promote 
ecological forest restoration and implement sound restoration 
policies and projects on the national forests. The principles 
clearly distinguish hazardous fuel-reduction projects designed 
to effectively protect homes and communities from projects 
designed to restore ecological integrity in fire-dependent 
ecosystems and elsewhere. This is a distinction currently 
overlooked by the U.S. Forest Service.
    These principles are currently undergoing a peer review 
process and will be published later this fall. To support this 
program, we urge the Congress to establish a new line item 
called ``Ecological Restoration'' in the Interior Bill, as 
outlined above, and fund this program at about $200 million a 
year. I think that would be a good, solid beginning for this 
effort.
    In our view, we would like to see a comprehensive approach 
taken to restoration. And so, restoration can also mean 
conservation. In our view, we need to look at the landscape and 
determine the areas that have the highest ecological integrity, 
and make sure that those areas are protected and not further 
degraded. So, for example, old growth forests, roadless areas, 
endangered species habitat, places like this have been 
identified and we believe should be protected. And I would just 
like to take a moment to thank you for your leadership on the 
Roadless Area Conservation Act, which we think is an important 
step towards establishing this comprehensive approach.
    I did include three case studies in our testimony about 
existing projects happening on the national forests, and rather 
than go through all the details, I would just like to summarize 
by saying that in all three of these projects, there are very 
positive elements that we would like to support. However, there 
have been elements included in these projects which we think 
will undermine ecological integrity and, therefore, in all 
likelihood, or already have been, they will be opposed by 
conservationists.
    And so we would like to develop this criterion in a process 
where we can have noncontroversial projects that do not include 
the logging of old growth trees, do not include logging in 
heavily degraded watersheds, and that kind of thing. So, when 
we look at what the Forest Service is doing right now, we do 
feel like they need some additional direction.
    With these lessons in mind, we would like to recommend some 
specific changes. We do feel like there needs to be 
environmental safeguards added to the legislation; 
specifically, protection for old and large trees, roadless 
areas, and endangered species habitat. We think a prohibition 
on new road construction would also be extremely beneficial, 
and we feel that these provisions would help ensure the 
resulting projects will enhance ecological integrity, and help 
reduce controversy and public opposition to projects involving 
the cutting of trees or that are proposed in ecologically 
sensitive areas.
    We also believe that economic safeguards need to be added. 
We are very concerned about how financial incentives can skew 
management decisions, and we have seen this over time. The 
timber sale program is really, and the excessive road 
construction is, a major reason why we need to do so much 
restoration on the forests. So, we would like to see this bill 
avoid using timber sale contracts to accomplish these projects. 
However, we do recognize that restoration byproducts derived 
from an ecologically-based project may have value secondarily. 
And so we are willing to explore other contracting methods to 
do those kinds of projects.
    Another key point that we would like to make is that we 
feel this bill does propose or places too strong of an emphasis 
on utilizing trees as restoration byproducts. When we look at 
restoration, we feel like there is a broad range of activities 
that should be included in this program. We currently have an 
$8 billion road maintenance backlog, for example. There is a 
tremendous amount of work and jobs that could be created 
working on those issues. Invasive species is a growing threat 
to the national forests. We would like to see additional 
emphasis, and we do appreciate the additional funding that is 
going into that program at this point.
    We are very concerned about stewardship contracting. We do 
feel like that includes some internal financial mechanisms that 
could ultimately undermine the restoration objectives of those 
projects. And one of the examples is a stewardship project.
    We do feel like the project criteria is a little bit 
unclear here. We feel there needs to be an up-front assessment 
done before we go in and do activities to determine what the 
highest priority for an area might be. For some places, 
reducing fuel loads might be the top issue, but for other 
areas, invasive species or dealing with the road system might 
be the highest priority. So, we think that this up-front look 
will help steer the projects in the direction that would most 
benefit those particular areas.
    We would strongly support the provisions included in 
section 6 to direct forest management activities to a smaller 
scale while utilizing best value contracting. We believe this 
language will support a smaller-scale approach, and hopefully 
move us away from large-scale industrial forestry. We think it 
will also help foster the creation of new businesses and a 
restoration economy that can sustain rural communities while 
providing effective community protection and forest protection.
    Also, about the value added centers, we think that they can 
also provide valuable assistance in utilizing and interpreting 
science, and also in training the work force to carry out these 
restoration projects.
    We wish to thank you again, Mr. Chairman, for your 
leadership on this issue, and for this opportunity to testify.
    And we look forward to working with you and your staff as 
this legislation moves forward towards passage.
    [The prepared statement of Mr. Holmer follows:]
       Prepared Statement of Steve Holmer, Campaign Coordinator, 
                        American Lands Alliance
    On behalf of American Lands Alliance, representing the interests of 
grassroots forest conservation activists around the nation, I wish to 
thank you Mr. Chairman for this opportunity to testify and for your 
leadership on efforts to restore National Forests and other public 
lands.
    American Lands supports the intent of the Community-Based Forest 
and Public Lands Restoration Act to promote restoration and to foster 
community-based businesses and citizen groups in rural communities to 
carry out needed restoration projects. We believe that this bill offers 
a critical opportunity that shouldn't be passed up to further the 
dialogue on restoration.
    To this end, we have a number of suggestions that we believe will 
help the legislation better promote sound ecological restoration on the 
ground and ensure that the Forest Service follows the intent of this 
program. Incorporating these suggestions will strengthen growing 
agreement among many sectors of the public on the need for an effective 
and ecologically sound approach to forest restoration.
             a program for ecological restoration is needed
    There is a tremendous need to carry out ecological restoration on 
many parts of the National Forests due to damage caused by past 
logging, roadbuilding, grazing, mining and more recently the 
introduction of off road vehicles and invasive species to the public 
lands. There is a huge potential to create a highly-skilled workforce 
and family wage jobs to carry out this work.
    Unfortunately, the Forest Service is rapidly giving restoration a 
bad name by proposing large scale logging projects and promoting them 
in the name of restoration and stewardship. An increase in use by the 
Forest Service of the commercial timber sale program to ``restore'' 
federal lands poses risks that inappropriate logging will adversely 
affect fish and wildlife habitat and ecologically sensitive landscapes. 
There is a great need to fund projects that are based on ecologically 
sound principles and criteria.
    This points to the need to create a new program whose goal would be 
to enhance ecological integrity by restoring natural processes and 
resiliency in priority areas on the National Forest. These priority 
areas and the restoration methods must be determined by comprehensive 
restoration assessments that address a broad range of restoration 
questions at multiple spacial scales which identify root causes of 
degradation, determine priorities for restoration, and appropriate 
methods for restoring degrading systems. Active restoration projects 
could involve road removal, culvert removal, prescribed burning, fuels 
reduction, invasives species control, fish and wildlife habitat 
rehabilitation, reintroduction of extirpated species and other 
necessary activities based on the priorities established in the 
ecological restoration assessment.
    To prevent abuses, there would need to be ecological safeguards and 
positive economic incentives to implement ecological sound forest 
restoration. Guidelines should include: taking a thoughtful, careful, 
and conservative approach; use of appropriate contracting techniques 
rather than commercial timber sales for restoration; no new 
roadbuilding; protecting roadless areas and areas of high ecological 
integrity; replacing low bid contracts with best value contracts that 
are based on desired ecological, community and workforce objectives--
which ensure that contractors possess the necessary skills and 
capacities to carry out high quality work; and requiring that project 
budgets include realistic and dedicated funding for assessment, 
monitoring and evaluation.
                restoration principles under development
    During the past year, the conservation community--together with 
input from forest practitioners and community forestry groups--has 
drafted Restoration Principles to promote ecological forest restoration 
and to implement ecologically sound restoration policies and projects 
on national forests. The Restoration Principles clearly distinguish 
hazardous fuel-reduction projects designed to effectively protect homes 
and communities from projects designed to restore ecological integrity 
in fire-dependent ecosystems, a distinction overlooked by the Forest 
Service.
    The Principles are currently undergoing peer-review and will be 
published later this fall. To support this program we urge Congress to 
establish a new line-item called Ecological Restoration as outlined 
above and fund this program at $200 million for FY 2004.
             ecological restoration also means conservation
    In addition to supporting active restoration projects, restoring 
ecological integrity to the landscape also means not allowing the areas 
of the highest ecological integrity, such as old growth and mature 
forests, and roadless areas, to be degraded. To this end, we urge that 
as part of a comprehensive restoration program, areas of the highest 
integrity be permanently protected. This would include:

          1. Old growth and mature forests
          2. Roadless areas 1,000 acres and larger.
          3. Threatened and endangered species habitat.
          4. Unimpaired riparian and aquatic systems.
          5. Large and old trees
          6. Other high integrity areas identified by restoration 
        assessments.

    It is important to recognize that even these important ecological 
areas may need restoration. However, active restoration should not be 
applied in these areas unless it can be shown that there is a high 
degree of scientific and stakeholder support, and that there are no 
other means for restoring or maintaining ecological integrity.

   All restoration projects should:
   Take a thoughtful, careful and conservative approach Comply 
        with all environmental laws
   Comply with ESA recovery plans
   Require restoration assessments before projects begin
   Include monitoring plans and adequate funding for 
        assessment, monitoring and evaluation.
   Take a comprehensive approach (i.e. include road closures, 
        erosion control, ecologically sound grazing management, 
        invasive species control etc.). Allow no new road building
   Recognize variation in forest type and fire regimes
   Use the least intrusive methods possible that will be 
        effective in order to avoid negative cumulative effects to 
        watersheds and wildlife, with the exception of road 
        obliteration.
               sheep basin restoration project goes awry
    On the Gila National Forest the Sheep Basin ``Restoration'' Project 
illustrates a basic disagreement that often keeps us from effective 
action. The Sheep Basin project emerged from an early collaborative 
watershed planning process that was initiated by local conservationists 
and supported by Senator Bingaman. The idea was to move beyond this the 
usual forest management conflicts to watershed restoration that would 
benefit all stakeholders.
    After years of dialogue an astonishing agreement was reached. A 
several thousand-acre project was identified for thinning and other 
restoration activities. Conservation groups and the Catron County 
Citizen's Group (interested in utilization of restoration by-products) 
agreed that the project should proceed with a diameter cap limiting 
logging of large trees.
    However in an equally astonishing move the Gila National Forest 
disregarded the agreement by choosing an alternative that will log 
large trees, though over 90% of the trees in the area are below 12" and 
all other parties agreed there were effective methods to meet both 
ecological and economic objectives. The decision to log large trees (in 
this case healthy trees up to 35" more than 20 miles from the nearest 
community) resulted in an appeal.
    By ignoring this unusual agreement the Forest Service chose 
controversy over cooperation. This story outlines the basic disconnect 
between the Forest Service and conservation groups as well as many 
rural communities that are working toward ecologically sound, effective 
solutions to community protection.
     east rim vegetation management project--kaibab national forest
    This project is intended to improve forest size distribution, to 
improve wildlife habitat for late seral species; reduce infection 
centers of dwarf mistletoe and road management. However, the project 
proposes to log 8 million board feet of timber over 7,500 acres, 
including old growth trees.
    The Kaibab Plateau country on the North Rim of the Grand Canyon 
contains some of the most extensive stands of old-growth forest 
remaining in the Southwest. These forests contain an incredible 
diversity of wildlife, including the densest breeding population of 
northern goshawks in North America, the endemic Kaibab squirrel and the 
famous Kaibab mule deer herd. While partially included within Grand 
Canyon National Park, most of the Plateau is administered by the Kaibab 
National Forest. Teddy Roosevelt was so inspired by the area that in 
1906 he declared it to be the Grand Canyon Game Preserve, the only such 
area in the Southwest.
    Despite the critical ecological importance of the forest on the 
Kaibab Plateau, the Forest Service continues to propose timber sales 
that log thousands of mature and old growth trees. For example, the 
East Rim Vegetative Management Project would log over 8 million board 
feet of old-growth ponderosa pine, mixed-conifer and spruce-fir forest. 
Much of the proposed logging within the East Rim timber sale will occur 
directly on the edge of steep canyon directly bordering a designated 
wilderness area. Erosion and sedimentation caused by the logging 
operations will directly impact a genetically pure population of the 
threatened Apache trout less than a mile from the sale's boundaries.
     iron honey restoration project--coeur d'alene national forest
    The Forest Service is proposing aquatic, vegetative and wildlife 
habitat improvement activities in the 21,600 acre Iron Honey Resource 
Area, located at the upper end of the Little North Fork d'Alene River 
drainage. The purpose and need for this project are to: 1) Improve 
Water quality, fish habitat and riparian habitat by reducing sediment 
and increasing large woody debris in the streams; 2) Trend the 
vegetative species composition toward historical levels, which included 
species more resistant to insect and disease; 3) Increase age-class 
diversity and reduce old-growth fragmentation; and 4. Reduce fire 
hazard and potential fire severity.
    However, the project includes 1,919 acres of even-age management 
(clearcutting), 70% canopy removal average, and 27 million board feet 
of logging, or 5,500 log trucks of trees. The Forest Service is also 
currently is proposing 34.2 miles of road work scattered throughout the 
entire 22,000 acre project area, including permanent and temporary road 
construction as well as road reconstruction.
    The Coeur d'Alene watershed provides 80% of the water for 400,000 
people and there is great concern that logging and road building in 
this area will harm the water supply of the City of Spokane. The Coeur 
d'Alene Ranger District already has 11 miles of road per square mile, 
making it the district with the highest road density of any other 
Forest Service ranger district.
    Flooding caused by logging and road building is the main mechanism 
for heavy metal transport from the flood plain of the Coeur d'Alene 
River to the Lake Coer d'Alene and the Spokane River. During the five 
to nine years the Forest Service believes it would take the watershed 
to return to ``normal'' the main stem of the Coeur d'Alene River will 
be in the middle of intense cleanup.
    The Forest Service cannot insure that during those five to nine 
years there will not be a rain on snow event, which would cause 
flooding in the basin, potentially redistributing heavy metals. The 
removal of vegetation in the North Fork is the predominate factor 
leading to rain on snow events. As a result, this project could cause a 
significant reduction in ecological integrity as well as contribute to 
flooding that spreads heavy metal contamination.
                 recommendations for improving s. 2672
    With these lessons in mind, we would like to recommend the 
following changes and additions to S. 2672 to ensure that the laudable 
goals of the bill are realized.
Environmental Safeguards
    We recommend that language be added to the bill protecting old and 
large trees, roadless areas and endangered species habitat. We also 
urge a prohibition of new road construction and reconstruction. These 
provisions will help ensure the resulting projects will enhance 
ecological integrity and will help reduce controversy and public 
opposition to projects involving the cutting of trees or that are 
proposed in ecologically sensitive areas.
Economic Safeguards
    There remains a concern that commercial incentives and commodity 
production should not be allowed to drive restoration project design 
and implementation. The current timber sale program continues to give 
priority to economic interests and is not appropriate for restoring 
forests. Past timber sale practices and the excessive construction of 
timber roads are a significant reason why restoration is currently 
needed on the National Forests. Therefore, we urge that the bill avoid 
the use of timber sales to pay for restoration projects.
    However, restoration by-products derived from ecologically based 
restoration projects may have value secondarily. Alternative 
contracting mechanisms must be developed that are driven by ecological 
objectives. Other contracting and funding mechanisms that are worth 
further consideration are cost share grants as well as cooperative and 
participating agreements.
Definition of Restoration
    The term to restore means to enhance ecological integrity by 
restoring natural processes and resiliency. Effective forest 
restoration should reestablish fully functioning ecosystems. Ecological 
integrity can be thought of as the ability of an ecosystem to support 
and maintain a balanced, adaptive community of organisms having a 
species composition, diversity, and functional organization comparable 
to that of natural habitats with in a region (Karr and Dudley 1981).
Restoration is More than Wood Bi-Products
    The bill as proposed places strong focus on utilizing trees as 
restoration bi-products. The bill language does not identify a 
framework for ecological restoration and associated employment 
opportunities nor identify other activities that are must be part of 
truly sound ecological restoration efforts. These include but are not 
limited to: road de-commissioning, improving aquatic habitat (e.g. 
culvert removal, recruitment of woody debris in streams, etc.).
    Principles of restoration must include passive and active 
strategies for restoration. Passive restoration is ceasing activities 
that have been determined by a restoration assessment to impede natural 
recovery processes. Cessation of degrading activities is a priority 
when it has been determined by a restoration assessment to impede 
natural recovery processes. Passive restoration should take precedent 
where it is vital to eliminate or reduce the root causes of ecosystem 
degradation, including stopping destructive logging, road-building, 
livestock grazing, mining, building of dams and water diversions, off-
road vehicle use, and alteration of fire regimes. This form of 
restoration, which should be based on thoughtful analysis and planning, 
must be distinguished from passive management, which has been 
criticized as mere neglect.
Project Criteria Unclear
    The legislation establishes a program to create new restoration 
projects but does not discuss how the projects are selected and by 
whom. We recommend a landscape scale assessment be completed to 
determine restoration priorities for a specific area. For example in 
some areas, reducing fuel loads may the be the highest priority, but 
for other areas, removing invasive species may be more important. This 
guidance is needed to ensure the projects meet the ecological needs of 
each area.
         s. 2672 supports the creation of a restoration economy
    American Lands supports provisions included in Section 6 of S. 2672 
to direct forest management activities to a smaller-scale while 
utilizing best-value contracting. We believe this language will support 
a smaller scale approach moving away from larger scale industrial 
forestry. It will also help foster the creation of new businesses and a 
restoration economy that can sustain rural communities while providing 
effective community protection and forest protection and forest 
restoration approaches.
    The Forest Restoration and Value-Added Centers authorized in Sec. 5 
may prove valuable in providing assistance in utilizing and 
interpreting science and training a work force with specific skills in 
forest restoration.
    We wish to thank you again Mr. Chairman for your leadership on this 
issue and for this opportunity to testify. We look forward to working 
with you and your staff on this legislation as is moves towards passage 
to accomplish the restoration of ecological integrity across America's 
forested landscape.
                                 ______
                                 
     Statement of Todd Schulke, Forest Policy Director, Center for 
                 Biological Diversity, Pinos Altos, NM
    We are writing to brief you on a disturbing turn of events 
concerning the Negrito Watershed, the collaborative project you help 
initiate in the early nineties. As you know there has been 10 hard 
years of work building agreement in Catron County around watershed 
restoration, ecological protection, and local employment opportunity. A 
recent decision by the Gila National Forest to log large trees in the 
Sheep Basin ``Restoration'' Project (the first phase of the Negrito 
plan) ignored the ground-breaking agreement between the Catron County 
Citizens Group and conservation groups to limit thinning to small 
diameter trees. By choosing controversy over cooperation the Gila 
forced appeals by conservation groups dedicated to the protection of 
large and old trees.
    The Center for Biological Diversity has participated in several 
field trips with the Gila National Forest and the Catron County 
Citizens Group. We have also commented several times on the proposed 
restoration plans. We have made it clear that if the Gila followed 
basic restoration principles (including a diameter cap to cutting large 
trees) that we would participate in an agreement to proceed with the 
Sheep Basin project.
    The Catron County Citizen's Group has also maintained that they 
support a using a restoration approach to the prescriptions used on 
Sheep Basin. They have strongly supported use of a diameter cap on the 
project. Even Don Weaver, member of the citizen's group and former head 
timber staff on the Reserve District of the Gila National Forest, wrote 
letters stating that the ecological objectives of the project could be 
reached using a diameter cap.
    All parties interested in the Sheep Basin project were then 
astounded when the Gila National Forest made the decision to log large 
trees from Sheep Basin. The Center appealed the project, though we have 
offered to rescind the appeal if agreement can be reached on the 
diameter cap. The Catron County Citizen's Group has written letters to 
the Gila outlining their concerns with logging large trees and 
illustrating on-the-ground examples of healthy old growth trees that 
are marked to be logged for no apparent reason. Thus far there has been 
no indication that the Gila plans to alter the decision in order to 
honor the agreement built between the Center and the Catron County 
Citizen's Group (CCCG).
    To further add salt to our wounds the Gila National Forest admitted 
in comments back to us that Sheep Basin was not a restoration project 
but that they didn't want to change the name so that they wouldn't 
confuse anyone.

        ``Although the project was scoped with the title Sheep Basin 
        Restoration Project, only grasslands are proposed for 
        restoration work. Desired conditions are based upon the Gila 
        Forest Plan as amended and not intended to restore these 
        vegetation types. The original project title was retained to 
        avoid possible confusion with other projects'' (From Sheep 
        Basin Comment Analysis). Both conservation groups and CCCG are 
        far too experienced and involved to be ``confused''.

    The Gila also admitted that though there are wildland urban 
interface areas within the Sheep Basin project that they had no plans 
to treat them at this time.

          ``Although the wildland urban interface biological opinion 
        considered some areas within the Negrito watershed, there are 
        no proposals to treat these areas at this time.'' (From Sheep 
        Basin Comment Analysis.)

    A final concern with the Sheep Basin project is that though the 
Forest Service has plans to log approximately 90 million board feet of 
timber from the Negrito Watershed, they have done no cumulative effects 
analysis on the potential damage caused by so much logging concentrated 
in one watershed. In fact the Gila has combined the next 2 phases of 
the Negrito plan, proposing to log millions of board feet of timber on 
up to 10,000 acres, making the cumulative effects concern very real.
    This situation is a good illustration of many upcoming Forest 
Service projects in Arizona and New Mexico. Many of the new projects 
developed in Region 3 are timber sales that log large trees under the 
guise of forest restoration and community protection. As you know there 
is plenty of evidence showing that logging large trees is ecologically 
harmful while often time actually increasing fire danger. As disturbing 
is the apparent disregard of the Forest Service of progressive 
agreements between rural communities and conservation groups. This is 
particularly disturbing in light of the legitimate efforts that need to 
be made to protect communities from the risk of forest fires. There is 
plenty of room here for agreement. The Forest Service simply has to 
honor these agreements when they develop or we will never see the kind 
of cooperation that we know you envision.
    We thought you might be particularly interested in the Sheep Basin 
project given your past support of the Negrito Watershed Plan and your 
commitment to building agreement and encouraging cooperation between 
rural communities and conservation groups. We would appreciate any help 
you can offer toward resolution of this perplexing problem.

    The Chairman. Thank you very much.
    Senator Craig has not had a chance to ask his questions. 
Let me defer to him at this point for any questions he has.
    Senator Craig. Well, thank you very much, Mr. Chairman. And 
thank all of you for being here, especially for the trek out of 
Elk City, I suspect to Spokane.
    Ms. Dearstyne. No. It was Elk City to Lewiston, Lewiston to 
Boise, Boise to Phoenix, Phoenix to D.C.
    [Laughter].
    Senator Craig. Okay. Ouch.
    [Laughter].
    Senator Craig. Yes. For those of you who missed the 
opportunity to get to Elk City, it is at the end of 50 miles of 
beautiful drive in the back countries in the back forests of 
Idaho into a small forest-bound community of wonderful beauty. 
And, in this day and age, very frustrated people.
    But I do, Joyce, thank you for being here because some of 
what you are trying to do there is so extremely valuable toward 
what we are looking at with this legislation, both the Chairman 
and I.
    If I were to give you a clean sheet of paper and suggest to 
you that you put down, let us say, three things that this 
Congress and the administration could do to help your efforts 
in Elk City, what might those three things be?
    Ms. Dearstyne. It would be to designate us as one of the 
value added centers; give us the ability to spend those monies 
in supporting efforts of restoration; and taking those products 
then and utilizing them to develop the secondary wood products 
that will give us a much higher rate of return than what 
dimensional-sawn lumber does, because that would directly 
affect those people within our communities who have hung on and 
not moved out, and give them an income that would be year-
round, have a living wage and benefits. And it would be to a 
scale that we could handle.
    Senator Craig. Yes. We know that in Elk City you still have 
a primary forest products manufacturing facility, and I am 
wondering if your operation could be replicated in a community 
that does not have the manufacturing base or has, let us say, 
lost its manufacturing base that Elk City still has.
    Ms. Dearstyne. Yes. What we did was we did not so much 
develop a model as we did a process. And our process started 
with going to the community and asking them what type of 
development they wanted to see. Then, we did an assessment of 
what the raw materials were in our area that could actually be 
accessed.
    Senator Craig. Yes.
    Ms. Dearstyne. And from there, we did an assessment of our 
infrastructure. We then went out and built our project around 
that foundation, and we realized that we could utilize small- 
diameter timber in the process of timber framing buildings that 
would last hundreds of years, and get a much higher rate of 
return. We could also take what is known as drop-off from a log 
that is used to cut for a timber, and that could be utilized by 
a furniture manufacturer, a decorative furnishings 
manufacturer. And we then took the waste from that and we will 
burn it in a commercial wood-burning stove that heats the 
radiant heat system in our floor. There will be no waste.
    Senator Craig. Well, Joyce, thank you.
    Steve, you have been before our committees on numerous 
occasions to testify over a variety of aspects of forest 
management. And as we struggle to find a policy that meets some 
of the criteria that the chairman and I are striving to 
accomplish, and creates the new dynamics in a forest community, 
I hear coming from you though something that frustrates me a 
bit in your testimony. And some of it is a bit of the old 
rhetoric, the old growth, roadless rhetoric that--well, I am 
not so sure that it has not put some in trouble today, and I do 
not know how to deal with it.
    We have a great frustration in the West at this moment. 
While Idaho is fortunately enough just drying out, so it has 
not experienced the Mission Ridge near Durango, or the fires in 
Medicine Bow, or the Stamford fire in Dixie, or the fires that 
are burning now in Oregon, but there is something very unique 
about those fires at this moment: 75 to 95 percent of them are 
in roadless areas at this moment, and are burning out of them 
into nonroaded areas.
    While I am maybe willing to go out and carve out and 
protect old growth, there is 64 million acres of roadless area 
out there and, by definition, not all of it is old growth. And, 
clearly, the forest health problem of today that might allow us 
the dynamics for a new small log operation or small diameter 
operation that could be a product, an end product, of the 
stewardship and the cleaning and the defueling of our forests 
that an Elk City or some other community could arrive from, it 
is going to take a few roads to get there. And yet you are 
suggesting, I think, by your testimony that we do not enter 
those areas. How do we deal with it then?
    I do not need to tell you. You have been around a long 
while and studied this every bit as much as I. But the fires 
the West is experiencing today are devastating. They are taking 
out the ecosystems, the watersheds, the wildlife habitat. There 
is not a new logging operation today, properly designed, moving 
lightly on the land, thin and clean, that in any way does the 
kind of damage that those fires are doing. Generationally, they 
are destroying now 3 million, almost 4 million acres to date. 
And I do not know how we get to new dynamics if we operate them 
on the old foundation.
    Mr. Holmer. Well, I----
    Senator Craig. Talk to me about that if you would.
    Mr. Holmer. Yes, I would. To respond to your first point 
about the nature of today's fires, a lot of the same language 
and rhetoric was used about the Yellowstone fires in 1988. 
``The National Park has been destroyed,'' I think was heard 
many times. But if you go to Yellowstone today, you will find a 
resilient ecosystem and abundant wildlife.
    And, in fact, it did not wipe out endangered species. It 
did not destroy the National Park. And, so, I do think that 
there is a bit of hyperbole going on.
    Historically, over the last 10 years, only 18 percent of 
the lands that have been burned have been National Forests 
lands, and when you start looking at, particularly on the 
roadless area issue itself, the roadless EIS was very clear 
that roadless areas are not the highest priority areas for 
treatment. There are so many acres that are closer to homes and 
communities which have been shown to be where the treatments 
have the most effect that, according to the EIS, roadless areas 
would not be a priority for treatment for another 20 years.
    And, so, we do believe in community protection. We support 
efforts to create defensible space around homes, create 
defensible zones for firefighters to operate. And, in fact, we 
have been doing extensive research and literature reviews, and 
working with scientists, to develop what we consider a better 
definition of the wild land/urban interface. And I believe they 
have come out with 60 meters around homes and a total of a 500-
meter firefighter safety zone. So for the high priority areas, 
we are totally willing to support activities to reduce fuels in 
those areas.
    We have seen problems with commercial logging in the back 
country actually increasing this problem by logging large 
trees, leaving slash behind, drying out the forest. And so we 
do feel like there is still a lot to be learned, and a lot of 
questions about the idea of landscape-wide thinning.
    So, I do feel like when you look at the science, it does 
support protection of old growth. It does support protection of 
roadless areas, but that does not mean that there would never 
be any restoration activities or fuel-reduction activities in 
those areas. If it was determined to be a priority, the 
roadless area conservation rule allows for activities to remove 
those fuels in roadless areas. And, so, we feel like the 
discretion has been retained by the agency if you do have a 
high-priority situation. But, again, we feel the emphasis 
should be much closer to home.
    Senator Craig. Okay. Well, I must tell you that I find your 
rhetoric not changed from 5 years ago or 3 years ago.
    Mr. Holmer. My rhetoric is based----
    Senator Craig. Habitat is----
    Mr. Holmer [continuing]. On Forest Service science.
    Senator Craig. Habitat; 3 million acres, almost 4 million 
now, habitat. Do not tell me wildlife and water resources have 
not been wiped out in the last month that might have--and I am 
not going to suggest that in a decade we get to hardly any of 
it. But we might get to some of it. Urban interface is 
critical, but urban interface is not everything. And why should 
our tax dollars be paying for that which the private landowner 
ought to do? Our tax dollars ought to be dedicated to 
protecting the public resource, and yet these fires that we are 
putting out in our National Forests today are dedicated to 
protecting private land, private property.
    I find it very frustrating. I guess, you know, one other 
conclusion that I would draw--and, Mr. Chairman, I will only be 
a limited amount of politically incorrect here.
    But we just passed a supplemental appropriation bill where 
one Senator thought his forests were so special that he would 
exempt them.
    Mr. Holmer. My organization was not part of that settlement 
agreement, but I do understand that this was an attempt to 
resolve a dispute that had been going on for quite some time. 
So, I----
    Senator Craig. So, we exempt that forest because it is 
okay, but for the rest of them it is not.
    Mr. Holmer. I do not think it is really a good example for 
adopting a nationwide policy of----
    Senator Craig. I think it is a perfect example, and you 
know it as well as I do. I have been through the Black Hills, 
and I suspect you have, too.
    Mr. Holmer. I have, and I would describe----
    Senator Craig. They have the same problems----
    Mr. Holmer. I would describe the Black Hills as a manicured 
forest. It has been one of the most intensively managed 
forests. It has one of the highest road densities. So, to 
suggest that the Black Hills have not had adequate management 
over the last 20 years is ridiculous.
    Senator Craig. So we exempt it?
    Mr. Holmer. I totally disagree with that policy. I would 
have opposed that if I had known it was coming.
    Senator Craig. Thank you. At least you would be consistent.
    Thank you, Mr. Chairman.
    Thank you, Steve.
    And, Joyce, thank you.
    The Chairman. Let me ask a couple of questions. The bill, 
as we have drafted it, requires the appropriate regional 
forester to select the recipients of the grants to create these 
centers, these restoration value added centers. The testimony 
from the Forest Service witness stated that they would prefer 
the Chief of the Forest Service to do the selecting instead of 
the regional forester.
    Do you have any views on whether this should be done by the 
regional forester or by the Chief of the Forest Service here in 
Washington? Ms. Dearstyne, did you have any thoughts on that?
    Ms. Dearstyne. No, I have not. Our regional forester has 
just taken office within the last 3 to 4 months. So, I really 
cannot base any comment.
    The Chairman. Okay. Ms. Enzer, did you have a thought?
    Ms. Enzer. Sure. I think that it is very important that 
these centers be able to reflect the regional context. In some 
places, they have lost an enormous amount of infrastructure in 
the industry, and people may want--the way that this is 
written, they can put a proposal together that reflects what 
they want to do. Do they want to focus on training people how 
to do restoration work on the land? Do they want to focus on 
processing the byproducts of those activities? Do they want to 
do both?
    And I think that by having the regional office work to 
select these centers, they are going to be much closer to that 
regional context. They are going to understand the dynamics 
there much better than I think Washington, D.C. may be able to. 
I also would hope that it would happen perhaps more quickly, 
and each region would be able to deal with it on its own.
    I guess I would also just say that I think that the centers 
do not have to be very large, huge, you know, institutes. These 
centers are things that will be built at community scale. They 
are centers that will reflect the needs of places like Elk City 
or Hayfork.
    And while earlier today they said that if it is not 
accessible to all communities, that that is not a good idea, I 
guess, from my point of view, these centers will help to 
rebuild some of that institutional capacity where it has been 
lost. The centers should not belong to the Government. The 
centers should be run by the local nonprofits or whoever is 
successful at winning the RFP for them, and they will be 
responsible for sustaining those centers over time.
    And I think in the bill you have provided for kind of a 
tiering off, not to eliminate the role of the Forest Service as 
a good partner. They are critical. We could not do it without 
the Forest Products Lab and the research stations. But this is 
about communities creating a future for themselves, and I 
really like the way that you designed it in the bill.
    The Chairman. Mr. Holmer, did you have a thought on any of 
this?
    Mr. Holmer. Well, I would agree with Maia. I think that 
there are very real regional differences in terms of what the 
priorities and needs on restoration are. What needs to happen 
in the Southwest is probably not what probably needs to be 
happening in the Southeast, for example.
    The Chairman. So, you favor keeping the decision making on 
these grants at the regional level?
    Mr. Holmer. Yes. We would be comfortable with that.
    The Chairman. Okay. Well, I think this has been useful 
testimony. We will continue to call on each of you for more 
input. And we appreciate the detailed suggestions that we have 
received on ways to improve the legislation.
    So, thank you all very much and that will conclude our 
hearing.
    [Whereupon, at 3:35 p.m., the hearing was adjourned.]

    [The following statement was received for the record:]
          Statement of the U.S. Small Business Administration
    The U.S. Small Business Administration (SBA) administers the 
Natural Resources Sales Assistance Program. The purpose of this program 
is to aid and assist small businesses in obtaining their fair share of 
Federal property offered for sale or disposal by other means. Within 
this Program, SBA's efforts have been concentrated on the sales of 
Federal timber. SBA reviews timber sale plans and programs from the 
National Forest Service and the Bureau of Land Management and 
recommends changes which will ensure that the small business community 
is given an opportunity to compete for a fair share of Government 
timber sales offered. SBA tracks the purchase of timber by small 
businesses in order to calculate their share of the market and to 
determine the need for set-aside timber sales. If small businesses 
purchase less than 10 percent of their market share, then SBA 
designates the timber set-aside sales. Over the last five years, the 
number of timber sales for purchase by small business has declined from 
1,494 timber sales in FY 1996 to 572 sales in FY 2000.
    We have reviewed S. 2672, the Community-Based Forest and Public 
Lands Restoration Act, and we are currently evaluating the total impact 
that this legislation will have on small business timber sales.
    This legislation will establish a joint community-based program for 
the restoration of National forests, to be administered by the 
Secretary of the Interior and the Secretary of Agriculture. The 
Secretaries will implement projects under the program to assist small 
rural communities to perform much needed ecological restoration.
    The legislation would also empower the Secretaries to develop 
partnerships and contracts with non-profit organizations, conservation 
groups, small and micro businesses, and other entities to perform 
needed restoration work, and to use the by-products of such restoration 
in value-added processing. S. 2672 requires that these Secretaries 
limit competition and reserve contracts including special salvage 
timber sales, timber sale contracts, and service contracts for the 
above mentioned entities.
    The SBA has questions regarding the definition of small business 
and the limitation on competition for timber sale purchases envisioned 
by S. 2672.
    Definition of Small Business. It appears that this Bill as proposed 
will only benefit a narrowly tailored segment of the small business 
community. The size classifications for ``micro-enterprise'' (5 or 
fewer people) and ``small enterprise'' (6 to 150 people) conflicts with 
the current SBA Regulations for the purchase of Government owned timber 
(500 or fewer employees) and Government-owned Special Salvage Timber 
(25 or fewer employees).
    Limiting. Competition on Timber Sale Purchases. As you are aware, 
small business timber sales have declined significantly over the past 
10 years. Small business sawmills and loggers have been severely 
impacted by the reduced amount of Federal timber available for 
harvesting, and many have either shut-down their mills, or have gone 
out of business.
    To stay in business, many small sawmills and loggers have changed 
their focus to purchase Federal timber sales through fuel reduction 
contracts, service contracts, and when available, special salvage 
timber sales. While these contracts offer another alternative for 
business and timber harvesting, the amounts of timber, and the timber 
by-products that these contracts yield are small, and can only be 
considered as supplemental at best. In fiscal year 2001, six special 
salvage timber sales were offered to small business.
    Although unintended, it appears that S. 2672 may impact timber 
sales, and if so, any reduction of these contracts would represent a 
significant loss to the small business community
    Thank you for the opportunity to provide our views on this 
important legislation.

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