[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



                                                   S. Hrg. 102-000 deg.

  ENDANGERED FARMERS AND RANCHERS: THE UNINTENDED CONSEQUENCES OF THE 
                        ENDANGERED SPECIES ACT

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

                                HEARING

                               before the

      SUBCOMMITTEE ON RURAL ENTERPRISE, AGRICULTURE, & TECHNOLOGY

                                 of the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                     WASHINGTON, DC, JULY 17, 2003

                               __________

                           Serial No. 108-26

                               __________

         Printed for the use of the Committee on Small Business


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house

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                            WASHINGTON : 2003
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                      COMMITTEE ON SMALL BUSINESS

                 DONALD A. MANZULLO, Illinois, Chairman

ROSCOE BARTLETT, Maryland, Vice      NYDIA VELAZQUEZ, New York
Chairman                             JUANITA MILLENDER-McDONALD,
SUE KELLY, New York                    California
STEVE CHABOT, Ohio                   TOM UDALL, New Mexico
PATRICK J. TOOMEY, Pennsylvania      FRANK BALLANCE, North Carolina
JIM DeMINT, South Carolina           DONNA CHRISTENSEN, Virgin Islands
SAM GRAVES, Missouri                 DANNY DAVIS, Illinois
EDWARD SCHROCK, Virginia             CHARLES GONZALEZ, Texas
TODD AKIN, Missouri                  GRACE NAPOLITANO, California
SHELLEY MOORE CAPITO, West Virginia  ANIBAL ACEVEDO-VILA, Puerto Rico
BILL SHUSTER, Pennsylvania           ED CASE, Hawaii
MARILYN MUSGRAVE, Colorado           MADELEINE BORDALLO, Guam
TRENT FRANKS, Arizona                DENISE MAJETTE, Georgia
JIM GERLACH, Pennsylvania            JIM MARSHALL, Georgia
JEB BRADLEY, New Hampshire           MICHAEL MICHAUD, Maine
BOB BEAUPREZ, Colorado               LINDA SANCHEZ, California
CHRIS CHOCOLA, Indiana               ENI FALEOMAVAEGA, American Samoa
STEVE KING, Iowa                     BRAD MILLER, North Carolina
THADDEUS McCOTTER, Michigan

         J. Matthew Szymanski, Chief of Staff and Chief Counsel

                     Phil Eskeland, Policy Director

                  Michael Day, Minority Staff Director

                                  (ii)


                            C O N T E N T S

                              ----------                              

                               Witnesses

                                                                   Page
Manson, Hon. Craig, U.S. Department of the Interior..............     3
Pombo, Hon. Richard, U.S. Representative, California.............     6
Sullivan, Hon. Thomas M., U.S. Small Business Administration.....     9
Waters, Tom, American Farm Bureau Federation.....................    15
Hays, John V., National Cattlemen's Beef Association.............    17
Gordon, Robert, National Wilderness Institute....................    19
Bean, Michael J., Environmental Defense..........................    22

                                Appendix

Opening statements:
    Graves, Hon. Sam.............................................    34
    Ballance, Hon. Frank.........................................    37
Prepared statements:
    Manson, Hon. Craig...........................................    38
    Sullivan, Hon. Thomas M......................................    52
    Waters, Tom..................................................    61
    Hays, John V.................................................    68
    Gordon, Robert...............................................    74
    Bean, Michael J..............................................    81

                                 (iii)

 
    ENDANGERED FARMERS AND RANCHERS: UNINTENDED CONSEQUENCES OF THE 
                         ENDANGERED SPECIES ACT

                              ----------                              


                        THURSDAY, JULY 17, 2003

                  House of Representatives,
Subcommittee on Rural Enterprises, Agriculture, and 
                                        Technology,
                               Committee on Small Business,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 1:00 p.m., in 
Room 1100, Longworth House Office Building, Hon. Sam Graves 
[chairman of the Subcommittee] presiding.
    Present: Representatives Graves, Shuster, Ballance, and 
Udall.
    Mr. Graves. We will call this hearing to order. I want to 
thank everybody and welcome you all to the Rural Enterprise 
Agriculture and Technology Subcommittee.
    Today our main purpose is to examine the overregulation and 
unworkable environment the Endangered Species Act has placed on 
farmers and ranchers. The Endangered Species Act, or ESA, was 
intended to protect species on the brink of extinction. 
Instead, ESA has been turned on its head, and it places undue 
hardships on small businesses, farmers, and ranchers. It is now 
our agriculture base that is in danger of becoming extinct.
    In 1973, 109 species were listed as endangered. Today, 
there are over 1,200 species listed as endangered, and 250 more 
considered candidates for ESA listing. Another 4,000 species 
are designated as species of concern. Of these thousands of 
individual species, only 15 have been recovered. That is less 
than 1 percent. And this number can't completely be proven. We 
are spending millions of dollars protecting the rice rat, the 
Key Largo cotton mouse, the oval pigtoe, and dozen of ferns.
    As stated, the numerous ESA mandates have done little to 
save species. The number listed far outweighs the number the 
ESA can handle and successfully nurse back to survival. 
However, America's farmers and ranchers and small businesses 
seem to be the hardest hit by attempts to save species. 
Property has essentially been taken away from landowners due to 
the restrictions that are placed on practices, and the value of 
private property has plummeted. Farmers and ranchers face fines 
and imprisonment for the most basic of farm practices if 
Federal regulators believe it would disturb or endanger species 
or critical habitat.
    The Endangered Species Act has done more to damage the 
welfare of America's hardworking farmers than it has done to 
save endangered species. The Department of Interior, the Fish 
and Wildlife Service itself stated--and I am going to quote 
here--itself stated in the Register, the Federal Register 
notice regarding the Preble's jumping mouse--and I hope I got 
that termed right--And I am going to quote here: ``In 30 years 
of implementing the ESA, the Service has found that the 
designation of statutory critical habitat provides little 
additional protection to the most listed species, while 
consuming significant amounts of conservation resources. The 
Service's present system for designating critical habitat is 
driven by litigation rather than biology. It limits our ability 
to fully evaluate the science involved, and consumes enormous 
agency resources at huge social and economic cost.''.
    The Interior Department further states--and, again, this is 
a quote: This leaves the Service with little ability to 
prioritize its activities to direct scarce listing resources to 
the listing program actions with the most biologically urgent 
conservation needs.
    Additionally, there has been very little study of the 
impact the ESA has had on agriculture communities and small 
businesses. Small business representatives have repeatedly 
stated that the Fish and Wildlife Service has in many cases 
proceed without the benefit of informed comments, specifically 
those from small business interests. Additionally, the SBA's 
Office of Advocacy has weighed in on ESA issues and concerns 
that the Fish and Wildlife Services failed to properly analyze 
the economic impact associated with the designation of critical 
habitat. Simply put, small businesses, farmers, and ranchers 
cannot survive under the constraints of the Endangered Species 
Act. The unworkable overregulation the ESA has placed on 
farmers does nothing to serve the function intended by this 
act.
    I look forward to today's expert testimony. We have a lot 
of folks here today, and I hope we can work towards a common 
sense solution to the grave situation faced by agriculture and 
small business today.
    [Mr. Graves' statement may be found in the appendix.]
    Mr. Graves. And now I would like to recognize our Ranking 
Member, Mr. Ballance, for his opening remarks.
    Mr. Ballance. Thank you, Mr. Chairman.
    Our environment is a part of everything we do, from the 
food that we eat to the land that we occupy, and protecting it 
is an essential component of our national and global economic 
policies. The Endangered Species Act directly addresses the 
need for safeguarding our environment that was implemented to 
protect the survival of listed species while at the same time 
protecting and promoting the ecosystem in which they live. The 
Endangered Species Act understands the need for a balanced 
approach between environmental protection and meeting the needs 
of landowners. The Endangered Species Act recognizes the 
importance of these businesses in today's world.
    Some claim that this act has a negative impact on their 
business by creating restrictions on small farmers and ranchers 
through land limitations. Debate will continue on whether or 
not the Endangered Species Act helps or hurts small businesses. 
But, in truth, depending on the industry, many small businesses 
do rely on this act for their prosperity.
    Both the fishing and recreation industry counts on 
environmental protection for their economic survival. For 
example, the initial failure to protect salmon resources helped 
contribute to the loss of 47,000 jobs in the recreational and 
commercial salmon fishing industries. This job loss had a 
ripple effect, eventually making its way to other small 
businesses such as fishing supply stores, motels, and 
restaurants that form the infrastructure supporting these 
communities.
    Failing to protect critical resources can devastate small 
businesses throughout an entire industry. The ESA plays a 
significant role in protecting many small business industries. 
Protections have been built into the Endangered Species Act to 
mitigate these effects in the form of conservation incentives. 
These incentives provide flexibility and choice for landowners 
trying to work within ESA provisions. These programs allow 
users to explore the best methods of compliance that also meet 
their economic needs.
    Ironically, debate has taken place on the House floor today 
on legislation that slashes funding for Federal conservation 
programs, including initiatives that help small businesses 
comply with ESA. The Interior appropriations bill funds 
conservation programs at 991 million, 569 million below the 
amount authorized for 2004, and 200 million below last year's 
level.
    The ESA and small businesses coexist today, and, with an 
adequate investment in effective conservation programs, will 
continue to do so. I hope that we can take a balanced approach 
and meet the needs of everyone involved to ensure the survival 
of both our environment and our Nation's economy.
    Thank you. And I look forward to hearing the witnesses' 
testimony throughout this matter today.
    Mr. Graves. Thank you, Mr. Ballance.
    [Mr. Ballance's statement may be found in the appendix.]
    Mr. Graves. We are going to have approximately six votes, 
which are going to happen at 1:30. So we will have an 
interruption, unfortunately, in the middle of the hearing, as 
things go. But there will be one 15-minute, and the rest are 
all 5 minutes. But when the bell rings, we will find a spot in 
there.
    Again, I do want to thank all those for being here. And all 
statements of the members and witnesses will be placed in their 
entirety in the record.
    Now, we are going to switch things around just a little bit 
for those of you who don't know, because Mr. Pombo, the 
Chairman of the Resources Committee, who is going to testify a 
little bit later, is on the floor right now working. So we are 
going to start out right now with our second panel.
    Mr. Graves. And I would like to introduce the Honorable 
Craig Manson, who is the Assistant Secretary for Fish, 
Wildlife, and Parks at the Department of Interior. Judge, thank 
you for being here. I do appreciate it.

 STATEMENT OF THE HONORABLE CRAIG MANSON, ASSISTANT SECRETARY 
    FOR FISH AND WILDLIFE AND PARKS, U.S. DEPARTMENT OF THE 
                            INTERIOR

    Mr. Manson. Thank you very much, Mr. Chairman.
    Mr. Chairman and Members of the Committee, I do indeed 
appreciate the opportunity to testify before you today 
regarding the Endangered Species Act. We at the Department of 
the Interior appreciate your interest in the impacts of the 
ESA, and its critical habitat component in particular, on 
agriculture and small businesses in general.
    We have provided the Committee with briefing papers on the 
ESA and some of the major programs and issues, and I won't 
repeat that information now, but it is with my written 
testimony.
    One of the most controversial aspects of the ESA is 
critical habitat. You were quoting from the Federal Register 
notice announcing the critical habitat designation for the 
Preble's meadow jumping mouse, and you described accurately 
what the content of that notice is--that we have found little 
additional protection to most listed species from the statutory 
designation of critical habitat, and that we are now faced with 
a flood of court orders requiring critical habitat 
designations. Compliance with those orders now consumes nearly 
the entire listing program budget, leaving the Fish and 
Wildlife Service little ability to prioritize its activities. 
It also compromises our ability to work with States, tribes, 
landowners, and others to recover species already listed under 
the Act.
    The accelerated schedules of court-ordered designation have 
also left us with almost no ability to provide for additional 
public participation beyond the minimum required to comply with 
the Administrative Procedure Act, the ESA, or the Regulatory 
Flexibility Act. We are generally also not able to take 
additional time for review of comments and information to 
ensure the rule has addressed all of the pertinent issues 
before making decisions on listing and critical habitat 
proposals.
    This is not a new problem. The previous administration 
testified before Congress that this situation is detrimental to 
species conservation and needs to be resolved. However, the 
increasing number of lawsuits has brought on a crisis where we 
are simply out of funds for this fiscal year. To cover this 
shortfall, the administration has requested authority from 
Congress to shift money from other endangered species programs, 
and the President's fiscal year 2004 budget request totals 
nearly $12.3 million for listing, nearly double the 
appropriation for fiscal 2000, and a 35 percent increase from 
last year. However, our long-term challenge is to find a way to 
use our limited resources to deal with the most urgent of 
species needs, and not on who can get to the courtroom first.
    We recognize that critical habitat and other resource 
management decisions made by the Department can greatly impact 
local communities and the people who live and work in them. 
While countless species depend upon the land to sustain life, 
families, particularly farming and ranching families, depend on 
the same land for economic well-being. We know that we must 
work in partnership with people who live and work on the land.
    This approach is also essential to the survival and 
recovery of many listed species. The majority of the Nation's 
threatened and endangered species habitat is on either State or 
private property. We strongly believe that a collaborative 
stewardship approach is the best way to achieve the ultimate 
goal of the Endangered Species Act, which is recovery of 
threatened and endangered species.
    Under Secretary Norton of the Department has been 
implementing this partnering approach in our land management 
practices. Secretary Norton has often spoken of what she terms 
the four C's--communication, consultation, and cooperation, in 
the service of conservation. The focus of the four C's is the 
belief that enduring conservation springs from partnerships 
involving the people who live on, work on, and love the land.
    At the same time, I must acknowledge that critical habitat 
is an extremely challenging program within which to apply 
collaborative approaches. We have, however, made some progress 
in this area. We have authority to exclude areas from critical 
habitat if the benefits of exclusion would exceed the benefits 
of inclusion, and we are making greater use of this authority.
    For example, we excluded from recent critical habitat 
designations in Hawaii several ranches where landowners have 
committed to assist in the conservation and recovery of listed 
species on their land. We currently have many other 
conservation tools available to provide for close cooperation 
with private landowners, State, and local governments, and 
other non-federal partners. A detailed summary of those is in 
my formal written testimony.
    Another aspect of conservation is to meet with and listen 
to landowners and others directly involved in or affected by 
our conservation decisions. I have made numerous visits to 
farming and ranching groups and other small businesses since 
taking office, and have met with many others here in 
Washington. For example, I met yesterday with members of the 
Nebraska Farm Bureau, and I particularly met with John Hays, 
one of the witnesses on the next panel, from Oregon. Mr. Hays 
is a genuine American conservationist, and I commend his story 
to you as a realistic example of the challenges both we and 
landowners face in dealing with the prescriptive provisions of 
the ESA.
    The one common thread of all these meetings is the 
overwhelming desire of the farmers and ranchers to keep species 
on their land, and the overwhelming frustration at the way the 
ESA requires us to go about it. As I have stated on numerous 
occasions, the Department is committed to working with Congress 
to find a solution to these problems and other related issues. 
I want to reiterate that offer here today.
    Mr. Chairman, that concludes my prepared testimony. And I 
am pleased to respond to any questions that the Subcommittee 
might have.
    [Mr. Manson's statement may be found in the appendix.]
    Mr. Graves. Thank you, Judge. I appreciate it. Would you 
rather be called Under Secretary or judge?
    Mr. Manson. Whatever you are comfortable with. It is 
Assistant Secretary. We decided that we don't have Under 
Secretaries at Interior anymore. That seemed a little too grim, 
you know.
    Mr. Graves. Tom, if you don't mind, Representative Pombo is 
here, and I am just going to include him and incorporate him 
right into this panel, because I know he is busy. And I 
appreciate Mr. Pombo being here. He is somebody who is very 
interested in reforming the Endangered Species Act. He is 
Chairman of the Resources Committee, which is a very important 
Committee when it comes to dealing with this act.
    And Representative Pombo, we were trying to come up with 
some props to kind of put a face on the endangered species that 
we are talking about here today, and we came across the fairy 
shrimp, which I have got a few of them in here. And I know 
these are near and dear to your heart. They look an awful lot 
like what I had at Ocean Air last night, but nevertheless I 
know they are near and dear to your heart.

 STATEMENT OF THE HONORABLE RICHARD POMBO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Pombo. Well, thank you, Mr. Chairman. I appreciate you 
holding this hearing. I know it is extremely important. And 
when you look at what the impact the Endangered Species Act has 
had on rural America and farmers and ranchers across the 
country, I think it is extremely important to look at the act 
itself and some of the shortfalls that we have had over the 
years in terms of recovery and being able to fully implement 
the act in a way that recovers those species.
    In my district in California, there is no question that we 
have had a major impact on the farmers and ranchers because of 
the implementation of the act. You hold up the fairy shrimp. 
That is a species which was listed as an endangered species. 
Well, there were a couple of them that were listed as 
endangered and one that was listed as threatened. And that has 
had a major impact on the ability of farmers to farm in and 
around my district.
    I recently had a farmer who was trying to plant vineyards 
on property that his family had farmed for generations, and he 
was given a cease-and-desist order and told he could not 
proceed with planting the vineyards because of the presence, or 
possible presence, of endangered species and the possibility 
that it was critical habitat for the fairy shrimp. That was a 
multi-million-dollar issue to that particular farmer because of 
the amount of money it cost to plant vineyards.
    In my own case, I have a ranch in California; and when I 
went to build a home on my ranch, I was told that I couldn't 
build the home unless I paid into the habitat conservation 
plan. And it cost me $6,000 to gain permission from the Fish 
and Wildlife Service and Fish and Game in order to build a 
house on my ranch. That is the kind of impact that it is having 
on my district.
    There are any number of anecdotal stories that people can 
tell, but I think what we all have to remember is that the 
problems that we are having with the Endangered Species Act 
aren't necessarily with the act itself, but it has a lot more 
to do with the implementation of that and what critical habitat 
designations mean and what recovery means and how we go about 
doing that. It is a matter of really rewriting the act, and 
trying to go after a law that does a better job of recovering 
species than what we currently have and has less of a direct 
impact on the private property owners, the farmers and 
ranchers, who have been good enough stewards of the land that 
they still have endangered species on that land. A lot of times 
people forget that they took care of that land good enough that 
they still have the species there. So maybe we ought to be 
changing the incentives, and encouraging them to become better 
stewards and encourage them to do things on their farms and 
ranches that attract endangered species, instead of making it a 
negative as we have under the current implementation of the 
law.
    So I appreciate greatly the opportunity to come in here and 
share a little bit with you, Mr. Chairman. And I am very, very 
appreciative that this Committee has decided to undertake this 
and hold a hearing.
    Mr. Graves. In light of the fact that we are going to have 
votes here in a little bit, I am going to go ahead and open it 
up for questions for Representative Pombo real quick, because I 
know he is going to have to leave right after this. And I want 
to start out, and I encourage the members to keep their 
questions as short as possible.
    But I read from--I quoted actually from the Federal 
Register. And we are finding out more and more, too, that 
critical habitat has been designated and species are being 
designated more through litigation than anything else. And why 
do groups continue--and I am just asking your opinion, I guess. 
Why do groups continue to use litigation when they know that 
also creates problems? Because it draws resources away from 
doing the job that the act was intended to do, it costs a 
tremendous amount of money, taxpayer dollars, to go through 
that. And yet it is proliferating.
    Mr. Pombo. I think the judge can probably describe for you 
what the impact has been on Fish and Wildlife and the 
Department of Interior. But if the question is why do they 
continue to do this, I think a lot of it has to do with a 
different agenda that really doesn't have anything to do with 
recovering endangered species. I think it has a lot more to do 
with stopping growth around communities, it has a lot more to 
do with stopping timber harvest or mining or any kind of 
resource extraction from our public lands and private lands. I 
think it has a lot more to do with an outside agenda that has 
very little to do with what is the best thing possible for 
recovering species. Otherwise, we wouldn't be tying Fish and 
Wildlife and Interior up in terms of all of these lawsuits. I 
mean, you have a chance to visit with the folks down at the 
Department of Interior. They are spending most of their time 
defending themselves against lawsuits and not doing the things 
that they should be doing to recover endangered species.
    Mr. Graves. If we condensed that list or reduced that list 
to a critical number, do you think that would have a huge 
effect on those lawsuits?
    Mr. Pombo. I don't know. Unless we can change the law in 
terms of how these lawsuits are handled, I don't know what you 
do about that. Because everybody has the right to file a 
lawsuit and tie everybody up. The idea of creating a smaller 
number of severely endangered species and concentrating our 
resources on that is something that we have kicked around. And 
in a lot of cases, I think it would be better, because there 
are some severely endangered species that we should be 
concentrating on, because nobody wants to be responsible for a 
species becoming extinct. And because of that, I think that we 
could identify those species, and concentrate our energy and 
efforts and dollars on trying to recover those species.
    Unfortunately, the way the law is written now or the way it 
is being interpreted right now, I don't believe that that is an 
option that Interior has.
    Mr. Graves. Mr. Ballance.
    Mr. Ballance. Thank you, Mr. Chairman.
    Mr. Pombo, I am going to just thank you for your testimony. 
And I don't have any questions.
    Mr. Graves. Bill.
    Mr. Shuster. Thank you, Mr. Chairman.
    I just want to thank Chairman Pombo. I think one of the 
things you said makes a lot of sense: Let us encourage 
landowners to manage these endangered species. I think they 
will do a good job of it and do it at a lot less cost, and I 
think in the end it will be a much better program.
    But I appreciate your coming here, and I look forward to 
working with you to change this law so that we can make it more 
effective and more friendly to our farmers and our ranchers and 
developers. Because I believe that they do have a different 
agenda over at U.S. Fish and Wildlife. In Pennsylvania alone, 
there is a situation in eastern Pennsylvania that they found 
there was a turtle--I don't know the name of the turtle. It 
turns that they did DNA testing on the turtle, and the turtle 
wasn't from eastern Pennsylvania, it was from North or South 
Carolina. I didn't know that such a thing could be done, 
figuring it out with DNA, but it was. And it appears that 
somebody imported the turtle and put it in place so they could 
stop development in eastern Pennsylvania. So those type of 
shenanigans have to stop. And as I said, I look forward to 
working with you in changing this law. Thanks.
    Mr. Pombo. If I may, Mr. Chairman. I would just add that 
the idea of changing the incentives and giving a positive 
incentive for those who are doing a good job of managing their 
land and recovering species is an idea that has grown quite a 
bit in recent years. And there are even a number of 
environmental groups that are beginning to see that as a 
solution to some of our problems.
    Mr. Shuster. Sort of the carrot and the stick. People 
respond much better to the carrot. And I don't know anybody 
that wants to endanger or hurt the environment, but we 
certainly want to have economic development and do it in a 
reasonable way. So thank you.
    Mr. Pombo. Thank you.
    Mr. Graves. Mr. Udall.
    Mr. Udall. Thank you, Mr. Chairman. And thank you, Mr. 
Pombo, for your testimony. Mr. Pombo is the chairman of the 
Resources Committee on which I serve, and I am going to make 
sure I don't grill him here, because it might have some 
consequences in the Committee.
    But I like your comment in terms of giving incentives, 
because I think you are right on. I think we need to try to--as 
many of us know, the endangered species are on private land, 
sometimes completely on private land. The only way we are going 
to fulfill the intent of the act is try to work with private 
landholders to make sure that happens.
    As the Chairman knows, we have a big endangered species 
issue in the Rio Grande Basin. And I am hoping to get in some 
legislation that will talk about sustainable agriculture and 
sustainable use of water, and I look forward to having hearings 
on those issues and maybe even out in the State. I think 
requests have been put in for you to come out West and do some 
hearings out in New Mexico and some of the Rocky Mountain 
States. So, with that, thank you very much, and appreciate you 
being here.
    Mr. Pombo. Thank you.
    Mr. Graves. Thank you, Mr. Udall.
    Thank you, Mr. Chairman. I appreciate you coming in. This 
is an issue that is very important to me, and we have--we get a 
lot of letters and a lot of correspondence from farmers and 
ranchers and many small businesses in many areas. Whether it is 
just trying to use their property and trying to farm, or even 
getting into the river, the Missouri River, which is--you know, 
we have a hotbed of endangered species issues going there, and 
the small businesses that are affected and the farmers that are 
affected based on some of the practices being changed. It is a 
huge issue, and I look forward to working with you and your 
Committee, too, on this particular issue and legislation.
    Mr. Pombo. Well, I thank you, Mr. Chairman. And I do think 
it is important to point out that when we decrease the number 
of acres that we have the ability to farm and have that kind of 
an impact on rural America, it is not just the farmers and 
ranchers that get hurt, it is all of the small businesses and 
that entire community who provide services for those farmers 
and ranchers that suffer, too.
    And as we have seen with the timber industry and other 
industries which have been, for all intents and purposes, been 
put out of business in this country, the impact on rural 
communities is devastating, and it is something that I believe 
the time has come for Congress to stand up and accept 
responsibility and move forward. So thank you very much.
    Mr. Graves. These are truly mom-and-pop businesses, too. 
They aren't big, by any stretch. Thank you, Mr. Chairman. I 
appreciate it.
    Mr. Pombo. Thank you.
    Mr. Graves. Tom, we will go ahead and move right on to you. 
Our next person is Tom Sullivan, who is the Chief Counsel for 
the Small Business Administration's Office of Advocacy. Tom, I 
appreciate you being here.

  STATEMENT OF THE HONORABLE THOMAS SULLIVAN, CHIEF COUNSEL, 
       OFFICE OF ADVOCACY, SMALL BUSINESS ADMINISTRATION

    Mr. Sullivan. Thank you, Mr. Chairman, and members of the 
Subcommittee. Good afternoon, and thank you for the opportunity 
to appear before you today to describe the U.S. Fish and 
Wildlife Service's compliance with the Regulatory Flexibility 
Act and its designations of critical habitat for endangered 
species under the Endangered Species Act. My name is Tom 
Sullivan, I am the Chief Counsel for Advocacy at the United 
States Small Business Administration.
    The Office of Advocacy is required by the Reg Flex Act and 
President Bush's Executive Order 13272 to monitor Federal 
agency compliance with the Reg Flex Act and report.
    And I will give a brief overview of my office's 
responsibilities, but first would like to request that my 
complete written statement be included in the record.
    As part of our mandate to monitor agency compliance with 
the Reg Flex Act, advocacy has reviewed recent rulemakings by 
the Service. My staff has had regular contacts with 
representatives from both the Department of Interior and the 
Service on critical habitat rulemakings. In fact, my deputy 
chief counsel and legal team are currently working with 
Assistant Secretary Manson's office to discuss ways to improve 
the Service's compliance with the Reg Flex Act while protecting 
both endangered species and small ranchers and farm builders.
    Recently, small businesses have expressed concern to my 
office that the Service has provided economic analyses which do 
not accurately capture regulatory impacts. The Office of 
Advocacy has publicly commented three times this year that the 
Service's analyses appear insufficient to serve as the factual 
basis for their certification that the rules would not 
significantly impact a substantial number of small entities.
    One example is the proposed designation of critical habitat 
for the pygmy owl published by the Service in November of last 
year. My office conducted outreach after the proposal, in part 
through our regional advocate in Arizona, Michael Hull, who met 
with affected small businesses directly and attended the 
Service's public hearing on the rule in Tucson.
    From our outreach, we learned that the Service had not 
incorporated the concerns of many small ranchers, miners, home 
builders, and others in its threshold analysis as to whether 
the rule would affect small business.
    And there is another concern I would like to express to the 
Subcommittee, and that is that the Service seems to have 
recently introduced critical habitat restrictions without 
affording notice and an opportunity to comment as required by 
the Administrative Procedure Act and the Reg Flex Act. I am 
concerned that the Service may exclude the public from its 
public policy process by foregoing rulemaking entirely, 
imposing survey and mitigation requirements on the public 
during consultations with other Federal agencies.
    On the rule to designate critical habitat for the pygmy owl 
in Arizona, the Service acted to impose critical habitat 
restrictions during the public comment period on the rule. In 
March of this year, a Service biologist field supervisor issued 
a guidance memo to the Army Corps' nationwide permit program 
which imposed survey consultation and mitigation requirements 
for the land comprising most of Arizona from north of Phoenix 
down to the Mexican border. This would affect ranchers or 
farmers who use the nationwide permit program.
    Small ranchers have also informed my office the Service may 
assert jurisdiction over unoccupied land in Arizona under the 
Endangered Species Act's section 7 consultation requirements, 
imposing survey consultation and mitigation burdens on small 
ranchers as they attempt to secure grazing permits from the 
Forest Service and the Bureau of Land Management.
    I believe that the Administrative Procedure Act and the Reg 
Flex Act do require the Fish and Wildlife Service to afford the 
public an opportunity to review potential regulatory actions 
and provide meaningful comment.
    I look forward to working with Assistant Secretary Manson's 
office to ensure that affected small entities are given this 
chance.
    It was the designated and designed purpose of the Reg Flex 
Act over 20 years ago, and my desire now, to help government 
base decisions on a full and open understanding of how 
regulations affect small business. My office stands ready to 
assist the Subcommittee and Judge Manson to achieve these 
goals.
    Thank you for the opportunity to testify, and I am happy to 
answer any of the questions that this Subcommittee may have.
    Mr. Graves. Thank you, Mr. Sullivan.
    [Mr. Sullivan's statement may be found in the appendix.]
    Mr. Graves. Judge, we will recess for a short time to go 
over and vote. Again, there is going to be one 15-minute and 
four or five 5-minute votes. So it will be a little bit, but we 
will come right back and then we will go into questions with 
you two, and then we will seat our third panel. So we will be 
right back. Thank you.
    [Recess.]
    Chairman Graves. Okay. We will go ahead and call the 
hearing back to order and we will open up with questions for 
the Judge and Mr. Sullivan, which I have one.
    Mr. Manson, I would like to ask you the same question I 
asked Mr. Pombo about the excessive litigation, and it seems to 
be this act is being driven more by litigation now than sound 
science. Do you have any good idea why they continue to sue the 
Department when it continues to draw away resources, when it 
continues to pull down monies that should be going to be used 
to protect these species?
    Mr. Manson. Well, I think that is a real problem, 
particularly in this critical habitat area, and I do not 
purport to understand the motives of all of the individuals who 
and groups who are engaging in that litigation. I do think, 
however, that in this particular aspect I have testified before 
in other Committees that the Endangered Species Act is broken 
and we need a fix to this aspect of the Endangered Species Act, 
to take away the strict deadlines that provide the hooks for 
litigation and to make the designation of critical habitat an 
opportunity for real recovery and move it away from process. 
Whenever you have a process-driven aspect of the law, there are 
opportunities for litigation.
    Chairman Graves. Do you think--and you mentioned recovery, 
which I think we should find those critical species and 
concentrate on recovery. But it seems like just keeping 
static--and, Mr. Sullivan, you might be able to answer this. Is 
the goal to stay static with some of these species or to 
actually recover? Recovery, there is only 1 percent that 
actually show recovery out of the ones listed.
    Mr. Manson. The goal of the act is to recover species and 
to the extent that we are not recovering species, then the 
purpose of the act is not being achieved.
    Chairman Graves. Mr. Ballance?
    Mr. Ballance. Thank you, Mr. Chairman. Mr. Secretary, you 
testified regarding large amounts and we just talked about 
litigation regarding this critical habitat designation and the 
drain it places on your Department and the limited resources. 
But is it not true that the overwhelming majority of this 
litigation is caused by the Department of Interior's failure to 
assign critical habitat designation in the first place? As 
required by this act?
    Mr. Manson. Well, the history is that for many years, the 
Fish and Wildlife Service found it, quote, not prudent, to 
designate critical habitat. That is a term that is used in the 
statute and it is a permissible finding under the statute. 
Beginning in the mid-1990s, starting primarily with a case 
involving the coastal California gnatcatcher, the courts began 
to find that the Fish and Wildlife Service's determination of 
what is not prudent was not in accordance with the Act. So, the 
answer to your question is all of the lawsuits on critical 
habitat are driven by the fact that there are 1,200 and more 
listed species, and less than a third of those have critical 
habitat designated as required by the Act.
    Mr. Ballance. But are these lawsuits--and I haven't 
reviewed any of them--are they being brought against the 
Department, against Fish and Wildlife, trying to seek such 
designation?
    Mr. Manson. Yes.
    Mr. Ballance. And of course your position is what?
    Mr. Manson. Well, my position is, as I have stated before, 
that the critical habitat designation, as it is presently set 
up in the statute, adds very little to the conservation of a 
species. That is why the Fish and Wildlife Service for many 
years, through administrations of both parties, found it not 
prudent to designate critical habitat.
    Mr. Ballance. Well, Mr. Chairman, I do not want to run over 
my time. In North Carolina there are nine animals and seven 
plants known to be extinct that once lived in North Carolina 
and 13 animals and 48 plants that have vanished from the State, 
but can still be found in other areas. In an article in the 
Atlantic Journal and Constitution a U.S. Fish and Wildlife 
Service representative from the Asheville, North Carolina 
office stated that habitat loss is the single biggest factor in 
the loss of these species.
    Given these facts one could argue that had environmental 
provisions such as critical habitat designation been in place 
to protect these habitats, 77 more species would be present in 
North Carolina today, further enriching the State's 
biodiversity. This is an example of how critical habitat can 
enhance one State. Imagine how many more species would be 
present today if we did a count in all 50 States. Given the 
fact that conservation of habitat could have prevented the 
extinction of a large number of species, how can you advocate 
eliminating critical habitat designations?
    Mr. Manson. Well, I agree that critical habitat loss is one 
of the, if not the critical factor, and that recovery of 
habitat is essential to the recovery of species. But, it is not 
so that the elimination of critical habitat under the statute 
would contribute to the further decline of species. In fact, 
the time, effort, and money that is spent on the statutory 
designation of critical habitat actually frustrates 
conservation efforts, and we find that there are superior ways 
to conserve habitat, both statutorily and on a voluntary basis, 
such as is done in our Partners for Fish and Wildlife Program 
and our Landowner Incentive Program and Habitat Conservation 
Planning. And there is a difference between the designation of 
critical habitat under the statute, which turns out to be 
largely an administrative exercise, and the conservation of 
habitat on the ground. That is the brief answer to that.
    Mr. Ballance. I have got a little bit more time, I think, 
Mr. Chairman. I am sympathetic with the small businesses and 
farmers and people who have these concerns. But is there a way 
or how can your Department--isn't there a plan or program in 
place, particularly the small farmers, that you can assist them 
with their limited financial resources in implementing 
conservation plans?
    Mr. Manson. Well, for example, the landowner incentive plan 
provides funds for landowners to do voluntary conservation 
measures that will benefit species. But nonetheless, we are 
still having to deal with the statutory structure of the ESA 
that requires the designation of critical habitat that has the 
other impacts that have been and will be discussed today.
    Mr. Ballance. Thank you, Mr. Chairman.
    Chairman Graves. Thank you, Mr. Ballance.
    Mr. Sullivan, I am going to ask you a similar question. You 
guys have been pretty active in dealing with the regulatory 
mess. What would you suggest from a small business standpoint 
on making this work? Where we can find some common ground?
    Mr. Sullivan. I think you are going to hear from a panel of 
professionals who have to deal with this every day in their 
business on what the Office of Advocacy believes is the 
solution. And that is prior to folks looking for litigation 
opportunities or prior to folks having to defend themselves in 
court, the folks from the Service have to ask the ranchers for 
solutions, and the Service has to ask the home builders for 
solutions. And I think that what Mr. Pombo said earlier is 
enlightening in that when it comes to conservationists and 
small business owners, they are not at odds with each other at 
all. They both want the same thing. And there is a tendency, 
the Judge and I were talking about during the break, is that 
this becomes a paper exercise. And instead of sitting down and 
consulting with the folks who would be affected by this, they 
file a claim with the Service. The Service has to file a claim 
by statutory deadline back and then they end up in court. And 
that is where the system is broken.
    If we could make sure that that consultation happens 
between the conservationists between the farmers, between the 
ranchers, between the home builders earlier in the process 
without fear of litigation, then the system should work better.
    Chairman Graves. Mr. Shuster.
    Mr. Shuster. My experience has been that it is not 
necessarily the rancher, or look at developers, it is the 
environmental groups, people out there that want to throw up 
these hurdles.
    How do we stop that? Can we at least limit? You are not 
going to stop people from suing people. I do not advocate that, 
but how do you limit it so that you do not have the endless 
continuing to file and file and file until the developer says 
forget it, I will just give up on it or it is costing him so 
much money that that becomes a problem?
    Mr. Sullivan. Mr. Shuster, one of the things that we have 
recommended is that if you realize you are going to end up in 
court, why not make the decision to litigation proof it at the 
front end? One way that we believe that can happen is under the 
Administrative Procedure Act and under the Regulatory 
Flexibility Act the Service must flush out the economic impact 
on the home builders, on the ranchers and on the farmers, and 
once that is documented for the entire public to see then that 
will bolster their chances of winning in court at the end of 
the day. But I think it is unfortunate that we presuppose 
courtroom action to solve these problems, and I think that the 
judge has some innovative ideas on how the act can be changed 
to disincentivise folks from going to court all the time.
    Mr. Shuster. Judge? Did you want to----.
    Mr. Manson. Well, we have talked, for example, about 
changing the structure of the Act, particularly in this 
critical habitat area, to remove the regulatory impacts of 
critical habitat and focus more on the conservation aspects of 
critical habitat. We have been talking to the Resources 
Committee and the relevant Committees in the Senate to see if 
we can't work cooperatively with Congress to develop specific 
legislative proposals along those lines.
    Mr. Shuster. Something I guess may not pertain exactly to 
this act, but getting the different agencies to work together. 
And I want to thank you for your help. You were able to work 
together, at least close the time line for a development going 
on in my district, and you and the Corps worked together. Are 
there more ways that we can do that? Is there something that we 
need to put into law to bring all the stakeholders together at 
the beginning?
    I know there is a project in northwestern Pennsylvania, 
they have been working on a road corridor, and they did just 
that. They haven't started construction, but brought all the 
stakeholders in at the beginning and said this is what we want 
to do. We are at a point where everybody has signed off on it. 
The biggest fight is where the corridor is going. Everybody 
wants the corridor because they have property near it. But you 
have the homeowners, you have the environmental people, the 
State, everybody sat at the table.
    Is there something that we can do to encourage that?
    Mr. Manson. Well, I agree with processes like that. I think 
that is the only way you make progress on these issues, which 
have so many varied interests and are very contentious, and I 
agree completely with Mr. Sullivan when he talks about getting 
people together. That is the type of collaboration that we are 
trying to instill in our bureaus in the Department of Interior 
because we do not see that it works any other way.
    Mr. Shuster. Another instance, back to the endangered 
species, the Indiana bat has been a problem on a highway 
corridor in Interstate 99 in my district. It has--I will step 
back a little bit. The project probably has been going on 30, 
35 years now, and the road is still not completed, the last 9 
miles, and it seems that the last hurdle is the Indiana bat. 
Somebody made a claim that they found droppings or something, 
and so it has held up the highway for a year. And this road 
started out in the mid-70s projected to cost $350 million. By 
the time they cut the ribbon and it is open, a 60-mile road, 
$750 million. And a lot of that quite frankly is due to the 
environmental holdup, the Indiana bat holdup.
    That is the kind of thing that we want to try to bring 
people together at the beginning, get them to sign off on it. 
So anything that we can do to help change the law to encourage 
that, we want to do.
    And I want to thank both of you for being here, and Judge, 
your work for the people of the Ninth Congressional District in 
getting that process through, I thank you for that.
    Chairman Graves. Thank you both very much. I appreciate it, 
and we will go ahead and seat the third panel now.
    [Recess.]
    Chairman Graves. Thank you all very much for being here. We 
will start out with Mr. Waters, who is from Missouri, Ray 
County, Missouri. He lives near Orrick and farms with his 
family there. You all farm about 3,500 acres of corn and 
soybeans and he has been very active in Missouri River issues 
and is a member of Missouri Farm Bureau and American Farm 
Bureau Federation. I appreciate you being here today.

 STATEMENT OF TOM WATERS, MISSOURI FARM BUREAU, AMERICAN FARM 
                       BUREAU FEDERATION

    Mr. Waters. Thank you. You just took my whole introduction. 
Good afternoon. My name is Tom Waters, a seventh generation 
farmer from Ray County, Missouri. I operate our family farm in 
the Missouri River bottoms near Orrick, Missouri. I farm 3,500 
acres of corn, soybeans and wheat and alfalfa. In addition, I 
oversee another 1,500 acres that is primarily in the Missouri 
River bottoms. I am a proud member of the Missouri Farm Bureau 
and the American Farm Bureau, the Nation's largest agricultural 
organization.
    Mr. Chairman, and members of the Subcommittee, I thank you 
for this opportunity to provide testimony regarding the 
Endangered Species Act. The Farm Bureau especially appreciates 
your willingness to address the impacts of the Endangered 
Species Act on our Nation's farmers and ranchers. The Missouri 
Farm Bureau has submitted written testimony for today's 
hearing. The written testimony covers a wide range of issues 
and concern the Farm Bureau has with regard to the Endangered 
Species Act.
    In addition to the written testimony, the Farm Bureau has 
asked me to share my story with you and describe how three 
threatened and endangered species have impacted my farming 
operation. The pallid sturgeon, piping plover and the interior 
least tern are stirring up much controversy along the Missouri 
River and causing me to pay close attention to the Endangered 
Species Act.
    Regional representatives within the Fish and Wildlife 
Service and a few environmental groups are using the Endangered 
Species Act to increase spring flows and reduce summertime 
flows on the Missouri River. Under this scenario my farming 
operation would suffer great harm. High flows in the spring 
prevent bottom lands from draining and make it difficult to 
impossible to plant my crops, and the reduced summertime flows 
will force barges that are used to transport my crops off the 
river.
    In 1999, for example, flows on the Missouri River were 
high. I had 970 acres I couldn't plant or that were drowned out 
by the high Missouri River.
    That is about one-third of my total operation that was 
unavailable to me that year. The next year, the river was low, 
and I was able to plant that same 970 acres and I raised a good 
crop. So I know for a fact that the higher spring flows on the 
Missouri River greatly reduce my ability to produce 
agricultural products.
    The Biological Opinion calls for a spring rise 
approximately every 3 years. That assumes certain levels of 
rainfall and amount of available water. The one thing we 
farmers know for certain, there is no certainty with the 
weather. It is likely that high rainfall years might require 
releases of water in an off scheduled year. That would mean 
that these lands could be flooded in 2 or 3 years in a row. 
This certainly makes it extremely difficult for me to plan my 
yearly operation and to obtain financing to grow my crops.
    Even if I can't grow a crop because my land is flooded by 
the spring rise, I still have to pay property taxes and make 
mortgage payments on the unusable lands. I am making a portion 
of my farm available for the benefit of these species, while my 
inland neighbors a short distance away have no such 
restrictions.
    The ESA is for the benefit of all people, yet I and others 
along the Missouri River are bearing the cost of preserving the 
habitat. What is so frustrating about the whole process is I 
have little to no say in the listing of the species, the 
process of designating critical habitat or the plan to recover 
the species. Yet I stand to lose several acres of highly 
productive farmland in an effort to save these fish and birds.
    The Army Corps of Engineers and Fish and Wildlife Service 
engage in a consultation process to decide matters that affect 
my property, and yet I have no chance for any meaningful input 
into these decisions.
    The Federal agencies who are deciding the fate of my land 
and up to one-third of my operation, I feel that I should be at 
table with them to tell them what is feasible for me to do and 
to generally have some input into what ought to be done. After 
all, it is my land that is being used for the benefit of the 
species. Even worse is the more I learn about the species, the 
more I understand the science being used may be misguided. 
There is a debate on what is best for the species and whether 
it is necessary for a spring rise in order to preserve them.
    Courts can't even agree on what is best. Right now there 
are two conflicting court orders regarding the Missouri River 
with which the Corps cannot comply. Before lands are restricted 
and people's livelihoods are affected, decisions should at 
least be based on sound science so that it is proved that the 
action is necessary for the survival of the species.
    The Endangered Species Act should at least have a threshold 
standard that the Fish and Wildlife Service is required to meet 
before it takes actions that affect people's lives. That 
information should be independently peer reviewed in order to 
ensure that it meets these threshold requirements and that the 
Service has a sound scientific basis for acting.
    Given scientific uncertainty surrounding Missouri River 
issues, I feel like a pawn in a political chess game with my 
land and that of my river neighbors as the prize.
    Landowner participation in conserving species is critical. 
Involving landowners more and providing incentives for them to 
become involved will not only create a more balanced and 
informative decision-making process but it will allow 
landowners to be excited once against about providing habitat 
for our Nation's treasures.
    Again, I thank you for the opportunity to share my 
thoughts. I would be happy to answer any questions you have. 
Thanks.
    Chairman Graves. Thank you, Mr. Waters.
    [Mr. Waters' statement may be found in the appendix.]
    Mr. Graves. We would now hear from John Hays. John is from 
Oregon, President of the Oregon Cattlemen's Association, and he 
is representing the National Cattlemen's Beef Association. We 
appreciate you being here and coming all across the country to 
be here in Washington. Go ahead.

    STATEMENT OF JOHN V. HAYS, ROUSE BROS. RANCH, NATIONAL 
       CATTLEMEN'S BEEF ASSOCIATION, PUBLIC LANDS COUNCIL

    Mr. Hays. Good afternoon, Chairman Graves and distinguished 
members of the Committee. My name is John B. Hays. I am a 
rancher and a former President of the Oregon Cattlemen's 
Association from Baker County, Oregon. My family has been 
ranching on the same land in Unity, Oregon since 1950. I 
appreciate the opportunity to be here today to provide my story 
on the Endangered Species Act to the Committee on behalf of the 
sheep and cattle rancher members of the Public Lands Council 
and the National Cattlemen's Beef Association, the largest 
cattlemen's organization in America.
    I graze my cattle on private lands, about 15,000 acres, as 
well as on three Federal allotments, one approximately 20,000, 
a 45,000-acre and a 35,000-acre allotment. These allotments are 
integral to my ranching operations. AUMs, animal units, 
reductions on the Federal allotment directly impact the 
economic viability of my entire operation.
    On May 24, 2001, I met several members of the United States 
Forest Service, my attorney, and two witnesses from the Oregon 
Cattlemen's Association to discuss the future of my grazing 
allotment. The meeting became necessary because I had been 
getting mixed communications concerning my Forest Service 
grazing allotment. I feared I was on the verge of having my 
animal units per month, AUMs, severely reduced due to an 
endangered species that was not present on my allotment.
    The Forest Service personnel had been communicating to me 
that the animal units on my grazing allotment would likely be 
cut back or possibly eliminated due to the Canadian lynx. I did 
say ``Canadian'' lynx, not ``United States'' lynx. This baffled 
me as the lynx has never been found on my allotment. Indeed, no 
one had ever seen a lynx in our part of the State. In fact, 
there had only been 14 confirmed reports of lynx in Oregon 
since 1897.
    Even more baffling was the Forest Service, working together 
with the United States Fish and Wildlife Service under a 
memorandum of understanding, were mapping critical lynx habitat 
on my ranching operation. My attorney took detailed notes of 
our conservation on behalf of myself so I could be free to ask 
questions, respond to the Forest Service comments, and the 
following key points is what we discussed:
    The Forest Service Resource Staff Advisor from Boise stated 
that parts of my allotment have been determined to be lynx 
habitat, even though the Forest Service ``did not think there 
are any lynx in the area, but they are required to manage for 
lynx anyway''.
    It is unfortunate that Federal agencies are being forced to 
spend their money resources on something that no rancher, no 
trapper, recreationalist or Forest Service personnel has ever 
witnessed or found any scientific evidence that suggests the 
presence of a lynx.
    The Forest Service said that the United States Fish and 
Wildlife Service required them to follow their conservation 
strategy that was in place even before the listing of the lynx 
took place, and then they could determine whether or not these 
actions are not likely to affect the habitat of the lynx. At 
that point they said they could issue a grazing permit for 
maybe 1 year without too much delay.
    Mr. Chairman, it is impossible to gauge my operation on a 
year-to-year basis. Grazing permits or grazing rights are 
issued for 10 years. Once issued, I have to present this permit 
to my banker and receive operational financials for the year. 
Three years ago, when all of the talk of the severity of 
reducing animal units on my allotment was taking place, my 
banker was reluctant to finance my operation because this might 
exist. The Forest Service telling me that they would issue a 
permit without too much delay is far too vague an assurance for 
running a business which depends on grazing.
    When I need to turn my cattle into grazing allotments, I 
have no other place to pasture them. A delay can cause 
overgrazing and resource denigration on my private pasture land 
and stunt the growth of my cattle.
    I realize the Federal employees that are stuck in the bog 
of regulations and paperwork that delay the issuance of my 
permit still receive a Federal paycheck, but I do not. My 
livelihood is dependent on the timely and continual issuance of 
a grazing permit.
    The Forest Service said so far they were not in compliance 
on the Canadian lynx issue because they had not yet consulted 
with the U.S. Fish and Wildlife Service on my grazing permit. 
They said they had been spending most of their time on the bull 
trout, another highly questionable endangered species. They 
said my allotment permit would be vulnerable until they had 
time to consult with the U.S. Fish and Wildlife Service. The 
science used to list the bull trout is now widely being 
questioned, and yet it seems to take precedence over the 
Canadian lynx.
    Even though the Forest Service has reissued my permit with 
restrictions, unaffected by the lynx at this time, except they 
had three timber sales in my area this past month that were 
denied because of the lynx habitat. This experience has left a 
bad taste in my mouth. It has made my sons reluctant to take 
family business over. They do not care about ranching. And this 
is not just a problem I have had to deal with but many ranchers 
across the area have the same problem.
    Perhaps the most obvious failure in the ordeal described 
above is when the agencies fail to use sound science which in 
this case equates with common sense. The Canadian lynx was 
never found on my allotment, yet the government has proposed to 
impose onerous restrictions on my livelihood to help it.
    Sound science starts with objective evaluations of species, 
listing and delisting proposals by qualified scientists, using 
peer review of their work. The U.S. Fish and Wildlife Service 
employees can have judgments obscured at times by their 
institutional interest in administering the ESA. Because of the 
tremendous impact the ESA can have on an economic community and 
local land use generally, we believe that additional procedures 
are in order to ensure that no interest is unfairly minimized 
or excluded prior to a decision.
    Another general issue is that all members of the public who 
are potentially adversely affected by the results of a 
consultation under the ESA should be permitted as a matter of 
law to participate fully in the consultation.
    And lastly the if Forest Service feels it is necessary to 
remove a permittee from the land pursuant to the terms of a 
biological opinion issued under the ESA, the agency should be 
required as a matter of law to consider alternatives to keep 
that rancher in business.
    In conclusion, I want to thank you again for the 
opportunity to present this view of the cattle industry in 
respect to the AUM reductions due to the ESA. We look forward 
to working with you to craft legislation that will both respect 
and meet the protective species and be respectful for the 
ranchers and their families who have worked the western lands 
for so many generations.
    Thank you.
    Chairman Graves. Thank you, Mr. Hays. I appreciate it.
    [Mr. Hays' statement may be found in the appendix.]
    Mr. Graves. We will hear now from Robert Gordon, who is 
with the National Wilderness Institute. Mr. Gordon, I 
appreciate you being here. I think you have a video.

   STATEMENT OF ROBERT GORDON, DIRECTOR, NATIONAL WILDERNESS 
                           INSTITUTE

    Mr. Gordon. I do, and I will start it partway through my 
remarks. It is relevant to the half. But I want to thank you 
and Ranking Member Ballance for the opportunity to comment on 
the ESA.
    The NWI is a private conservation organization dedicated to 
using sound, objective science for the wise management of 
natural resources, and we have done extensive work on 
endangered species and produced a number of studies on the 
effectiveness of our wildlife conservation programs.
    Of particular interest to NWI is the relationship between 
private ownership of land and conservation. Private 
conservation is actually more important to wildlife than 
government efforts, in my opinion. Although the Federal 
Government owns vast amounts of land, private land is often 
richer in wildlife, plants and water. It is often said that 
about 70 percent of endangered species are found on private 
land. And when I speak of private conservation, I do not refer 
only to the work of those who are self-proclaimed environmental 
organizations, but also commercial activities, small 
businesses, ranching, farming, forestry, recreation industries, 
and others that make tremendous contributions to conservation 
as a by-product of their businesses.
    For example, in Texas there are private ranches with a 
greater number of certain species of rare antelope than are 
found in the wild in their native lands. In these cases not 
only the landowners and the species benefit from private 
conservation activities, but the public as well. If any of 
these private activities made the property owner vulnerable to 
taking of his property, they would surely be reduced in number 
and scope and might not occur at all.
    Undoubtedly, the attribute of our society that makes the 
greatest contribution to the environment is the ever growing 
efficiency of American businesses. Our family farms that during 
the last 100 years have greatly increased food and fiber 
production while reducing the amount of land devoted to crops 
by 28 million acres serve as a prime example of such 
efficiency. That 28 million acres is now available for some 
other use.
    In the 30 years that the Endangered Species Act has been on 
the books it has brought few, if any, species to the point 
where they can actually be classified as recovered and removed 
from the endangered species list. Although several species have 
been taken off the list and called recoveries, in few, if any 
cases was it brought about primarily or solely by the ESA. In 
many cases the claimed successes are really attributable to the 
species being underestimated when it was on the list or being 
mistakenly listed due to taxonomic errors.
    When you consider all the money that went into the program, 
which is called the crown jewel of environmental legislation, 
its very poor record is quite amazing. There are a number of 
reasons this law has not been as successful as we would like 
our conservation laws to be. The act is 30 years old and some 
of the assumptions on which it is based have proven not to be 
sound principles. For a program to work well we have to get the 
incentives right. Unfortunately, the ESA has created a perverse 
incentive structure that actually compounds the difficulty of 
conserving rare species.
    A well-known example of this has been the plight of the 
red-cockaded woodpecker, where it was determined years ago that 
the policy of protecting older stands of trees was basically 
encouraging those who were growing stands of trees that reached 
the age where they would be suitable habitat for red-cockaded 
woodpecker to cut them down so they would not be regulated. 
Basically, a very predictable reaction to the public policy. 
U.S. Fish and Wildlife Service Regional Director, Sam Hamilton, 
has recognized this when he stated years ago: The incentives 
are wrong here. If I have a rare metal on my property, its 
value goes up. If a rare bird occupies my land, the value 
disappears.
    During the break I talked to fellow panelist, Mr. Bean, and 
we couldn't recollect exactly how many times we had been up 
here in the last decade and testified on the same panel. And I 
can recollect that the first time that I testified back in the 
early nineties, my point was that incentives needed to be 
incorporated in the law and that there was a very poor record 
of achieving the goal of recovery of endangered species and 
that the standards were very subjective. The problem of 
incentives I think is now starting to be well recognized. I 
have heard many Members mention it and many panelists and I 
think people are trying to incorporate solutions to the 
problems of perverse incentives under the law. And I think the 
criticism of the poor recovery record is well-known and 
starting to be addressed.
    And I also raised back then the first time I testified the 
standards of the law are very subjective, and one of my 
problems with that is that it allows very selective enforcement 
of the law. The subjectivity of the standards under which the 
current program operates allows the law to be enforced 
selectively and politically. Economic activity has been shut 
down in parts of the country, particularly the rural West to 
protect potential habitat of species, species whose 
endangerment is questionable. But in other areas developments 
never seem to be inconvenienced by the need to protect a 
species. Now conservation science and the politicizing of 
allocation of resources not only lead to unjustified or 
counterproductive restrictions, but also block protective 
action where it is truly needed.
    A glaring example of this occurs right here in Washington, 
D.C., where thousands of tons, millions of pounds of sludge, 
toxic sludge are permitted to be discharged by the Corps of 
Engineers Washington Aqueduct through a national park and into 
the Potomac River, where it smothers the spawning beds of the 
endangered short-nose sturgeon. I brought a tape of that 
discharge. I hope it can come out a little bit clearer than 
that. But there might be other places that you would find that 
would dump as much sludge in a river, but you would have to go 
to a Third World country to do it. This sludge is so toxic that 
the acute toxicity of it is strong enough that it kills fish in 
10 minutes. It is loaded with arsenic, lead, chromium, nickel, 
zinc, and yet it has been going on for years under the eye of 
the EPA and right into the area the National Marine Fishery 
Service has stated is a primary, if not only, spawning habitat 
of the endangered short-nose sturgeon.
    If you wondered why there is so little conflict between the 
rare species and human activities in this area, you may be 
surprised to learn the ESA simply is not enforced here the way 
it is elsewhere. Here the benefit of the doubt is given to 
economic considerations, not endangered species.
    In the big picture, I would just say that you need to 
compare the results of ESA's regulatory and punitive approach, 
which often takes private property with a record of voluntary 
and incentive-based efforts which greatly benefit from private 
property. Wood ducks, bluebirds came back from depressed 
numbers because thousands of people built artificial nesting 
boxes on their property. During the past 30 years, wild turkeys 
have been restored to their original range and beyond at the 
impetus of turkey hunters.
    Why are these private efforts so much more successful than 
the ESA? Consider the difference between the incentives and the 
regulations. Suppose the Endangered Species Act had been 
adopted early this century and wood ducks and bluebirds and 
wild turkeys would have been added to the Federal list and 
regulated under this law. How would you possibly get a 
landowner to put a nesting box on his property? How many 
landowners could afford to let the Wild Turkey Federation 
release birds on their land if the presence of the endangered 
species meant they could no longer use the land?
    Through the implementation of laws which take private 
property without compensation of the landowner we have created 
a climate which pits rare plants and animals against the 
property owner. As a result they both lose, as does society. 
Our current approach to endangered species is inadequate 
because it is based on flawed ideas.
    Thank you very much.
    Chairman Graves. Thank you Mr. Gordon. I appreciate that.
    Now we will hear from Michael Bean. And Michael, you are 
with the Ecosystem Restoration Program and Chair of the 
Wildlife Program? Did I get that correct?

    STATEMENT OF MICHAEL J. BEAN, CHAIR, WILDLIFE PROGRAM, 
                     ENVIRONMENTAL DEFENSE

    Mr. Bean. Pretty close, Mr. Chairman. Thank you. Thank you 
very much for the opportunity to testify. I am with 
Environmental Defense, Chairman of its Wildlife Program and Co-
Director of its Center for Conservation Incentives. I want to 
begin my remarks by recounting some work that I did in Mr. 
Ballance's home State of North Carolina, nearly 10 years ago.
    We were concerned then about the conservation of the red-
cockaded woodpecker, an endangered species. Mr. Gordon 
mentioned that species a moment ago. And we were concerned 
because many of the private landowners in the area around Fort 
Bragg were disinclined to do the sort of management of their 
land that would have created improved habitat for that species. 
And yet we saw that the cooperation of those landowners was 
essential to the conservation of that species. So we spent some 
time talking to those landowners, understanding their needs and 
their concerns. We put together an idea to address both their 
regulatory concerns and their economic needs to see if they 
might be willing to change the way they were managing their 
land so that the red-cockaded woodpecker could benefit.
    And I am pleased to say that today that program in North 
Carolina, which was the first of its kind anywhere in the 
Nation, has been extraordinarily successful. Indeed, that 
program and others like it operate in Virginia, North Carolina, 
South Carolina and Georgia and will soon be operating in 
Florida. In the two Carolinas, there are roughly 140 landowners 
with 350,000 acres of land in their ownership and all of those 
landowners are actively managing their land in ways that lay 
out the red carpet for that endangered bird.
    And there are in fact landowners who are willing to have 
endangered birds introduced onto their land. In Texas, there 
are landowners who together own 2 million acres of ranchland 
who are allowing the endangered northern aplomado falcon, the 
rarest falcon in North America, to be released on their lands 
in a thus far successful restoration program, and that is an 
outgrowth, Mr. Ballance, of the program that began in your 
State.
    I believe based on the work that I have done with 
landowners in North Carolina, Texas, California and elsewhere 
that it is in fact possible to address their concerns and 
realign incentives within the existing framework of the 
Endangered Species Act so that they can be allies of 
conservation, not its adversaries.
    There are two needs, however, that I think are quite 
important. Many of the examples that I have given in my 
prepared testimony of landowners who are doing positive things 
to help rare species on their land are landowners who are 
taking advantage of Fish and Wildlife Service policies called 
the safe harbor agreement policy or the candidate conservation 
agreement policy. For both of these types of agreements, I 
believe, landowners have a great deal of interest in many parts 
of the country in pursuing but, candidly, Fish and Wildlife 
Service's process for reviewing and approving these is slower 
and more complicated than it needs to be. So frankly the Fish 
and Wildlife Service needs to assume the responsibility for 
according higher priority to these agreements and ensuring that 
they can be expeditiously reviewed and approved so that 
landowners who are willing to do their part in helping 
endangered species, in fact, do so.
    There is also a need for money, because the sort of 
management that is needed for any of these species always 
entails a cost and that is sometimes a rather significant cost. 
Judge Manson in his testimony referred to the LIP program, the 
Landowner Incentive Program. That was one of two new incentive 
programs that were announced by Secretary Norton in the fiscal 
year 2002 budget. Together those two programs would have 
provided $50 million of incentives to private landowners. 
Congress included that in the fiscal year 2002 budget. It is 
now mid-July in fiscal year 2003 and to this date not one cent 
of that $50 million has reached any landowner anywhere in the 
country. That is not because any environmentalist sued or 
created any obstacle; it is because the Fish and Wildlife 
Service and the Interior Department have been unable to 
organize those two programs in such a way that that money can 
get out the door and into the hands of landowners where it can 
be used to restore habitat for rare species. In fact, the first 
year's appropriation, because none of it was even obligated by 
the Fish and Wildlife Service, was rescinded last year by 
Congress so they have recently awarded grants to the States and 
announced grants under the private stewardship grants program, 
the smaller of the two programs to which I refer, but to this 
point has paid no money to any landowner under either of those 
programs.
    So I firmly believe that incentives are critically needed 
in order for the Endangered Species Act to achieve its goals, 
but there is a serious need for the Fish and Wildlife Service, 
or others who are in the business of delivering those 
incentives, to have in place procedures and mechanisms whereby 
those incentives can be delivered expeditiously with a minimum 
of delay and burden and so forth. And if we can solve that 
problem, then frankly, I think the sorts of conflicts which I 
must admit will be to some extent unavoidable, can nevertheless 
be reduced in the future. And so I would hope that the 
Committee might focus its attention on that problem as well.
    Thank you.
    Chairman Graves. Thank you, Mr. Bean. I appreciate your 
testimony.
    [Mr. Bean's statement may be found in the appendix.]
    Mr. Graves. I also want to read the testimony of an 
individual who couldn't be here today, Rex Wood. I want to put 
it in the record. He is from Mehlville, Missouri.
    Chairman Graves, Ranking Member Ballance and Members of the 
Subcommittee, thank you for holding this hearing to examine the 
problems farmers and ranchers face with the Endangered Species 
Act. I am Rex Wood, a farmer from Mehlville, Missouri. I have 
been directly affected by the Endangered Species List.
    The floods of 1993 and 1995 caused a massive logjam in 
Locust Creek in Lynn County, Missouri. Approximately 1,200 feet 
of solid debris in the channel was bordered by private land and 
the remaining 5,000 feet was within the boundaries of Pershing 
State Park. The blockage was stopping water flow upstream, 
raising channel levels, and preventing fields from draining. 
Numerous efforts were made by approximately 40 farmers 
controlling 10,000 acres of affected farmland to get the logjam 
cleared. The 40 farmers donated over $18,000 for cleanup on the 
1,200 feet of channel bordering private land, but the Fish and 
Wildlife Service halted our plans for over 2 years by claiming 
any clean-out would harm Indiana bat habitat.
    No one has ever seen an Indiana bat in this area, but 
because loose-bark trees along streams were potential habitat, 
we could do nothing while watching productive fields lay idle 
because of standing water. Losses to affected farmers easily 
surpassed $3 million dollars for the 1995 through 1997 cropping 
years. Finally, in the fall of 1997, Fish and Wildlife agreed 
to clean out after marking every potential habitat tree along 
the channel. The clean-out equipment could not touch any one of 
these trees, resulting in higher costs involved in removing the 
debris.
    Farmers try to be good stewards of the land and 
environment, but frustration results when common sense is 
absent and we become the endangered species. Thank you for 
allowing me to testify. Hopefully some resolutions could be 
made.
    I do want to submit that for the record.
    Chairman Graves. We will open it for questions from our 
panel, and I do want to start with Mr. Bean. What you said is 
actually encouraging with programs for private owners to 
participate, and obviously you have made it clear that there 
are individuals out there who are very interested in fostering 
endangered species.
    What I am interested in is the individuals like these, for 
instance, that are not necessarily interested. They want to 
help the environment, they want to do what they can, but they 
also want to be able to use their land for whatever need they 
have, whether it is farming or whatever small business that is. 
And that I guess is what I am getting at. How do we help those 
individuals? Because this is what this is about and what the 
Endangered Species Act is doing to those farmers and small 
businesses. How can we help them out if they are not 
necessarily wanting to participate, as it is put?
    Mr. Bean. As you have noted earlier, the goal of this 
program is to recover endangered species and when endangered 
species do recover, then the restrictions that the act imposes 
are eliminated. So the faster we can accomplish the goal of 
recovery, the better. I recognize that not every landowner will 
be interested in using his or her land to create or improve 
habitat for endangered species. But to the extent we can create 
significant incentive programs and deliver those to landowners 
in an efficient way, the goal of recovery can be achieved much 
more quickly and much more easily, thus lessening the conflicts 
between endangered species objectives and other objectives.
    So I would think even those landowners who will not 
participate themselves in these incentive programs have an 
interest in there being incentive programs that their other 
neighbors can take advantage of, because to the extent their 
neighbors do then we can only make faster progress toward the 
goal that we all share.
    Chairman Graves. Can we afford that? In this situation, or 
at least it would seem to me, if an individual is prevented 
from using their property for whatever business they are 
engaged in, say it be farming in this particular case, and we 
reimburse them for whatever losses were incurred as a result of 
that, can we afford that nationwide and all of those affected? 
We have approximately 1 percent I think we have shown to be 
recovered from all the species listed on the Endangered Species 
List. We could go generations in some cases trying to recover 
some of these.
    Mr. Bean. I think--I don't want to minimize the costs, but 
I do think the goal of recovery is achievable, it is within our 
means and a target that is an appropriate target to shoot at. I 
would note that the farm bill has in it some, I think, $17 
billion for various conservation programs over the next 5 
years. Part of the problem we face is just making sure that we 
spend those dollars in an effective way. Let me give an example 
from Oklahoma.
    The Conservation Reserve Program in Oklahoma was used to 
encourage the planting of grasses, perennial grasses on 
potential habitat for a bird called the lesser prairie chicken. 
It is not yet an endangered species but it is heading in that 
direction. Grasses that were planted were nonnative grasses. 
The nonnative grasses provided no habitat value for the lesser 
prairie chicken. Had that same money from the Conservation 
Reserve Program been used to plant native grasses, the goals of 
the Conservation Reserve Program, which at that time were 
largely erosion control, would have been met and simultaneously 
habitat would have been created for the lesser prairie chicken. 
So without an additional penny being spent, it would have been 
possible to achieve both the sediment control or erosion 
control goals of that program and at the same time a goal which 
was not achieved, which was the goal of creating habitat for 
that species that is headed toward the endangered list.
    And frankly in my experience around the country that is 
just the tip of the iceberg of how we are missing opportunities 
with existing programs to integrate endangered species 
conservation into those programs and get our goals working, if 
you will, in harmony with each other, not at cross purposes as 
they were in that Oklahoma example.
    Chairman Graves. I have one final question. Is it--do you 
think that the needs of species on the Endangered Species List 
outweigh needs of the displaced families or whatever the case 
may be or the businesses?
    Mr. Bean. No, I do not, sir. I think the needs of human 
beings are uppermost. But I think the needs of human beings are 
served by having a biologically diverse environment and doing 
everything within our means to avoid the loss of species whose 
loss we can avoid.
    Chairman Graves. Mr. Gordon, why on the--which is 
outrageous to see that, why is it that a blind eye is being 
turned to that sludge being dumped--I mean I can just imagine--
and I know what happens in the Midwest if there is any sort of 
runoff from the livestock operation or something like that, 
which is shut down immediately. But yet you see something like 
this and it is kind of appalling to see that. Why the disparity 
from what I know to be the case in the Midwest, where I am 
from, and this out here?
    Mr. Gordon. I can't entirely answer that question. I would 
have to be inside the mind of the agencies, but I can tell you 
that the behavior has been atrocious. The Corps has actually 
argued, at one point sent a memo to the EPA arguing that those 
discharges might be good for fish because they would cause the 
fish to flee the area and thereby not be caught and eaten by 
fishermen.
    The level of these pollutants exceed D.C. water quality 
standards by not a small percentage, but by orders of magnitude 
10 times, 100 times. There is very strong indication that 
actually testing done to justify a new permit that will allow 
that to continue for at least another 6-1/2 years may have been 
rigged. There is--according to officials at EPA, they recently 
advised me that the application submitted for this discharge by 
the Corps was profoundly factually flawed. One of the 
discharges was recorded as being 110,000 gallons a year. They 
made a mistake. They meant 110,000 gallons a day. That is like 
a taxpayer reporting a $30,000 income when his annual income is 
$11 million. And the National Marine Fisheries Service 
originally argued in court that we do not know if this 
endangered fish nearby. We do not know if this sludge is bad, 
and when it came time to issue the permit gave the facility a 
permit that actually anticipates that the eggs and fry of this 
fish will be killed and makes the argument that, well, there is 
enough of them that it will not kill all of them.
    So just a remarkable set of dual standards. My hunch is 
that it has a lot to do with the fact that the facility is here 
in Washington, D.C., and it is one Federal entity regulating 
another. It is in an affluent neighborhood that maybe does not 
want a sludge treatment facility built. The water treatment 
wholesale buyers, D.C., Arlington and Falls Church, do not want 
to pay the costs perhaps of complying with the law and the 
court has been successful in obscuring this discharge. 
Typically it is conducted at night so that people cannot see 
it.
    Chairman Graves. Mr. Ballance.
    Mr. Ballance. Thank you, Mr. Chairman. I have enjoyed 
listening to all the panelists and I don't know how much time 
we will have to explore this but it has been educational to me.
    Mr. Bean, I want to thank you for your work in North 
Carolina. .
    Mr. Gordon, you mentioned that ESA had not been effective 
in preserving listed species. My information is that 41 percent 
of listed species have improved or stabilized their population 
levels and other species. Red wolves and California condors 
would likely be extinct without ESA protection.
    Mr. Bean, what is your thinking on ESA's success rate in 
general?
    Mr. Bean. Mr. Ballance, my thought on that is that the 
Endangered Species Act has done a reasonably good job of 
preventing extinction. It has not done as good of a job at 
achieving recovery as I would like it to, and I note that the 
Endangered Species Act is largely prohibitive in the sense that 
it prohibits harmful activities but it does not offer many 
incentives for rewarding or encouraging beneficial activities. 
So the work I have been doing since working in your State in 
North Carolina a decade ago has been focused on trying to 
create or find incentives, both financial and regulatory 
incentives to complement the necessary regulatory controls so 
that private landowners, since they do own much of the habitat 
where many of these species life or can live with appropriate 
management, incentives for those landowners to get engaged in 
conservation activities on behalf of these species. Only with 
those sorts of incentives and with that sort of participation 
can we improve the record so that it is not 41 percent that are 
improving or stable, but closer to 80 or 90 percent, which I 
think is an achievable goal in the future that you and I can 
foresee.
    Mr. Ballance. And as a follow-up, I don't know if you or 
Mr. Gordon mentioned this, the Fish and Wildlife not putting 
these funds out, what happened there?
    Mr. Bean. I wish I knew all the details. It took a long 
time for the Fish and Wildlife Service to publish a notice of 
how it intended to operate these programs in the Federal 
Register. I am told that many months were consumed by some back 
and forth with OMB over the details of those notices.
    But Secretary Norton properly, I think, has touted these 
programs as emblematic of this administration's commitment to 
promoting incentives and working with private landowners. So I 
don't think there is a very persuasive excuse or justification 
for the fact that a year and a half later not a dime has 
reached the ground yet.
    Mr. Ballance. Mr. Waters, I am very sympathetic with your 
situation. I am a farmer, I started out my career on the farm. 
But I take it you recognize that there are some small business 
industries, maybe even in your general area, that would benefit 
based on how this flow would come out on the river.
    Mr. Waters. I don't think so in my area. Probably the upper 
basin, you know there are some small businesses pushing for 
these changes in the upper basin, the recreation industry. But 
in general in our area in the lower basin, you are looking at a 
barge industry that is just barely hanging on. The agricultural 
folks that are impacted by the river are certainly struggling, 
and the small businesses that provide goods and services to 
those agricultural producers are struggling because of it.
    Mr. Waters. And in addition, that you look at municipal 
water supplies and industrial water supply. Those folks are 
having to leap great hurdles as well because of the changes 
that they are proposing.
    Mr. Bean. May I comment on that, Mr. Ballance?
    Mr. Ballance. Yes, sir.
    Mr. Bean. The Corps of Engineers has done a very extensive 
environmental impact statement on this issue of changing the 
flow regime on the Missouri River, and the Corps of Engineers' 
conclusion is that the changes in flow necessary to achieve the 
suggestions of the Fish and Wildlife Service in its biological 
opinion would increase the economic benefits from the river by 
$9 million in a normal year and by $19 million in a dry year, a 
drought year. Those are Corps of Engineers figures. And while 
it is certainly true that navigation on the Missouri River 
would suffer a loss, which the Corps estimates at $2 million, 
the benefits for navigation on the Mississippi River, again, 
according to the Corps of Engineers, are $5 million. So if one 
is a fiscal conservative and interested in making sure that the 
expenditures of our tax dollars are maximizing economic return, 
in this case that happens when you operate the flow of that 
river so as to achieve the objectives of the Endangered Species 
Act.
    Mr. Ballance. Thank you, Mr. Chairman. My time is up.
    Mr. Graves. Mr. Shuster.
    Mr. Shuster. I thank all of you for being here today. I am 
going to echo something the Chairman said; he is encouraged by 
what you said, Mr. Bean, some of the remarks that you had. And 
one thing that I was encouraged to hear is that you believe the 
U.S. Fish and Wildlife is slow, and their process doesn't work 
that well. Can you let me know what some recommendations or 
some things you see that can be changed there, because I feel 
the same way. And many people in my district have faced those 
problems with the U.S. Fish and Wildlife.
    Mr. Bean. Yes, sir, Mr. Shuster. I am in the process of 
preparing for the Fish and Wildlife Service a set of written 
recommendations that will expedite the approval of these 
voluntary landowner agreements that I have referred to. I 
expect to have that done shortly. And if that is acceptable to 
you, I will be happy to provide those to you and the rest of 
the Committee when those are done shortly.
    Mr. Shuster. That would be great.
    And the other question I have--and obviously you are not 
here to defend the entire environmental movement in this 
country, But it seems to me at times, and I have seen this 
first-hand, where they are not interested in--they are 
interested in stopping development at any cost. And that is why 
we get lawsuits, and they use what would appear to me to be not 
sound science, as I stated earlier, in the building of a 
highway through my district. It has taken 30 years, and every 
environmental challenge that can be thrown up has been done. 
And in the course of time, people are losing their lives, being 
killed on unsafe highway.
    So how do you respond to that charge to the environmental 
movement in this country? And, again, I don't think that it is 
all of or every group in this country, but there is a 
significant amount of that going on.
    Mr. Bean. Well, I don't know any of the facts about the 
highway in your district, so I really can't comment on that. 
Nor is it possible for me to read people's minds to know 
exactly what their motives are.
    I will say that a lot of lawsuits have been brought by 
environmental organizations where their motives were 
questioned, but the lawsuits were successful. And what that 
tells me is that judges, courts, including judges appointed by 
Republican as well as Democratic Presidents, agreed that there 
was a violation of law, and thus awarded judgment to 
environmental plaintiffs in those cases.
    In all the discussion this morning about the many lawsuits 
that the Fish and Wildlife Service is on the receiving end of, 
there wasn't any acknowledgment of the fact that the Fish and 
Wildlife Services loses almost every one of those lawsuits. And 
it is not because the suits are frivolous, it is not because 
the judges are biased; it is because the Fish and Wildlife 
Service isn't doing what the law requires.
    Mr. Shuster. Well, again, there are some the judges are 
finding in favor, but there are many that they aren't. And, 
again, that is the ones that I have to question. I certainly 
don't want to stop people from pursuing a lawsuit where they 
feel that something has been done, but in many cases they are 
losing because judges are throwing them out, or they are losing 
in court because they haven't used sound science, and they have 
just been hurdles to try to escalate the costs of projects. And 
those are the things that concern me.
    I wonder, Mr. Gordon, if you would want to comment on that, 
what you see out there in parts of the environmental movements 
in this country.
    Mr. Gordon. I think there are legitimate lawsuits and 
lawsuits that are frivolous. I think there are both. I think 
there are people that have stated motives and unstated motives. 
As Mr. Bean said, it is difficult to read people's minds.
    You know, I have been working on endangered species issues 
for too long, about 14 years, and for the first 10 years of our 
organization's existence, we never engaged in lawsuits, and we 
are generally pretty critical of them. The first time we 
actually did was over this discharge, and, in my opinion, it is 
something that nobody from either side of the political 
spectrum could agree with, but--and we have stated, hey, we 
think this is also very much an example of selective 
enforcement, so that people see that as a very troubling aspect 
of, you know, we are suing to make Washington, D.C., abide by 
the same laws that you feel, I think, are overzealously 
enforced around the country.
    I happen to generally share that opinion, that there is two 
sets of standards, and the laws can be overzealously enforced 
against a farmer or a rancher who doesn't have necessarily the 
resources, and the standards that may be required of the 
plaintiff in that case may not be as tough as they have been in 
our case. And there has been a term, the iron triangle, that 
has been thrown around for years describing the relationship 
between regulators and the people in the environmental 
community and others getting in basically cozy lawsuits, where 
the lawsuits are driven to drive--accepted and designed to 
drive the policy. I think that goes on. I think there are all 
different kinds of reasons for the lawsuits.
    But I don't think that--I think that is the nature of ESA. 
That is the way it is set up. It is a litigious mechanism, and 
until there is some fundamental changes in the law that make it 
operate in a different way, that is the way it is going to be.
    Mr. Shuster. Well, why have you shied away, your 
organization? You said you shied away from lawsuits.
    Mr. Gordon. Well, we just weren't litigious in nature. I 
mean, our goal or the way we were dealing with our educational 
mission was conducting studies and surveys and producing peer-
reviewed papers and entering into philosophical debate. And, in 
fact, the way we got into this lawsuit is we had hired three 
biologists to come and look at some Federal projects and say, 
hey, are the same standards that are applied to farmers and 
ranchers around the country being applied to these Federal 
projects here in Washington, D.C.? And they came back to us and 
they said, you wouldn't believe what is going on in these 
things. And when we looked at it, we found that it was so 
egregious that we decided we would enter into litigation for 
the first time.
    Mr. Shuster. It seems that Mr. Hays was at the lengths of 
an example of what you hear about around this country, where 
small business people, you were held up as they were looking, 
and then it turned out they didn't find.
    Mr. Hays. Yeah. I feel like that coming from a very remote 
part of the State--don't forget, Oregon, we have been literally 
demolished by the Endangered Species Act. Our timber industry, 
by a bogus spotted owl, by a salmon recovery, which we already 
have and have recovered, has literally ripped us apart. I have 
seen families and towns diminished down to something--the guys 
that you are talking about about these conservative programs, I 
do this every day in my ranch, and so does everybody else in 
that area. We don't need to have something that is not there, 
like don't use that door because God is going to use it in 50 
years. Stay off of that. No, that is not the way this works. We 
have things that are--I run probably two, 3,000 head of elk and 
deer on my place, flocks of geese. I mean, we are 
conservationists. But we come in with some bogus thing like the 
spotted owl turned our State, which was one of the most 
prosperous; now we are the highest unemployment State in the 
world. I have seen families that have lost their pride and 
everything they have got. They are going down to drugs now and 
anything else they can do to sell to make a living. Our little 
schools and everything.
    These recovery programs are great somewhere, but they are 
not doing it in the West. We are hurt. We are darn near to the 
point where we are broke and ready to close the doors on 
everything. And you just cannot believe how this thing has hurt 
us. I mean, it needs change. It needs change from day one. But 
you can't--just like my little deal here where this endangered 
species took me out of the banking industry. I borrowed $3 
million as of yesterday. I paid 10 points up front for it and 
10 percent interest just to stay, in interest, because I 
believe in it.
    My family came out on the Oregon Trail, and my grandmother 
and my great-grandmother and her sister were widowed 5 days 
out, brought 11 children out. I'm not the one that is going to 
turn this thing around and quit, but I am going to tell you 
these things are--it hits me right here when we talk about some 
of this thing that is going on.
    But Oregon was the classic example where it all started, 
and they have demolished our State. And I am sorry.
    Mr. Shuster. No, that is quite all right. I understand. 
Being a former small business owner, I know that, you know, 
government regulation----.
    Mr. Hays. I don't--I want your regulation, but I don't want 
your handouts. I just want to make a living and grow food for 
America.
    Mr. Shuster. Absolutely. And some of these government 
regulations are just--you know, some of them are 30, 40, 50 
years old people are still dealing with. They need to be 
changed, and that is our responsibility here to see that that 
is changed, so that you can rebuild a timber industry in 
Oregon. And it is encouraging to me that Chairman Pombo is here 
today, and I know I spoke to him later, he is going to try to 
go through and revamp this law so that we do see the U.S. Fish 
and Wildlife doing things differently. They need an overhaul, 
and I don't think they need just tweaked, I think it needs a 
vast overhaul so that--we want to protect the environment. We 
have to make sure that families like yours and millions of 
other families are able to earn a living and not be destroyed 
by bogus claims, as you said. And I think there are more out 
there than should be.
    So, thank you all for being here today. And thank you, Mr. 
Chairman.
    Mr. Graves. I do have one more question that was mentioned 
for Mr. Waters and Mr. Hays. Both of you mentioned being shut 
out of the process when it comes to involvement in addressing 
critical habitat. You might address that just a little bit 
more. I mean, is this just being implemented without any 
consultation whatsoever?
    Mr. Waters. Well, there is consultation in the Missouri 
River case between the Corps of Engineers and the Fish and 
Wildlife Service. They go into formal consultation, but the 
problem is, when they go into formal consultation, it is 
between those two agencies basically behind a closed door, and 
we are shut out of that process. So it would be nice if the 
landowners and the folks affected had some input into that 
formal consultation process. But right now, as the act is 
written, we don't have any input into that formal consultation 
process. That is correct.
    Mr. Hays. He is very right, none at all, because I have a 
biologist that is on my ranch, works every day, and I have to 
do that to keep operating. And he is a retired BLM man. They 
don't even list him. He can't get on that. He said, you aren't 
a government employee, you can't get on our I.D. teams. I said, 
well, how about my county agent? He works for USDA. I said, how 
about Oregon State University? They eliminate us from the 
process of it, and the science that we put into them never hits 
the turnpike. We never get to use it.
    And that is--and what it does is it comes to the point 
where I did talk to Mr. Manson the other day, yesterday, and 
they are changing their U.S. Fish and Wildlife in the 
Northwest, in Portland, and they have got some direction to get 
this thing straightened out. But, no. We are--and, you know, 
when you are out of the system, and you are the guy that has 
historical--all your life you lived there, your family. My 
mother just died, who was 91 a couple months ago. And people 
like that, you know, we know the history of the thing and what 
has made it work, but we are cut completely out because it is 
government deals, and it is not a fair system.
    Mr. Graves. I appreciate you all being here. We have a 
joint session of Congress at 4:00. I thank you for your 
testimony.
    Mr. Ballance. Mr. Chairman, may I?
    Mr. Graves. Yes, Mr. Ballance.
    Mr. Ballance. I listened to--pretty carefully to all the 
testimony. I am not sure I heard the need for a complete 
overhaul of this act. And I am----.
    Mr. Hays. Yes, sir, we do.
    Mr. Ballance. Well, let me ask Mr. Bean. Do you see that--
and maybe just a brief answer--that we actually need a complete 
overhaul, or we need--maybe some people are not doing their 
jobs.
    Mr. Bean. I don't think there is a clear consensus on this 
panel in response to your question. My own view is a complete 
overhaul, no, I don't think that is in the cards. I don't think 
it is likely to happen. I do think there may be some fine-
tuning adjustments that would be helpful. But I do think there 
is a very urgent need and a very practical benefit from 
addressing the manner in which the Fish and Wildlife Service 
administers and implements some of these new incentive 
programs. They hold the potential, I believe, to make a lot of 
these problems that now afflict a number of landowners more 
manageable and shorter-term if they are effectively 
administered. At least that is my view. And, to date, the 
service has not effectively administered these new programs. So 
that is a critical need, in my view.
    Mr. Ballance. Thank you, Mr. Chairman.
    Mr. Graves. I want to thank you all.
    Mr. Gordon. I just wanted to say, I would agree that the 
program--or an overhaul of the bill, the law, is probably not 
politically in the cards at this moment, but I don't think that 
that means it is not necessary. I don't think the law has a 
very good record at conservation. And, clearly, it is causing 
tremendous social and economic disruption, and you are not 
achieving the goal, and you are doing damage. And if that is 
not something that cries out for correction, I don't know what 
is. And the only people who can do that correction are you.
    Mr. Hays. Just one comment. When I got out of the football 
world and come back to the ranch in 1986, we had 3 percent were 
growing agriculture in America. And you look right now, with 
all the species and all this, we have less than 1 percent 
raising agriculture right today. I don't want to buy food from 
a foreign country.
    Mr. Graves. Again, I appreciate all of you being here 
today. We have identified it--in my research in this and 
through the testimony today, we have identified some immediate 
problems. Obviously, landowner involvement in this process is 
part of it. The excessive litigation and using litigation to 
address critical habitat issues is a problem, but, to me, of an 
even greater issue is how the Endangered Species Act is 
implemented when it comes to private property. And there is one 
key there, private property. And I want to do everything I can 
to make sure that the needs of animals or whatever, or plants, 
species, do not come ahead of the needs of people. That is far 
greater.
    I think there are people out there, Mr. Hays, Mr. Waters 
are good examples, producers out there that will do everything 
they can to make sure that habitat is there. They believe in 
habitat and conservation, but they also believe in providing 
for their families and food and fiber for this country and 
think that that is very noble, and we need to work with them. 
We can find some common ground here. It doesn't have to be all 
or nothing. And right now, when you shut down an individual's 
use of the property because of the Endangered Species Act, that 
goes way too far.
    Thank you all for being here today. I appreciate the time 
you spent coming in for this testimony. We are adjourned.
    [Whereupon, at 3:49 p.m., the Subcommittee was adjourned.]

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