[Senate Hearing 110-60]
[From the U.S. Government Publishing Office]


                                                         S. Hrg. 110-60
 
 SECURE RURAL SCHOOLS AND COMMUNITY SELF-DETERMINATION REAUTHORIZATION 
                              ACT OF 2007

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

                                HEARING

                               before the

                SUBCOMMITTEE ON PUBLIC LANDS AND FORESTS

                                 of the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                                   ON

                                 S. 380

      TO REAUTHORIZE THE SECURE RURAL SCHOOLS AND COMMUNITY SELF-
           DETERMINATION ACT OF 2000, AND FOR OTHER PURPOSES

                               __________

                             MARCH 1, 2007


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


                      U.S. GOVERNMENT PRINTING OFFICE
36-027 PDF                    WASHINGTON  :  2007
---------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government
Printing Office Internet:  bookstore.gpo.gov Phone:  toll free (866)
512-1800; DC area (202) 512-1800 Fax: (202)512-2250 Mail: Stop SSOP,
Washington, DC 20402-0001 










               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

DANIEL K. AKAKA, Hawaii              PETE V. DOMENICI, New Mexico
BYRON L. DORGAN, North Dakota        LARRY E. CRAIG, Idaho
RON WYDEN, Oregon                    CRAIG THOMAS, Wyoming
TIM JOHNSON, South Dakota            LISA MURKOWSKI, Alaska
MARY L. LANDRIEU, Louisiana          RICHARD BURR, North Carolina
MARIA CANTWELL, Washington           JIM DeMINT, South Carolina
KEN SALAZAR, Colorado                BOB CORKER, Tennessee
ROBERT MENENDEZ, New Jersey          JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas         GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont             JIM BUNNING, Kentucky
JON TESTER, Montana                  MEL MARTINEZ, Florida

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
              Frank Macchiarola, Republican Staff Director
             Judith K. Pensabene, Republican Chief Counsel
                                 ------                                

                Subcommittee on Public Lands and Forests

                      RON WYDEN, Oregon, Chairman

DANIEL K. AKAKA, Hawaii              RICHARD BURR, North Carolina
TIM JOHNSON, South Dakota            LARRY E. CRAIG, Idaho
MARY L. LANDRIEU, Louisiana          CRAIG THOMAS, Wyoming
MARIA CANTWELL, Washington           LISA MURKOWSKI, Alaska
KEN SALAZAR, Colorado                JIM DeMINT, South Carolina
ROBERT MENENDEZ, New Jersey          JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas         GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont             JIM BUNNING, Kentucky

   Jeff Bingaman and Pete V. Domenici are Ex Officio Members of the 
                              Subcommittee

                         Scott Miller, Counsel
          Frank Gladics, Republican Professional Staff Member









                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Bingaman, Hon. Jeff, U.S. Senator from New Mexico................     1
Burr, Hon. Richard, U.S. Senator from North Carolina.............     4
Cantwell, Hon. Maria, U.S. Senator from Washington...............    19
Francis, Michael A., Director, National Forests Program, The 
  Wilderness Society.............................................    36
Jacobson, Julie, Deputy Assistant Secretary for Land and Minerals 
  Management, Department of the Interior.........................     9
Kusel, Jonathan, Director, Sierra Institute for Community and 
  Environment....................................................    25
Rey, Mark, Under Secretary, Natural Resources and the 
  Environment, Department of Agriculture.........................     6
Robertson, John Douglas, Chairman, Board of Commissioners, 
  Douglas County, OR.............................................    33
Salazar, Hon. Ken, U.S. Senator from Colorado....................     4
Tester, Hon. Jon, U.S. Senator from Montana......................     4
Wyden, Hon. Ron, U.S. Senator from Oregon........................     1

                               APPENDIXES
                               Appendix I

Responses to additional questions................................    49

                              Appendix II

Additional material submitted for the record.....................    55


 SECURE RURAL SCHOOLS AND COMMUNITY SELF-DETERMINATION REAUTHORIZATION 
                              ACT OF 2007

                              ----------                              


                        THURSDAY, MARCH, 1, 2007

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

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

    Senator Wyden. The subcommittee will come to order. This is 
the first hearing of the subcommittee and I'll have an opening 
statement and then I think since Senator Burr is not here, our 
ranking minority member. Senator Craig, why don't you make the 
opening statement, if it is all right with you? Let's both 
allow Senator Bingaman to proceed. I know he's on a very tight 
schedule.

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

    The Chairman. Thank you very much, Mr. Chairman. Thanks to 
you and Senator Craig both for your leadership on this 
important issue. I know that this County Payments program was 
created by you--and Senator Craig with his help--and I know 
it's been a great benefit for your States and other States as 
well. I commend you for that.
    I think the issue of course that we're dealing with now, 
and it's one we talked to Secretary Rey about at the hearing--
was it yesterday? Time flies around here; I don't know, it 
seems like yesterday.
    At any rate we talked about where we go from here. My own 
sense, and I've expressed these views before, is that it is 
very difficult to get the support to proceed with the program 
as it's currently structured. I favor trying to do a multi-year 
reauthorization, but I think to do so, we need to look at some 
restructuring of the program, and clearly the cost of the 
program is a substantial factor as well.
    I'm informed that we're talking about $3 to $4 billion in 
order to get this reauthorized for the next several years in 
any form, so changing the formula so that other States realize 
a more substantial benefit from it, I think is essential. I 
think at the same time it can be a substantial benefit to the 
States that are currently benefiting and I hope we can find a 
way to move ahead and do that.
    As I say you deserve tremendous credit for getting us to 
this point, and I know that you and Senator Craig have worked 
hard over the last couple of years to try to get this program 
reauthorized and moving forward. We're closer to agreement on 
this than we've been in a long time so I appreciate that very 
much.
    Senator Wyden. Thank you, Mr. Chairman and we look forward 
very much to working with you on it. As Chairman Bingaman 
noted, the purpose of today's hearing is to receive testimony 
on S. 380, the Secure Rural Schools and Community Self-
Determination Reauthorization Act of 2007--a bill that I 
introduced and is also co-sponsored by 11 other Senators, 
including a member of this subcommittee, my colleague and 
friend, Senator Smith.
    Before I turn to the legislation, this is our first hearing 
of the subcommittee and I want to note that for almost a decade 
Senator Craig and I have worked together on this. I am looking 
forward to continuing that particular tradition.
    I also want to welcome an old friend. Senator Burr is the 
new ranking minority member of the subcommittee regardless of 
whether an issue involves Federal land in the eastern or 
western part of the State. If the bill is going to be approved 
by the Senate, final passage almost always requires very strong 
bipartisan support.
    I'm been very proud in this subcommittee of being 
influential on both of the major forestry bills that have 
passed the U.S. Senate and been signed into law in the last 20 
years--the County Payments Legislation and the Forest Health 
Legislation--and we want to continue that strong bipartisan 
tradition.
    For 6 years, the legislation we consider today has been 
nothing less than a lifeline for forest-dependent communities 
in more than 40 States and in more than 700 counties 
nationwide. I'm honored by the distinguished representatives 
from the administration, Sierra Institute, Wilderness Society 
in the State of Oregon whose participation here today 
underscores the importance of the County Payments Program.
    It is essential to recognize that as this hearing is held 
the future of rural communities literally hangs in the balance. 
Sheriffs, cops on the beat, those who are running search-and-
rescue missions, teachers, students, parents, they're all 
watching--probably a lot of them live on streaming video--in 
order to find out whether their small rural community is going 
to survive or whether the Federal Government is going to 
dishonor an almost 100 year obligation to rural communities.
    As today's witnesses will attest, there is both a moral and 
historic imperative to continue the critical safety net 
program. In 1908 in consideration for consenting to the 
creation of a National Forest System, forested counties in 
Oregon received revenue directly from Federal timber harvests. 
The Congress did this because it understood that in protecting 
the country's forests, counties would be saddled with land that 
could neither be developed nor taxed. Those fees paid for 
schools and essential county services.
    Neither the counties nor the Federal Government could have 
envisioned 100 years ago that environmental laws enacted by 
future Congresses would impinge on this funding obligation to 
rural communities, but a future Congress had to address that 
very scenario last decade when timber harvest precipitously 
dropped in counties who were not only hit by the loss of timber 
harvesting jobs, they lost the Federal payments that were 
essential for services in their communities.
    It was in this crisis in 1999 that Senator Craig and I 
authored the Secure Rural Schools and Community Self-
Determination Act, which despite partisan legislation, brought 
concrete relief to suffering rural communities. For 6 years it 
has meant essential funding for those law enforcement programs, 
for schools, for roads programs and critical services.
    In addition, the County Payments Law is widely recognized 
as an extremely successful statue fostering all-too-rare 
cooperation between counties, timber interests and 
environmentalists. There are folks, who before this law, could 
rarely be seen speaking to each other about natural resources, 
let alone coming together to work together at the same table.
    For 2 years now, I and others have been trying to sound the 
alarm bell about the urgency of reauthorizing County Payments 
and attempting to move forward with a long-term reauthorization 
of the Secure Rural Schools Law. Yet neither the administration 
nor this body was willing to move forward on legislation. As 
chair of this subcommittee, with the help and the commitment of 
the chairman of the full committee, Senator Bingaman, the 
passage of the Secure Rural Schools Statue is my top priority.
    I cannot predict or promise an outcome, but I can promise 
my State that this Senate is going to vote on whether or not it 
will honor its obligation to forested rural communities. If we 
do not choose to honor our obligation those critical programs 
could all unravel scores of small communities in rural 
counties.
    Just last week the sheriff in Grants Pass, Oregon told me 
that his police force is being stretched so thin that he is 
looking at the prospect of calling out the National Guard in 
order to protect the lives of citizens in his community. My 
State is not alone in this fate. The law supports rural 
communities across the country, and that is why there are 
sponsors of the reauthorization from around the country.
    The National Education Association has found 18,379 schools 
and 557,000 teachers will be affected by not reauthorizing the 
County Payments Program. Schools are expected to be closed, 
teachers laid off, school weeks shortened and numerous programs 
canceled. Some counties have suggested that they will have to 
release prisoners from their law enforcement programs and 
eliminate other vital services.
    With all due respect to a committee alumnus, Secretary Rey, 
the Bush Administration has consistently refused to make the 
Secure Rural Schools Act a funding priority. I will note 
briefly that the administration again proposes to sell off 
almost 275,000 acres of public land as a way to fund the 
program. A proposal distinguished primarily because it has 
brought a tidal wave of bipartisan opposition in both the House 
and the Senate. I hope that we're not going to waste time 
discussing an idea that cannot pick up even one Republican 
United States Senator as a supporter.
    Today we're going to hear more about the urgent need for 
the program. It is my hope that we can focus the committee and 
the Senate on the need to finally work together and reauthorize 
this program so as to prevent needless suffering.
    We've got a superb group of witnesses, people with strong 
views who are extremely knowledgeable. I'm especially pleased 
that Doug Robertson of Douglas County in my home State will be 
here. He's joined by a number of county officials from around 
the State. I want to recognize the ranking minority member at 
this time to just take care of a few administrative matters.
    We're asking all of our witnesses to summarize the key 
points of their testimony to limit their remarks to no more 
than 5 minutes. We can have, I think, several rounds for the 
Senators. All of the witnesses' written statements will be made 
a part of the record. We're also expecting to get a letter of 
support for the legislation from Governor Kulongoski of Oregon.
    Senator Burr.
    [The prepared statements of Senators Salazar and Tester 
follow:]
   Prepared Statement of Hon. Ken Salazar, U.S. Senator From Colorado
    Thank you Chairman Wyden, Senator Burr.
    During the 109th Congress I came to just about every hearing of the 
Public Lands and Forests Subcommittee, even though I was not a member, 
because the hearings almost always focused on issues important to my 
State of Colorado with approximately 35% of our land under the control 
of the Forest Service, BLM, Park Service, and Fish and Wildlife 
Service.
    This Congress, I am an official member of this subcommittee and I 
am excited to join Chairman Wyden at the first hearing of the year.
    I'd like to say thank you to our witnesses for coming today. I look 
forward to hearing your testimonies and hearing your views on 
reauthorizing the county payments legislation.
                                 ______
                                 
    Prepared Statement of Hon. Jon Tester, U.S. Senator From Montana
    Mr. Chairman, thank you for holding this important hearing today.
    While the west as a whole has experienced rapidly changing 
demographics over the last two decades, the economies of many of our 
rural communities have not. The Secure Rural Schools program is vitally 
important to communities in Montana that are most in need of funding 
for schools and county services because of the safety net that it 
provides. I intend to work with my colleagues in the Senate to find a 
workable solution to extend this program and maintain this necessary 
safety net for rural communities.
    In regard to the President's proposal to phase out the Secure Rural 
Schools program, I am particularly troubled by the proposal to sell off 
hundreds of thousands of acres of land including 11,159 acres in 
Montana, and use a portion of revenues for a few remaining years of the 
program. Montanans demand more access to public lands, not less, and 
more recreation opportunities, not fewer. The Administration's 
assertion that these lands are isolated and difficult to maintain is 
false in too many instances to warrant serious discussion of the 
proposal's few merits. I will fight the sale of our public lands under 
this proposal, because I do not believe it is in the best interests of 
our nation as a whole, or for Montana's rural communities that use 
these lands for hunting, fishing and access to other recreation sites.

       STATEMENT OF HON. RICHARD BURR, U.S. SENATOR FROM 
                         NORTH CAROLINA

    Senator Burr. Mr. Chairman, thank you and it's certainly a 
pleasure to work once again with my good friend, Senator Ron 
Wyden, and more importantly for scheduling this hearing.
    I understand the issue is very important to your State. I 
know that you and Senator Craig have been leaders on this 
issue. I want to tell you that I'm pleased to be your ranking 
member. I think this subcommittee has important work to do and 
this is a start of that important work today. Some might think, 
``What's the interest in North Carolina?'' North Carolina has a 
proud history of public land management, and it's home to 
Nantahala, Pisgah and Croatan and Uwharrie National Forests, 
with approximately 1.2 million acres of National Forest in 
North Carolina, covering approximately 25 percent of our entire 
State.
    Mr. Chairman, Asheville, North Carolina is known as the 
cradle of American forestry. I know that's hard for you to 
believe, but the first college of forestry in our country was 
located in the Biltmore estates outside the city of Asheville. 
It was established by Clifford Pinchot, the first chief of the 
United States Forest Service and run by Dr. Carl Schenck, who 
took over as the chief forester for George Vanderbilt's 
Biltmore estate.
    While we don't have the wildfires that many of the western 
national forests do, we do experience two fire seasons per year 
and in times have suffered tremendous damage to our forest and 
the forest infrastructure from hurricanes, ice storms, and wind 
storms. Like your forest, insects play havoc on some species of 
trees in our forest. Like your forest, recreation is crucial 
resource that the people of North Carolina depend upon, and 
like your forest, timber harvesting has and continues to play 
an important role in the economy of many towns in western North 
Carolina.
    Reauthorization of the Secure Rural Schools and Community 
Self-Determination Act may not have the scope of importance it 
does to Oregon, but there are 25 counties in my State that 
receive a little over a million dollars a year in county school 
payments. In fact counties in North Carolina first began 
receiving forest service 25 percent payments in 1916 and have 
received payments every year since. You may be interested in 
knowing that the counties in my State put 100 percent of these 
funds toward paying for school operations. In 2005, they 
received approximately $5 per impacted student. Believe me, Mr. 
Chairman, I'm envious of the $433 per student that Oregon 
counties received on average each year, and can understand why 
some Senators complain about how these funds are distributed.
    I want to conclude by telling you how happy I am to be 
serving on the committee, how much I look forward to the issues 
that are in front of the committee and I want to apologize to 
the chair that I've had an intelligence meeting call for 2 
o'clock and I'm going to have to cut out, but I feel like I 
leave both sides in good hands.
    [The prepared statement of Senator Burr follows:]
      Prepared Statement of Hon. Richard Burr, U.S. Senator From 
                             North Carolina
    I want to start by thanking you, Senator Wyden, for scheduling this 
hearing. I understand that this issue is very important to your State 
and I know you and Senator Craig have been leaders on this issue.
    I also have to tell you how happy I am to be serving as Ranking 
Member on this important Subcommittee and to be working with you on all 
of the important natural resource issues this committee deals with.
    North Carolina has a proud history of public land management and is 
home to the Nantahala, Pisgah, Croatan and Uwharrie National Forests. 
We have approximately 1.2 million acres of National Forests in North 
Carolina which is approximately 25% of our State.
    Mr. Chairman, Asheville, North Carolina is known as the ``Cradle of 
American Forestry'' because the first college of forestry in our 
Country was located at the Biltmore Estate outside the City of 
Asheville. It was established by Gifford Pinchot, the first Chief of 
the United States Forest Service, and run by Dr. Carl Schenck, who took 
over as the chief forester for George Vanderbilt's Biltmore Estate.
    While we don't have the wildfires that many western National 
Forests have, we experience two fire seasons per year and at times have 
suffered tremendous damage to our forests and the forest infrastructure 
from hurricanes, ice and wind storms. Like your forests, insects play 
havoc on some species of trees in our forests. Like your forests, 
recreation is a critical resource that the people of North Carolina 
depend upon and, like your forests timber harvesting has and continues 
to play an important role in the economy of many towns in Western North 
Carolina.
    Re-authorization of the Secure Rural Schools and Community Self-
Determination Act may not have the scope of importance it does to 
Oregon, but there are 25 counties in my state that receive a total of a 
little over a million dollars per year in County School payments. In 
fact, counties in North Carolina first began receiving Forest Service 
25% Payments in 1916 and have received payments every year since.
    You may be interested in knowing that the counties in my state put 
100% of these funds towards paying for school operations. In 2005 they 
received approximately $5 per impacted student. Believe me Chairman 
Wyden, I am envious of the $433 per student that Oregon counties 
received in 2005 and can understand why some Senators complain about 
how these funds are distributed.
    I want to conclude by telling you again how happy I am to be 
serving with you on this Committee and that I am committed to working 
with you and other Senators to ensure this important program is re-
authorized in a manner that is equitable to all involved.
    Finally, I look forward to helping focus some of this 
Subcommittee's attention on issues that we face in our Eastern National 
Forests.

    Senator Wyden. We're glad to have you here. Secretary Rey.

 STATEMENT OF MARK REY, UNDER SECRETARY, NATURAL RESOURCES AND 
           THE ENVIRONMENT, DEPARTMENT OF AGRICULTURE

    Mr. Rey. Thank you, Mr. Chairman and members of the 
subcommittee, and thank you for the opportunity to provide the 
Department's views on S. 380, as well as the efforts to 
reauthorize the Secure Rural Schools legislation.
    The administration continues to support the reauthorization 
of the 2000 Secure Rural Schools legislation. The 
administration also continues to support a 1-year extension of 
the Act for fiscal year 2007 as an interim step so long as 
there are agreed-upon offsets. The administration would support 
S. 380 with agreed-upon offsets for the payments authorized by 
the bill, and an eventual phaseout of payments as the bill is 
amended, to incorporate a number of technical changes as 
specified in our statement for the record, which I will simply 
summarize.
    To assist in offsetting the cost of reauthorizing the 
legislation, the administration is proposing the National 
Forest Lands for Rural Communities Act. This proposal supports 
the President's fiscal year 2008 budget by authorizing the 
Secretary to sell certain identified National Forest Systems 
lands in an amount not to exceed $800 million.
    Under the proposal, half of the land sales would be 
available to make payments under the reauthorized School Act 
for fiscal years 2008 through 2011, and half will be available 
in the States in which they were collected for the acquisition 
of land and other conservation purposes. States would benefit 
from 4 additional years of payments, 2008 through 2011, and 
would also benefit from ecologically important land to the 
National Forest System.
    Our proposal provides for up to $400 million a year over a 
4-year period to be made available for acquiring lands and 
interest in lands for national forest purposes from receipts 
obtained from selling National Forest System lands that are 
identified for conveyance.
    Implementing our proposal will result in acquiring lands 
that are better-suited for National Forest System purposes, and 
additionally could result in a net increase in lands acquired 
verses those conveyed, because under our existing land exchange 
program, for the past 10 years, there's been a 2\1/2\-to-1 
ratio in lands acquired versus lands conveyed. Over the past 5 
years, as property values have risen, for un-developable tracts 
that ratio has expanded to 3 to 1. The net increase is because 
the lands conveyed are more economically valuable and less 
environmentally desirable than the lands which are acquired, 
which are less economically valuable and more ecologically 
desirable.
    Additionally, purchase and sale of tracts is an inherently 
more efficient means of adjusting ownership in exchange, 
because it does not require a 1-to-1 correlation in Federal 
Government and private landowner objectives over two specific 
tracts. I proposed legislation and submitted it to Congress 
formally today, and I will provide a copy for the committee's 
record.
    The 2000 legislation provided for the establishment of 
resource advisory committees. Those committees would increase 
the level of interaction between the forest service, local 
governments and citizens, resulting in greater support and 
understanding of the agency's mission, as well as oversight and 
supervision of a number of important projects on the ground. 
The authority under the 2000 legislation for these advisory 
committees to meet, has expired effective as of September 30, 
2006.
    I'm pleased to also announce today that we will be 
extending the role of these committees for an additional year 
by amending their existing charters, to allow them to be 
authorized as discretionary committees under the Federal 
Advisory Committee Act. That will allow the resource advisory 
committees to continue to oversee the expenses associated with 
the 2000 legislation while we and the Congress work to 
reauthorize that legislation. So there will be no interruption 
in the meeting of these advisory committees.
    Now I have been haunted by your comments about the 
controversy associated with the proposal that we've put forward 
and the contrast to the bipartisan nature with which the 2000 
legislation was enacted, but let me relive a bit of our common 
history together. When the 2000 legislation was first 
introduced by you and Senator Craig in 1999, it was 
extraordinarily controversial. You'll have a witness on the 
next panel who called that bill ``Clear Cuts for Kids''. It was 
first enacted by the House of Representatives, not the Senate, 
in the fall of 1999. After an extended negotiation and even 
after that negotiation, about 150 House members still voted 
against it, including six members who are now in the U.S. 
Senate and the present speaker of the House of Representatives.
    The bill became a bipartisan touchstone over time, not 
initially, as a result of a good faith effort on the part of 
the then-Clinton administration and the majority and minority 
Members of Congress to work together. Now we've been doing 
that, we've met with your staff repeatedly last fall to look at 
alternative offsets in the course of those discussions; as many 
as ten different offsets were discussed. None of them were 
uncontroversial and the administration only had problems with 
one of the ten.
    So our proposal, we've never said is the only proposal that 
we could accept. It is presently the only offset available but 
there are other options, but those options are going to be 
hard-won if they're going to succeed, and they're not going to 
be adopted without controversy. We're not going to see 
enactment or reauthorization of this legislation without at 
least as much effort as went into authorizing it in the first 
place.
    In the spring of 2000, I can recall coming to your office 
and deciding to divert because in your anteroom a group of 
environmental evangelists were praying over one of your staff 
members to try to convince that person not to proceed with the 
Craig-Wyden legislation. I diverted because I didn't want to 
see what would happen if holy water was, if by accident, was 
splashed on me. That's an indication that this bipartisan 
solution, as worthy as it is, wasn't a bipartisan solution as 
an initial matter. I think that's what we're going to have to 
hear today and this year to see this bill reauthorized.
    The administration remains committed to working with you to 
that end and to see if we can find a solution that meets, if 
not everyone's needs, at least silences everyone's objections.
    [The prepared statement of Mr. Rey follows:]
Prepared Statement of Mark Rey, Under Secretary, Natural Resources and 
               the Environment, Department of Agriculture
    Mr. Chairman and members of the Subcommittee, thank you for the 
opportunity to provide the Department's views on S. 380, a bill to 
Reauthorize the Secure Rural Schools and Community Self-Determination 
Act (SRS Act).
    S. 380 would reauthorize payments under the SRS Act (P.L. 106-393) 
for an additional seven years, beginning with the payment for fiscal 
year 2007, and would amend other provisions of the Act. The bill would 
provide a one-time opportunity for a county to resume receiving the 25 
percent payment or 50 percent payment if they wish to do so. The bill 
would clarify that States must notify the Secretary of Treasury of a 
county's election.
    Additionally, S. 380 would add a provision regarding the source of 
funding for payments and require that certain funds be reserved to make 
payments to the states. The bill would provide for reappointments of 
Resource Advisory Committee (RACs) members for more than one term to 
provide greater flexibility in staffing committees. S. 380 also would 
revise the merchantable material pilot program to authorize projects 
under this program if they are recommended by a RAC. Finally the bill 
would add notification and reporting requirements for the Secretary 
regarding county projects under Title III.
    The Administration continues to support a one-year extension of the 
SRS Act for FY 2007 as an interim step, so long as there are agreed-
upon full offsets. The Administration could support S. 380 with agreed 
upon offsets for the payments authorized by the bill, an eventual phase 
out of payments and if the bill is amended to incorporate other 
changes.
    To assist in offsetting the cost of reauthorizing the SRS, the 
Administration is proposing the National Forest Land Conveyance for 
Rural Communities Act. This proposal supports the President's FY 2008 
Budget by authorizing the Secretary to sell certain identified National 
Forest System lands in an amount not to exceed $800 million. Under the 
proposal, half of the land sales proceeds will be available to make 
payments under a reauthorized SRS Act for FY 2008-2011, and half will 
be available in the States in which they were collected for the 
acquisition of lands or interests in land for National Forest purposes, 
improvement of fish and wildlife habitat, restoration of National 
Forest System land, and conservation education. States would benefit 
from four additional years of payments (FY's 2008-2011), and would also 
benefit from the addition of more ecologically important land to the 
National Forest System.
    Our proposal provides up to $400 million over a four year period to 
be made available for acquiring lands and interests in land for 
National Forest purposes from receipts obtained from selling National 
Forest System lands that are identified for conveyance. Implementing 
our proposal will result in acquiring lands that are better suited for 
National Forest purposes and additionally, could result in a net 
increase in acres of land under federal ownership. For instance, the 
ratio of lands acquired versus conveyed under our ongoing land exchange 
program for the past ten years has been a two and a half to one ratio. 
The net increase is because the lands conveyed are more economically 
valuable then the lands acquired which are more ecologically valuable. 
Additionally purchase and sale of tracts is an inherently more 
efficient means of adjusting ownership than exchange, because it does 
not require a one-to-one correlation in federal government and private 
landowner objectives over two specific tracts. Our proposed legislation 
will be transmitted to Congress in the very near future for your 
consideration.
    The Administration would like to work with the subcommittee on 
additional amendments to S. 380 that will improve the legislation. For 
example, we recommend that sections 2(c)(1)(C) and 2(c)(2)(C) of the 
bill be deleted as the Department believes these sections are not 
needed. We are also concerned about the inclusion of the notification 
and reporting requirements regarding county projects under Title III in 
section 2(f) of the bill. This provision requires the Secretary to 
monitor and report on the use of these funds by local units of 
government which would require detailed reporting that many local 
governments might find onerous. We would like to work with the 
committee on alternative methods for insuring accountability for Title 
III funds. For example, it may be appropriate to require RAC review and 
approval of expenditures of any funds under Title III. The Department 
of the Treasury advises that the bill would improperly assign certain 
duties to the Secretary of the Treasury that would be more properly 
assigned to the Departments of Agriculture and the Interior. We would 
like to work with the Committee on these and other technical and 
substantive amendments.
    The SRS Act provided transitional assistance to rural counties 
affected by the decline in revenue from timber harvests on federal 
lands. Traditionally, these counties relied on a share of receipts from 
National Forest System lands to supplement local funding for schools 
and roads. Payments made under the SRS Act have been used to support 
more than 4,400 rural schools and to help maintain county road systems.
    In addition, the SRS Act provided for the establishment of RACs. 
RACs have increased the level of interaction between the Forest 
Service, local governments, and citizens, resulting in greater support 
and understanding of the agency's mission. A total of 55 RACs in 13 
States have proposed more than 4,500 resource projects on National 
Forests and adjacent non-federal lands under Title II. Funds allocated 
under the SRS Act for Title II projects ($185 million) have been 
leveraged by more than $192 million in funds from other non-federal 
sources.
    The last payment authorized by the SRS Act was for fiscal year 2006 
and was made in December of 2006. Additionally, the authority for RACs 
to meet and propose projects expired on September 30, 2006. These 
committees have improved relationships by: broadening their 
connections, increasing access to resources and information, building 
trust, and providing active discourse on public policy issues. We need 
the support and assistance of these RACs in completing Title II 
projects that are in progress.
    I am pleased to announce today that we will be extending the role 
of these committees for an additional year by amending the existing 
charters to allow them to be authorized as discretionary committees 
under the Federal Advisory Committee Act. This will enable them to 
continue to meet in order to monitor and track the implementation of 
approved projects as well as to make recommendations regarding changes 
or adjustments that may be necessary to the projects they are 
monitoring.
    This concludes my statement, I would be happy to answer any 
questions that you may have.

    Senator Wyden. Ms. Jacobson.

  STATEMENT OF JULIE JACOBSON, DEPUTY ASSISTANT SECRETARY FOR 
    LAND AND MINERALS MANAGEMENT, DEPARTMENT OF THE INTERIOR

    Ms. Jacobson. Thank you for the opportunity to testify on 
S. 380. The underlying act, the Secure Rural Schools and 
Community Self-Determination Act, expired on September 30, 
2006.
    The Department recognizes the impact the expiration of the 
Act is having on counties that rely on the payments to fund 
important local programs, and the administration continues to 
support a 1-year extension of the Act as an interim step, so 
long as there are agreed-upon offsets.
    S. 380 extends the reauthorization of the Secure Rural 
Schools Act from 2006 to 2013. The Department of the Interior 
could support S. 380 if amended with agreed-upon offsets and 
eventual phaseout of payments, and if the bill is amended to 
incorporate other changes. The administration would be pleased 
to work with the subcommittee and the appropriations committees 
to address these and other amendments.
    The BLM manages 69 million acres of forest and woodlands, 
of which 2.5 million are located in western Oregon counties and 
are covered by the O&C Act. Of the public lands managed by the 
BLM, the Secure Rural Schools Act applies exclusively to those 
18 O&C counties in western Oregon.
    Congress set a stage for the long and close association 
between the BLM in these counties when, in the O&C Act of 1937, 
it directed these lands to be managed for the purposes of 
providing a permanent source of timber supply, protecting 
watersheds, regulating stream flow and contributing to the 
economic stability of local communities and industries and 
providing recreational facilities.
    In addition the O&C counties receive approximately 50 
percent of their receipts from timber harvested from public 
lands in these counties. By the late 1980's and early 1990's, 
litigation regarding the northern spotted owl resulted in steep 
reductions in timber harvest and therefore steep reductions in 
income to these counties. In response to this, Congress enacted 
safety net payments to stabilize income flow to timber-
dependent communities. In 2000, Congress repealed the safety 
net payments and enacted the Secure Rural Schools Act to set a 
stable level of payments to counties.
    Also title II of the Act has brought about $50 million for 
cooperative projects to restore the health of public and 
private lands under the guidance of the resource advisory 
committees. These projects have included wildlife hazard 
reduction, stream and watershed restoration, control of noxious 
waste, and improvement of fish and wildlife habitat.
    The RACs authorized by this Act have brought together 
diverse groups and individuals with the shared goal of 
improving the conditions of our public lands. Reauthorization 
of the act under S. 380 will strengthen these efforts.
    Under title III of the Act, counties may use the funds for 
such purposes as emergency services, community service work 
camps and the purchase of conservation easements.
    In closing, the BLM has a long history with the O&C 
counties and we look forward to continuing this relationship. 
In fact the BLM is currently working on revisions to the 
western Oregon resource management plans, 17 of the 18 O&C 
counties, as well as the State of Oregon and cooperating 
agencies in this important effort which will include much 
public input. This effort will serve as the basis for land 
management decisions and will be critical to the counties and 
communities.
    [The prepared statement of Ms. Jacobson follows:]
 Prepared Statement of Julie Jacobson, Deputy Assistant Secretary for 
        Land and Minerals Management, Department of the Interior
    Thank you for the opportunity to testify at today's hearing on S. 
380, the ``Secure Rural Schools and Community Self-Determination 
Reauthorization Act of 2007.'' The underlying Act, the Secure Rural 
Schools and Community Self-Determination Act of 2000 (P.L. 106-393) 
(the Act) expired on September 30, 2006. The Department recognizes the 
impact the expiration of the Act is having on the counties that rely on 
payments to fund important local programs, and the Administration 
continues to support a one-year extension of the SRS Act as an interim 
step, so long as there are agreed-upon full offsets. S. 380 extends the 
authorization of P.L. 106-393 from 2006 until 2013. The Department 
could support S. 380 if amended with agreed-upon full offsets, an 
eventual phase out of payments, and if the bill is amended to 
incorporate other changes. The Administration would be pleased to work 
with the Subcommittee and the appropriations committees to address this 
and other amendments to improve the bill.
                               background
    In addition to the rangeland managed by the Bureau of Land 
Management (BLM) manages 69 million acres of forests and woodlands on 
the public lands, some 2.5 million of which are located in the 18 
western Oregon counties covered by the ``O&C Act'' (Revested Oregon and 
California Railroad and Reconveyed Coos Bay Wagon Road Grant Lands Act 
of 1937.). Of the public lands managed by the BLM, the Secure Rural 
Schools Act applies exclusively to the 18 O&C counties in western 
Oregon.
    Congress set the stage for the long and close association between 
the BLM and the O&C counties when, in the O&C Act, it directed the 
Department of the Interior to manage the O&C lands for ``the purpose of 
providing a permanent source of timber supply, protecting watersheds, 
regulating stream flow, and contributing to the economic stability of 
local communities and industries, and providing recreational 
facilities.'' The O&C counties receive approximately 50 percent of the 
receipts from timber harvested from public lands in the counties.
    By the late 1980s and early 1990s, litigation regarding the 
northern spotted owl resulted in steep reductions in timber harvests in 
the Pacific Northwest, and correspondingly steep reductions in income 
to counties that depended on revenues from timber harvests on public 
lands to fund essential local government services. In the years between 
1989 and 1993, income to O&C counties from timber harvests dropped by 
nearly 30 percent, to approximately $79 million. In response to this, 
Congress enacted ``safety net payments'' to stabilize income flow to 
timber-dependent counties during this tumultuous period, through the 
Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66).
    In 2000, Congress repealed the ``safety net payments'' and enacted 
the Secure Rural Schools Act to set a stable level of payments to 
counties. The Act provided the O&C counties with the option of 
receiving a full payment amount equal to the average of their three 
highest timber receipt years from 1986 through 1999. In addition, under 
the Act the counties elect the percentage of the payment (80-85 
percent) to be distributed directly to the counties (Title I), and the 
remaining percentage (15-20 percent) to be allocated between Title II 
projects (administered by the BLM), Title III projects (administered by 
the counties), or returned to the Treasury.
    Under Title II, funds are used to support cooperative projects, 
under the guidance of Resource Advisory Committees (Committees), to 
restore healthy conditions on public lands or on private lands for the 
benefit of public land resources. Such projects include wildfire hazard 
reduction, stream and watershed restoration, forest road maintenance, 
and road decommissioning or obliteration, control of noxious weeds, and 
improvement of fish and wildlife habitat. Under Title III of the Act, 
counties may use funds for emergency services, community service work 
camps, purchase of easements for recreation or conservation, forest 
related after-school programs, and fire prevention activities.
    The Resource Advisory Committee process authorized by the Act has 
served as a catalyst to bring together diverse groups and individuals 
with the shared goal of improving the condition of our public lands. In 
projects selected through collaborative decision-making, the BLM has 
worked in partnership with state and local governments and stakeholders 
to improve the condition of the O&C lands and support the development 
of community-based strategies to protect these communities from 
catastrophic wildfire.
    To date, the BLM's five Resource Advisory Committees have 
recommended for approval over $50 million in Title II restoration 
projects on public lands or for projects on private lands that enhance 
public lands. The Act has allowed the BLM to undertake a greater amount 
of on-the-ground restoration activities than would otherwise have been 
possible. Reauthorization of the Act, under S. 380, will strengthen 
these efforts.
                                 s. 380
    Section 2(a) of the bill extends the payments authorized under all 
three titles of the Act from 2006 to 2013. As amended, the payment 
authorities would sunset on September 30, 2013, and any funds not 
obligated by September 30, 2014, would be returned to the Treasury.
    Section 2(b) of the bill amends, among other things, Section 
103(b)(1) of the Act to extend the counties' election to receive 50 
percent payments through fiscal year 2013, and adds language to that 
Act that authorizes the Secretary of the Treasury to give counties the 
opportunity to elect in writing during the last quarter of fiscal year 
2006 to begin receiving the 50 percent payment effective with the 
payment for fiscal year 2007.
    Sections 2(c)(1)(C) and 2(c)(2)(C) of the bill amend the Act to 
state that if the Secretary of the Treasury determines that a shortfall 
in revenues is likely, all revenues, fee, penalties and miscellaneous 
receipts, subject to certain limited exceptions, shall be reserved to 
make payments to the counties for that fiscal year. We believe these 
sections are unnecessary and recommend that they be removed from the 
bill. Also, the Department of the Treasury advises that the bill would 
improperly assign certain duties to the Secretary of the Treasury that 
would be more properly assigned to the Departments of Agriculture and 
the Interior.
    Section 2(e) of S. 380 amends the ``Merchantable Material 
Contracting Pilot Program'' authorized by Section 204(e)(3) of the Act 
to authorize the Secretary to establish a pilot program at the request 
of a Resource Advisory Committee to implement one or more the projects 
recommended by the Resource Advisory Committees. While we have no 
objection to the amendment, we urge the Subcommittee to consider 
whether the goals of the Pilot Program can be more effectively reached 
using Stewardship Contracting authority to implement Title II projects 
with merchantable materials.
    Section 2(f) of the bill amends the Act to add notification 
requirements by counties receiving funds under the Act. Specifically, 
it requires participating counties to submit to the Secretary written 
notification specifying each project for which the county obligated 
funds during the fiscal year. The Secretary is then required to review 
the notifications to assess the success of participating counties in 
achieving the purposes of the bill. Additionally, Section 2(f) amends 
the Act to require the Secretary to prepare an annual report containing 
the results of the most recent reviews conducted by the Secretary. We 
have concerns about this provision as it requires the Secretary to 
monitor and report on the use of these funds.
    To address these and other concerns, the Administration would like 
to work with the Committee on other technical and substantive 
amendments. As stated earlier, the Department could support S. 380, if 
amended with agreed-upon full offsets, an eventual phase out of 
payments, and if the bill is amended to incorporate other changes.
    In closing, the BLM has a long history with the O&C counties, and 
we look forward to continuing this relationship. In fact, the BLM is 
currently working on revisions to the Western Oregon Resource 
Management Plans. Seventeen out of 18 O&C counties, as well as the 
State of Oregon, are cooperating agencies in this important effort 
which will include public input. This document will serve as the basis 
for land management in these areas and will be critical to the counties 
and communities.
    I would be happy to answer any questions.

    Senator Wyden. A land-speed record for finishing testimony. 
We thank you. Senator Smith, I know, has a tight timeline. If 
all of us take 5 minutes, I think we'll be in good shape for 
you, Senator Smith.
    Mr. Rey, Doug Robertson is going to testify in a few 
minutes. He's the commissioner of Douglas County and he is 
going to say that a catastrophe is about to befall rural 
America. That there're going to be thousands of termination 
notices going out, counties prepared to declare bankruptcy, and 
I'd like to know whether, in your judgment, Doug Robertson is 
wrong with respect to that assessment.
    Mr. Rey. No, I don't think so. I think we've acknowledged 
that there are a number of counties who are still in need of 
this assistance. Not all the counties who were in need of it in 
2000, but certainly a large number, and I think his county is 
among those.
    Senator Wyden. Now, with respect to the funding issue, as I 
have looked at the budget, it does seem that the administration 
can find money for its priorities, the values that it's most 
concerned about. For example, the budget includes proposals to 
raise money by improving tax compliance that are similar to 
what Senator Baucus and I have proposed to pay for County 
Payments last year. So they said we'll take this money that 
Senator Baucus and I talked about for County Payments. We'll 
use it for something else.
    Don't you think that if this were a priority for the 
administration, this method of financing the program, it would 
be possible to find somebody in the Senate to be willing to 
sell off our national treasures? I mean in the last Congress 
the administration offered a proposal that nobody would 
support. This is our second hearing now, and I don't exactly 
see my colleagues on the other side of the aisle tripping over 
themselves to support land sales again. How can it be this is 
the only thing the administration offers up?
    Mr. Rey. Well, the proposal this year is not the proposal 
we offered last year. We listened intently to those comments 
that were substantive--as opposed to those ad hominem in 
nature--to see what the nature of those objections were, and 
responded to them accordingly.
    The primary nature of those objections were No. 1, that 
people were uneasy about the idea of losing part of the Federal 
estate; and No. 2, that there was an inequity associated with 
the States that were going to be donors and the States that 
were going to be recipients. In other words, there was an 
unhappiness with the idea that we were going to sell national 
forest lands in Missouri to fund Oregon's schools. The proposal 
this year responds fairly to both of those concerns. We're 
going to use half of the money raised to acquire new land. By 
the time we're done we'll end up with more land acquired than 
we sold and that land is going to be acquired proportionately 
to the States that were donor States because they had 
developable tracts. So if we sell 2 million acres of national 
forest land in Missouri, a million acres will go into schools 
and a million acres will go back to Missouri to buy national 
forest lands that are more ecologically valuable in that State.
    But more broadly, I think a more accurate description of 
your assessment is both the Congress and the administration 
have a number of funding priorities.
    Senator Wyden. Not me, I have one, getting this program, 
and that's why I offered an alternative.
    Mr. Rey. The chronology of last year's debate is that the 
House budget resolution already used the alternative that you 
and Senator Baucus subsequently offered for a different 
purpose. So at the time that it was offered it was already in 
conflict with the House budget resolution.
    The administration didn't oppose your proposal, so 
presumably if the Congress had passed the budget resolution 
there would have been an opportunity to sort out how that 
funding should be used. But the fact that the Congress didn't 
pass a budget resolution isn't a reflection of a lack of 
commitment on the part of the administration.
    Senator Wyden. All I can tell you is, there was another tax 
legislation from the administration. That seemed to go forward, 
but there's no money for County Payments.
    Ms. Jacobson, nothing in the original legislation says the 
program was intended to be temporary. Can you explain why the 
administration supports terminating now a program that's been 
considered one of the most successful forestry laws in the last 
30 years?
    Ms. Jacobson. It is a 6-year authorization.
    Senator Wyden. But you all want to terminate it. You want 
to close a program described as one of the most successful in 
decades, at a time when clearly it's not going to be possible 
to make up the revenue in these rural communities that say 
they're going to die. Why is that a priority for you?
    Ms. Jacobson. What the administration has said is that we 
support your bill as long as there are mutually agreed-upon 
offsets and that there is an eventual reduction in payments, 
but we support the reauthorization for 6 years.
    Senator Wyden. You also didn't propose a funding mechanism. 
Again, you've got vast amounts of BLM timber lands and you 
didn't propose a funding mechanism. It's very hard to take 
these statements with a straight face. I mean no funding, no 
comment with respect to what's going to happen to these 
communities, and yet somehow administration priorities like tax 
cuts can get funded.
    Ms. Jacobson. Mr. Chairman, the administration did fully 
fund the Secure Rural Schools Act within the President's 
budget.
    Senator Wyden. By selling off something a republican 
Senator would go along with. That's the position of the 
administration.
    Mr. Rey. We're putting a lot of them as leaning against.
    Senator Wyden. That's what happened; I wanted to pass it 
the last Congress. No republican Senator would support your 
funding proposal. Senator Craig.
    Senator Craig. Mr. Chairman, because I want to make a 
statement, why don't I turn to my colleague from Oregon? You 
mentioned a time crunch he's under, to proceed, and then I'll 
come back, and that could well include our colleague from 
Alaska. Then I'll come back and make a brief statement and 
offer some questions.
    Senator Wyden. Senator Smith.
    Senator Smith. Thank you very much, Senator Craig and thank 
you, Mr. Chairman, we're proud of you for holding the gavel in 
this committee, and doubly proud that we share as our No. 1 
priority in this session of Congress, the extension of the 
Secure Rural Schools Act.
    I've spent a lot of hours in hearings on this issue, a lot 
of hours speaking about this issue on the Senate floor. I don't 
think I need to redo that filibuster here, but what I do want 
to say is there's an enormous community of interest here--in 
fact there are communities in 39 States that need help. My 
State of Oregon just simply leads the list because it has the 
most Federal land.
    It's an amazing thing though, when the Federal Government 
owns over half of your State and under our Constitution, local 
communities have no ability to develop or tax that land. So we 
have with the Federal Government built up a great region of the 
country, and specifically the State of Oregon, that was built 
by timber. The environmental ethic of this country has changed, 
shifted, as it relates to the management of public lands. That 
leaves stranded some communities that I care deeply about.
    This fight cannot evolve into a dispute between States, 
between Republicans and Democrats or between branches of 
government. We owe the American people, and the people we 
represent deserve something better than that, so we've got to 
get together at the highest levels. Because the dollars are 
running out and so is the time available to structure a new 
agreement.
    I listened with interest to the chairman of the committee, 
Senator Bingaman, and I truly do understand why other States 
don't like the formula, when you look at over half of the money 
going to Oregon.
    Senator Wyden and I could have settled this issue a long 
time ago if we were willing to walk away from a formula that 
was based on history. A formula based on historic timber 
harvest, because that is the economic realities that underpin 
this discussion of a formula. But we haven't been able to walk 
away from that. I understand, however, that other States would 
like more of this money, to have a larger share, and Oregon 
take a lesser share.
    I actually don't oppose them getting more money. What I've 
opposed is our taking less. I'm wondering what the rationale of 
the formula would be. It would help Oregon if they got more 
money, but Senator Wyden and I can't go home and say why we got 
less. I don't understand how we would explain that other than 
that this just didn't work out and that somehow we're revising 
history.
    I guess Mark, my question to you is really based on, not 
any disgruntlement with the effort I know that you have made to 
increase timber harvest. I know President Bush has taken a lot 
of arrows in his back to defend the timber industry, seeing it 
as valuable to Oregon's history and to its continued vitality. 
But the facts are, that we're producing less timber now than we 
were under President Clinton, and I can't explain that at home.
    I know it's not entirely your fault because I think the 
Federal courts have something to do with that. But what I'm 
saying in summation is, Mark, if we're going to ramp down the 
dollars, can you ramp up the timber harvest? Because these 
folks have no choice.
    Mr. Rey. That's part in parcel of what we're proposing this 
year. We're proposing to increase funding for the northwest 
forest plan, which will go predominately to Oregon. We will do 
that in fiscal year 2007 and we're proposing to do it again in 
2008, but it's depending on which years you use as a basis for 
comparison.
    It's not accurate to say that there's less timber being 
harvested, less timber being sold now than there was during the 
Clinton administration, when in the first couple of years of 
the operation of the northwest forest plan the commitments that 
were made to the timber-dependent communities in Oregon, 
Washington and northern California were, to a considerable 
extent, met. But by the time that plan had been in operation 
for 5 years, the sales levels were down to zero, which is where 
they were in 2001 when we walked in the door.
    So what we've had some success in doing is bringing that 
back up again. Now if you want to average the 8 years of the 
Clinton administration against the 8 years after we're done, of 
how it ends up, you'll have a better gauge of who sold more 
timber. If indeed the Clinton administration sold more timber, 
well then I hope the National Wildlife Federation will make me 
conservationist of the year, but that may not be the outcome.
    Senator Wyden. The time of the gentleman has expired; the 
Senator from Alaska.
    Senator Murkowski. Thank you, Mr. Chairman and Secretary 
Rey; it's nice to have you here. Thank you for your focus on 
Alaska.
    I understand you're going up soon to meet with many in our 
timber community and I'm curious to hear your response to 
Senator Smith's question: if you can't ramp up the funding, can 
we somehow ramp up more in timber receipts? As you know, we're 
getting nothing out of the Chugach National Forest, and the 
Tongass is a mess of litigation and snarls and politics and 
great, great frustration, as well you know. I'm not convinced 
that we see any level of optimism there to make a difference to 
our communities that were once so dependent on the industry, 
and now so dependent on these receipts from the Secure Rural 
Schools.
    In the Chatham school district in Angoon, they're on 
Admiralty Island. They received $310,000, which might not seem 
like a boatload of money to us here, but $310,000 is 10 percent 
of their annual budget. I don't care whether you're a school, 
or what business you're in, if 10 percent of your annual budget 
is taken away, how do you move forward with dealing with the 
next year?
    I have folks that are here today that have come to hear 
this testimony, have come to hear what the proposals and the 
solutions are, because they are so desperate, truly so panicked 
about the future, whether it's in Angoon or whether it's 
Wrangell, Yakatak--you know the communities.
    One of the problems, of course, that we're facing is we 
have a difficult and a very challenging time in recruiting 
educators to the State in the first place. If they are getting, 
not necessarily the pink slip now, but hearing the word on the 
street that we don't know whether we're going to have this in 
our budget next year, these people leave. They not only leave 
the community of Wrangell, but they leave the State. They can't 
get in a car and drive back up, so we are extraordinarily 
concerned about how we make it through.
    I'm trying to understand what it means to the State of 
Alaska if we go to that 25 percent funding level. Can you tell 
me what that number would be in terms of receipts to the State 
of Alaska, does anyone have that? I've been trying to track 
that down.
    Mr. Rey. I think it would drop from about $9 million in 
annual payments to somewhat under $1 million in annual 
payments, so it would be pretty precipitous, if you were back 
at this moment in history to the 25 percent formula 
exclusively. But to your immediate question, the pendency of 
the crisis is one of the reasons that we support a 1-year 
extension with mutually agreed-upon offsets on whatever near-
term mechanism is available to do that.
    The broader question is: ``What do we do after this 
reauthorization?'' It's answered in three parts. No. 1, there 
are some areas where timber harvest levels are increased and 
where we will get back to a stable timber sale program that 
will provide enough revenues, with enough agreement among the 
local people, to continue to make these guaranteed payments 
unnecessary. I'm somewhat optimistic that this Tongass Plan 
will hopefully get us there.
    No. 2, there are other areas where the economies of the 
counties either have already, or will, diversify, such that the 
historic dependence on timber sale receipts is an artifact of 
the past. Sure, it's nice for them to have the money, but do 
they need it? No. Could they raise it on their own tax base? 
Yes. I'm not going to single out any individual counties but I 
am going to say that I know of a lot of them, in a lot of 
States, that are getting a lot of guaranteed money under this 
legislation.
    The third way we're going to resolve it is to look and see, 
5 years from now, where we're at and if we still have counties 
that haven't been able to make a transition, or we still have 
areas where the timber sale program is in great dispute and 
hasn't regenerated to an agreed-upon sustainable level. Then, 
as we are discussing now, we will look to an extension for 
maybe a limited number of counties to get our way through this 
transition. Those are the three ways I see forward from here.
    Senator Murkowski. Well, of course we just hope that in 
that ensuing 5 years, you're going to have your communities 
still alive, still around. Of course when you're dealing with 
some of the land ownership issues that we have in our western 
States--when you're an island that is surrounded by national 
forest, and your ability to diversify is just a nice term but 
not something that has practical applications in your 
community, you know the challenges.
    Mr. Rey. I wouldn't have said there were any counties in 
Alaska per se that have hit that diversification plateau yet, 
but there are a number of counties in other States that have.
    Senator Wyden. The time of the gentle lady has expired; the 
Senator from Idaho.
    Senator Craig. Thank you very much, Mr. Chairman. I missed 
the opportunity to sit in that ranking seat and be your partner 
on these issues before this subcommittee. The rules of the 
Senate are strange. As a result of that uniqueness, I had to 
put on another hat in another committee, which I think in the 
end is going to be very valuable for everyone sitting in this 
room: as the ranking member on the appropriating committee of 
the Interior Committee from which, certainly, this wealth might 
spring.
    Now having said that, Mr. Chairman, I want to thank you for 
your effort, and the effort of your partner in Oregon for the 
reintroduction of the bill itself. I have been silent too long 
and in that silence I have received a level of criticism that 
because of the silence might be justifiable. But there was a 
reason, Mr. Chairman, why I did not co-sponsor Craig-Wyden. 
There was a tendency to want to do that for a namesake purpose, 
if for no other reason, but I think you heard it a few moments 
ago when you heard the Chairman of this committee restate 
something that he said a year ago. That was that a second look 
is needed at the formula because of the disparity that some 
States feel they are receiving versus that which we are 
receiving and that for a reauthorization to occur--and a 
multiple-year scenario--it would certainly require a different 
view.
    Having said that, it's been difficult for me to be silent 
for a lot of reasons. One of the reasons is because of the 
value of the resource advisory committees, when Mark Rey, as 
you mentioned as an alum of this committee, staffed and helped 
us write this bill, this law.
    One of the things we were in search of was a bridge, to 
bring parties together and stakeholders together for the 
purpose of unity, not the kind of divisive character that 
frankly brought us to the disparity we exist in today. While 
none of us likes to remember the past, I think it was important 
for the Secretary to recognize those who were our critics at 
that time. I didn't take it on the chin too much, but Ron Wyden 
did. There's no question about it, and he was a brave soul 
during that time, and I think Mark raised a demonstration of a 
fact at hand or a scene revisited in his mind in the Wyden 
office, so it was one not untypical of that day. That was then; 
this is now.
    What was also then that is not now, was the time of surplus 
in our country, budgetarily. While Mark Rey and I and Ron were 
struggling to get this legislation together, I made a little 
trip over to a guy by the name of Pete Domenici's office and I 
said, Senator Domenici, chairing the subcommittee of 
authorization or funding, here's what we have got to do and he 
said, ``Oh, okay, here's $500 million a year, how's that?'' and 
it was almost just that simple. That was then; this is now.
    Why are we struggling to find a responsible longer-term 
funding mechanism? Because of where we are today, and I don't 
care who decides priorities. In this instance we have a 
problem, and that safety net that you, Mr. Chairman, have 
spoken so eloquently to, has been phenomenally valuable in my 
State and will raise havoc upon some of my school districts. It 
is something that I'm going to make every effort to resolve, 
along with you.
    In the end it will be bipartisan. I am confident that we 
can create another safety net that will take us into the out-
years and then maybe allow us to, as the Secretary has just 
mentioned, examine ourselves on a county-by-county basis. To 
see those who have not been able to diversify versus those who 
have. Some of my counties have been reasonably successful in 
changing their economic base, some have not, and as a result of 
that it becomes increasingly important that we evaluate this.
    I have always said this was a transitional tool. I did not 
see it as an ``in perpetuity'' entitlement. I recognize history 
and it is wonderful history to talk about the 25 percent fund 
and 1908, and that was then. But that is not now, and as a 
result I think we have to be reflective upon that.
    It is not to suggest, Mr. Chairman, that in the O&C lands 
or in other areas where we have communities that are so totally 
locked within the public domain that to diversify is a near 
impossibility, that we would not want to look at and reflect 
upon a new formula to fund and assist them. I said some years 
ago that with the demise of the timber side of the Forest 
Services responsibility, I grew fearful of a day when those who 
were the advocates of that demise would disappear from the 
scene and leave the responsibility of the funding mechanisms or 
the funding downstream that that timber program offered, in the 
lurch. Sure enough they not only have left the scene, they have 
become our critics at a time when we are trying to save the 
scene that many of those would choose to live in.
    So, it is with frustration that I attend this hearing 
today. I wish it were easy to just simply wave a magic wand, 
find well over $400 million annualized and move on down the 
road. It would be so easy to do that because if I were to miss 
the havoc raised in the communities of interest, in the 
counties and with the schools, I would be blind. And that Mr. 
Chairman, I am not. But my silence has been only auditory. I 
and my staff have worked for the last 6 months to try to bring 
together in a bipartisan way a group of Senators to create the 
60 votes necessary, by looking at different formulas that we 
could come together on.
    We are near. I think the chairman of the full authorizing 
committee reflected that, but we are not there. I would also 
suggest that I would not expect this chairman and Senator Smith 
to, in any short term, want to--or find it necessary to--take 
anything less then that which they received a year ago at this 
same time.
    In working through this process, let me only conclude that 
that was then and this is now, and we're dealing with a 
different world in a different environment trying to find our 
way through it. I think we will, because I concur with you, Mr. 
Chairman, we have to. Having said that, you've been patient 
with your time. Our colleague from Washington is here. Let her 
make her comments.
    I would come back with only one question of Mr. Rey at the 
time. Julie, thank you also for being here. Clearly the role 
that your agency plays in southwestern Oregon is a major one 
and it should not be unrecognized. Thank you.
    Senator Wyden. I just want to say to my friend, I'm 
interested in working with you as well, and I know that Senator 
Smith is, and we're going to prosecute this bipartisan effort 
very aggressively and I thank you. We'll have some additional 
questions in a moment.
    Senator Cantwell.

        STATEMENT OF HON. MARIA CANTWELL, U.S. SENATOR 
                        FROM WASHINGTON

    Senator Cantwell. Thank you, Mr. Chairman. I, too, want to 
work with you and Senator Craig on this important 
reauthorization. We all know in the Northwest how vital this 
program is and it's nearly 100-year-old policy is more 
comprehensive than maybe people here in Washington understand. 
But I know we have various county commissioners from some of 
our rural counties in the audience today who are also going to 
try to add to the perspective.
    Simply put, without the support provided by laws like the 
Secure Rural Schools and Self-Determination Act, many 
communities in Washington State struggle to meet their basic 
needs, such as good roads and good schools. It's imperative to 
forest-dependent communities in over 40 States that more than 
700 counties, nationwide, have this program fully funded, so I 
applaud you, Mr. Chairman for your hard work and your effort. 
I'd obviously like to thank the Senator from Idaho for his 
leadership in co-sponsorship.
    However, I fear that much of this progress is being put at 
risk by the administration's latest misguided proposal where 
they are outlining their fiscal 2008 year by budget selling off 
270,000 acres of public land, but only partially funding the 
County Payments program and $800 million. This funding level 
only provides half of the necessary funding for this program 
and provides for funding for the next 4 years. In short, this 
proposal is underfunded, short-sighted and, I believe, a non-
starter. I think my colleagues will agree with us.
    So I am very concerned about the precedent of selling off 
public lands in order to cover short-term budget deficits. The 
Federal forest land represents an irreplaceable public treasure 
cherished by lots of hunters, fishermen, and recreational 
users, and it is also used for education and a variety of 
things essential to habitat for the future. So I hope that as 
we work through this proposal, that we will be sure that the 
County Payments program is sufficiently funded and is the 
safety net. Otherwise without the safety net, Washington State 
stands to lose $47 million in irreplaceable funding for 
critical programs.
    Skamania County in southwest Washington is a good example. 
Almost 80 percent of Skamania is in the Gifford Pinchot 
National Forest, making it non-taxable by the county. Other 
large portions of land are owned by State or timber companies, 
leaving only 2 percent of the county eligible to be taxed at 
full valuation. However by leveraging funds from the County 
Payments program, places like Skamania County are able to 
provide critical public services like education, emergency 
response and road maintenance. It can be a wonderful place to 
live and provide services, but they have to have the resources.
    So, I know, Mr. Chairman we are going to get to questions, 
but ultimately I think this is about examining the priorities. 
It's about an initiative that has succeeded for years in 
supporting our communities and the co-existence with Federal 
lands. So are we going to continue that process or will 
Congress follow the administration's flawed proposal by placing 
a price tag on our precious public lands? I look forward to 
asking Mr. Rey some questions, but I'll yield back to my 
colleague, either the Chairman or my colleague from Idaho who 
wanted to ask questions. But I thank the chairman for allowing 
me to have this statement and a longer statement inserted in 
the record.
    [The prepared statement of Senator Cantwell follows:]
Prepared Statement of Hon. Maria Cantwell, U.S. Senator From Washington
                              introduction
    Thank you, Chairman Wyden.
    Thank you for holding this hearing, and thank you for continuing to 
support and champion the Secure Rural Schools and Self-Determination 
Act.
    I appreciate you holding this hearing and look forward to working 
with Senator Wyden and Senator Craig and to reauthorize this law.
    As you know, this vital program continues a nearly one hundred year 
old policy of providing fair and equitable compensation to the citizens 
of forest counties for their coexistence with federal lands. Simply 
put, without the support provided by laws like the Secure Rural Schools 
and Self-Determination Act, many rural communities in Washington would 
struggle to meet their basic needs such as adequate roads and good 
schools. It is imperative to forest-dependent rural communities in over 
40 states and more than 700 counties nationwide that this law continues 
to be fully funded.
    As you know, reauthorizing this program has strong bipartisan 
support on this Committee. I'd like to publicly thank Senators Wyden 
and Craig for their leadership and am proud to be a cosponsor of this 
legislation. However, I fear that so much of this progress and 
essential support will be put at risk as a consequence of the Bush 
Administration's latest misguided proposal. The administration's plan 
outlined in the fiscal year 2008 budget proposal would sell off around 
270,000 acres of public land, but would only partially fund the County 
Payments program at $800 million. This funding level only provides half 
of the necessary funding for the program and only provides funding for 
the next 4 years. In short, this proposal is under funded, 
shortsighted, and is a non-starter for this Senator.
    I am very concerned about the precedent of selling off public lands 
in order to cover short-term budget deficits. Federal forest lands 
represent an irreplaceable public treasure: cherished by hunters and 
fishermen, used for recreation, study, and education. In addition to 
these multiple purposes, these forest lands provide essential habitat 
for fish and wildlife.
    Since the Administration's proposal was developed in D.C. with 
little or no input from the Forest Service's Pacific Northwest field 
office, we are anxious to see maps of exactly what lands are on the 
chopping block in Washington State.
    These lands represent an important legacy, which we have chosen as 
nation to protect for future generations. The proposal in this budget 
seems to undervalue this legacy by proposing to sell off our children's 
inheritance to pay down the debt. Such fiscal slight-of-hand won't fool 
anyone.
    To be sure, the County Payments program has proven effective, 
responsive, and essential to so many counties across the nation. We 
must support and sustain it with real funding in an adequate, 
responsible manner. Without this vital safety net, rural counties in 
Washington State will lose more than $47 million dollars in 
irreplaceable funding for a variety of critical programs.
    Skamania County in Southwest Washington is a good example. Almost 
80 percent of Skamania is in the Gifford Pinchot National Forest, 
making it non-taxable by the county. Other large portions of land are 
owned by the state or timber companies, leaving only two percent of the 
county eligible to be taxed at full valuation. However, by leveraging 
funds from the County Payments program, places like Skamania County are 
able to still provide critical public services like education, 
emergency response, and road maintenance.
    In addition, title two of this law has increased local community 
involvement and empowered local citizens through Resource Advisory 
Committees. These committees have helped cultivate a sense of 
ownership, promoting involvement in important projects such as 
improving wildlife habitat and water quality while reducing the threat 
of forest fires through fuels reduction efforts.
    Ultimately, I believe this is a time to examine our priorities. Do 
we want to sustain a proven and balanced initiative that has succeeded 
for years in serving, supporting, and valuing the citizens of forest 
counties in their coexistence with federal lands? Or will Congress 
follow the Administration's flawed proposal by placing a price tag on 
our precious public lands?
    I believe the answer is clear and I look forward to working with my 
Committee colleagues on this issue.

    Senator Wyden. I'm going to indulge both my colleagues. 
Would you like to ask a question or two now? Then Senator 
Craig. I had one as well. Go ahead.
    Senator Cantwell. Thank you. Mr. Rey, have you looked at 
how this partial funding and termination of the program will 
impact Washington State?
    Mr. Rey. Yes. What we would do would be to fully fund the 
program in '07 and start to phase down the program in '08 
through '11 and then at the end of '11, or not '11, at the end 
of fiscal year 2011, we'd have the opportunity to look at what 
the situation in individual counties is, to assess which of 
them are still in need of support and which are not. There are 
some who are presently not in need of support.
    Senator Cantwell. Where do you think some of the poorest 
counties in the State of Washington with 80 percent of their 
land in Federal timber holdings could come up with $47 million 
even if you gave them 3 or 4 years to come up with it?
    Mr. Rey. Well, if we decide to look at the revenue 
distribution formula as some members have suggested today, we 
might consider taking the money that King County is getting 
from the 2000 legislation and reallocating that to a county 
that's in greater need.
    Many now largely urban or suburban counties in the west are 
getting a substantial amount of money in 2000 legislation's 
formula because the formula was a reflection of the historical 
timber receipts that those counties enjoyed in 1908 or at an 
earlier time. Many of those counties, including the one I just 
mentioned, are pretty vibrant right now. The fact that they're 
getting several hundred thousand dollars or a million dollars 
is a relatively small part of their budget. It's a big part of 
the budget for some of the counties like Skamania County, but 
that's not how the formula as it exists today distributes the 
support. So that would be one option available to us, either in 
the reauthorization of the bill now or as we look at the 
situation.
    Senator Cantwell. Do you think that's a revenue stream not 
being used or not being planned on?
    Mr. Rey. No, it's certainly being used and it's certainly 
enjoyed but it's a different case for Skamania County then it 
is for King County. You can make a very persuasive case that 
Skamania County, given its situation today, is not 
demonstratively better off than it was in 1999 and it ought to 
benefit from an extension of this legislation. It's harder to 
make that case today for King County, and there are other 
comparable comparisons in other States throughout the west. So 
that's one of the adjustments that seems to me that we might 
make as we go forward.
    Senator Cantwell. Did I understand from a previous question 
before I got here by Senator Wyden that the administration does 
support this program?
    Mr. Rey. Yes. We support a 5-year reauthorization of the 
2000.
    Senator Cantwell. But a trailing off in several years and 
looking for revenue from sources that are already dedicated to 
other things. Is that right?
    Mr. Rey. Not necessarily looking for other revenues, but 
yes, trailing off on the premise that either one of two 
occurrences taking place.
    No. 1 would be that the timber sale revenues are back up, 
so the need for a guaranteed payment is diminished. No. 2 would 
be that the county has diversified its economy to the point 
that it's no longer as dependent on historic levels of timber 
receipts as it once was.
    Senator Cantwell. Well, Mr. Chairman, I know my time is 
expired but I'm all for creativity. I am not for curtailing a 
program or shifting a focus to other revenue streams and not 
looking at the larger policy, perhaps, Mr. Rey.
    Mr. Rey. We'd be happy to talk to you about that.
    Senator Cantwell. I share my colleagues' concerns and 
frustrations over where this has been, and now is not the time 
to hide the focus under some other hat, in a hat trick. This is 
about finding the revenue and resources within the budget, and 
so I thank the chairman.
    Senator Wyden. I thank my colleague and for your co-
sponsorship of the legislation, all your advocacy and I 
appreciate your involvement. Senator Craig.
    Senator Craig. Let me just pick up where the Senator from 
Washington and the Under Secretary were dialoguing, because I 
find it fascinating.
    If timber receipts were to pick back up and we were to find 
less of a need to fund the given program, it is interesting 
that probably Douglas county's receipts would not pick back up 
because of its urbanization, but Skamania because of its rural 
forest base would. The formula would be working not unlike how 
I think we've got to show some objectivity in looking at it in 
the future years. I have similar counties. Some have been 
reasonably successful in economic growth and development and 
given another few years, my guess is, they will look at timber 
as a part of their historic past, not as a future revenue base 
simply because of the land base itself.
    While I know it's hard to give up revenue flows, if we 
continue to tie this program to the resource and to a formula 
that is tied to the activity of the resource itself, which I 
have always believed we should, as a fair measurement of how we 
got to where we were, then I think that kind of funding would 
probably take care of itself. By its character it would pick 
its winners and its losers and you and I would not necessarily 
be caught in the political vise that we find ourselves in 
today. I think that's a reasonably fair statement.
    Senator Cantwell. If I could, in discussion with my 
colleague, I think the issue is--and I think we're very proud 
of--the economic development that's happened in our State. You 
know the fact that Google has moved into The Gorge, or the area 
is promoting an economic strategy of wind and wine.
    We're, I think, on the cutting edge of a lot of new 
developments and technology and job growth but, you can't have 
these counties for the next 5 not have the revenue. When you're 
80 percent timber-dependent or 80 percent of your land holdings 
are in timber, there isn't a whole lot that you can do.
    I think Skamania County has done well. They have some 
innovative technology companies even within there, but there're 
going to start basically at the same time they're trying to 
promote in their business park, economic expansion to 
companies. I can't keep the school open, I can't keep the 
hospital open, I can't get the roads paved, we can't get the 
infrastructure to the business park--then they're not going to 
have that vision of economic development that I think you 
suggest and I'd love to work.
    Senator Craig. You and I have no disagreement with that at 
all. I think that's a valid observation. The infrastructure 
that Craig-Wyden has assisted in sustaining is critical in any 
economic growth or economic development scenario.
    My question, Mr. Chairman, is for Mark, or Under Secretary 
Rey. Mike Francis of the Wilderness Society will be expressing 
some concern about the modification that is made in S. 380 in 
the use of pilot sort yard provisions. Is there anything wrong 
with further empowering the RACs to make the decision of when 
and where to use the sort yard pilot authority?
    Mr. Rey. The administration doesn't object to that 
provision in S. 380. I don't see any problems with that 
proposal.
    Senator Craig. Julie, a bit of an extension of that 
question. You suggested that the goals of the pilot program 
embodied in your testimony be met through Stewardship 
contracting.
    Could you discuss very briefly that issue a little more and 
explain how this can be done, or might be done?
    Ms. Jacobson. Senator, it was a suggestion that the 
committee look at the language that we use under the 
Stewardship contract upon whether it was an equal or better 
tool, but we have used the provision in the Secure Rural 
Schools Act.
    Senator Craig. Fine, thank you. Mr. Chairman, thank you.
    Senator Wyden. I thank you; Senator Craig and Senator 
Cantwell and I think that these comments, as we go to our next 
panel, were very telling.
    I just had a big round of town meetings when I was home and 
I'm sure, like you, people say, ``Why does Oregon get this 
money? Why doesn't anybody else get this money?'' Well, the 
reason that Oregon gets this money and everybody else's is 
about history, and essentially this is a 100-year-old formula 
that is based on harvest and volume. Oregon gets this money 
because this is where God decided to put the trees, beautiful, 
wonderful trees, and we're thrilled.
    There are more than 3 million Oregonians. This is what God 
decreed and I appreciate the exchange between my friend from 
Idaho and Washington. I happen to agree with both of you with 
respect to the future of the rural communities. Once we get the 
County Payments law passed and we ensure the survival of these 
rural communities, I can ensure for example that Curry County, 
beautiful spot on the Oregon coast, doesn't disappear, and 
Grant's Pass doesn't have to call out the National Guard.
    Once the rural communities survive, it is my intent, as my 
friend from Idaho and I have done for a full decade now--it 
seems incredible that it's gone by so fast--we're going to work 
on biomass, which I know you're very interested in. We're going 
to work on thinning issues. We have two major forestry bills 
that the two of us were so heavily involved in, actually got 
enacted into law; I think both of us said the only forestry 
bills that got enacted in the last 20 years. Once we ensure the 
survival of these rural communities, we're going to go on to 
those other areas that I know that you're interested in, 
Senator Cantwell is interested in, that we will have bipartisan 
support for.
    I'm not going to belabor the land sales issue any further.
    Mr. Rey. We'll put you down as leaning against.
    Senator Wyden. Pardon me?
    Mr. Rey. We'll put you down as leaning against.
    [Laughter.]
    Senator Wyden. Put me down as especially curious to see if 
one Republican Senator will announce their support for the 
proposal as opposed to last time when there were no Republican 
Senators.
    Senator Craig pointed out he didn't want to be dragged into 
that one. The point is we intend to work closely with you. 
We're going to have to move on at this point. Let us call our 
next panel. We'll excuse you both. I look forward to working 
with you Secretary Rey, Ms. Jacobson.
    Let's call our next panel if we could. The Honorable Doug 
Robertson, chairman of the Board of Commissioners of Douglas 
County, Mike Francis of the Wilderness Society, the National 
Forests Program and Mr. Jonathan Kusel, Sierra Institute for 
Community and Environment in Taylorsville, California.
    Senator Craig. Mr. Chairman, while our panel is coming up, 
let me make a suggestion to you. I've been out in Idaho holding 
town meetings. I've chosen not to hold town meetings in the 
timber communities. I might suggest that of you. I'm going to 
go back there.
    Senator Wyden. That's because you're so popular.
    Senator Craig. No, no, no, I'm going to go back there after 
we fund Craig-Wyden, not before we fund it. I think it would be 
safer to do that.
    Senator Wyden. Very good. Let us go to our next panel. We 
can begin with you Mr. Kusel and then we'll go to you, Mr. 
Robertson and Mr. Francis.
    Welcome to all of you and thank you for your patience and 
involvement in this.
    Mr. Kusel.

  STATEMENT OF JONATHAN KUSEL, DIRECTOR, SIERRA INSTITUTE FOR 
                   COMMUNITY AND ENVIRONMENT

    Mr. Kusel. Senator Wyden, thank you very much for the 
opportunity to testify to the subcommittee on S. 380.
    It was 10\1/2\ years ago that I addressed the full Senate 
Energy and Natural Resources Committee about community 
involvement and natural resource management and the need for 
collaboration. Senator Craig, you were a leader in that effort 
and I appreciate it. It's a pleasure to come back now and talk 
about collaboration and how it's played out over the last 10\1/
2\ years. I don't know if you remember the time that we all got 
down on the floor here and off the dais and had a conversation 
among a variety of interest groups. Again thank you for that.
    I direct the Sierra Institute for Community and 
Environment, a non-profit research and education organization. 
The Departments of Interior and Agriculture contracted the 
Sierra Institute to examine titles II and III of the 2000 
Secure Rural Schools and Community Self-Determination Act. In 
my testimony I want to share a bit of what we learned in our 
18-month study, and then offer a few recommendations based on 
these findings, and conclude with just a brief view of the 
future of the legislation. I refer you to my written testimony 
in our reports for more specific findings and recommendations.
    I think most of you know--and it's already been mentioned--
the stunning success of Pub. L. 106-393; the RACs were really 
quite phenomenal in what they accomplished and this is true 
across the country. We visited nine States in our study.
    A key ingredient in the success of the RAC is that they 
have money for projects and on-the-ground work, not just 
talking about policy, but really doing things. In fact many 
people mentioned that they knew if they couldn't come to 
agreement, things weren't going to happen on the ground. RACs 
recommended a wide variety of projects that improve watersheds, 
habitats, and roads, and completed important forest management, 
fuels, and thinning projects. There are hundreds of examples of 
RAC funds being used to complete projects that the agencies 
needed to do and that the public wanted.
    Terribly important: the RAC-funded projects have leveraged 
millions of additional dollars, many partnerships in the 
thousands of volunteer hours, and in some projects actually 
doubled the title II contribution. Interestingly and equally 
impressive collaborations have taken place between RAC interest 
group members and the Federal agencies. The RAC process helped 
break through a grid lock that was decades thick and people 
talked about truly improving the relationship with the Federal 
agencies. Interesting also is that the Federal agencies talked 
about doing business differently as a result of their exposure 
to the various interest groups on the RAC.
    RAC members not only just got along, but the interest 
groups and the agencies turned the RACs into what I've talked 
about as ``learning laboratories,'' and quite powerful learning 
laboratories. One of the truest markers of the RACs' success, 
and I know you've heard this before, is that at least at the 
end of our study, no RAC project had been appealed or 
challenged. There's been a couple since.
    Title III dollars have accomplished a lot of good work, but 
there were two primary problems with title III. Approximately 
half the funds were allocated through administrative processes 
and there was little to no oversight. In a few cases some of 
the funds of title III were used inappropriately. I say a few, 
not extensive. More open, competitive and transparent processes 
for project solicitation review and approval are needed, making 
clear, as S. 380 begins to do, what a project is, will help 
address this.
    I want to just conclude by saying with title III, there 
were problems, but these really are quite fixable. Should the 
program be continued based on our work? The answer is a 
resounding yes.
    I want to respond to a couple of issues. What's the 
formula? Behind this question is another question about what 
the Federal obligation is. Mr. Chairman, you mentioned a number 
of times about a Federal obligation. I'm a firm believer that a 
Federal obligation to rural communities and people exist. At 
the same time I don't believe counties should expect funding 
from the Federal Government based on a high 3-year harvest 
average to continue in perpetuity.
    So how do we fund it? This is obviously a huge challenge 
and I know better at this point then to go there right now, but 
let me point out that what people have argued--that 
collaboration is time-consuming and expensive. I offer that 
this legislation is a great example of where we've actually 
saved money through collaboration. Six years of Secure Rural 
Schools legislation has saved an enormous amount of money in 
litigation that hasn't taken place, projects that have not been 
tied up in courts and then, of course the leverage in Federal 
dollars. Just as importantly, as already mentioned, this 
legislation has significantly reduced gridlock that has 
characterized resource management over the last two decades.
    One last comment if I may, and that is where it might go. I 
suggest if we talked about looking to the future, 
reauthorization should be viewed as a bridge to the future and 
a program that combines deriving revenue from resource 
production a la timber products and forest products with equal 
system services. We're increasingly talking and hearing about 
ecosystem service work, and I think revenue from both ecosystem 
products and services can and should be part of this bridge 
which lends to a more sustainable future funding of this 
legislation.
    An ecosystem products and services approach can be watched 
by identifying ways to secure resources, support management 
that contributes to improvements in water quality and quantity, 
as well as generating wood products.
    Two very quick examples in the Sierra Nevada ecosystem 
project, of which I was one of the scientists: we identified $2 
billion worth of water value coming off of the forest. One 
doesn't have to take in much of that to contribute tremendously 
to that system. On a small scale OHV permits their collecting 
money at the State level, returning it to the forest to improve 
OHV trails.
    Finally by adopting a broader approach that is ecosystem 
products and services, I think there's an opportunity to extend 
the range of this program which has been hugely successful. 
Extend the range in terms of the geographic range, bring in the 
south more, bring in the east, bring even in the Midwest as 
well and offer an opportunity for them to share in what I think 
is a tremendously successful program and--it has already been 
mentioned, and Chairman you've said it--one of the most 
successful pieces of legislation in quite a number of years. 
Thank you very much.
    [The prepared statement of Mr. Kusel follows:]
 Prepared Statement of Jonathan Kusel, Director, Sierra Institute for 
                       Community and Environment
    Thank you for this opportunity to provide testimony to the 
Subcommittee on Public Lands and Forests regarding Senate Bill 380 to 
reauthorize the Secure Rural Schools and Community Self-Determination 
Act of 2000.
    I direct the Sierra Institute for Community and Environment. The 
Sierra Institute is a non-profit research and education organization 
that works locally, regionally, and nationally. The Departments of 
Interior and Agriculture contracted the Sierra Institute to examine 
Title II and Title III of the 2000 Secure Rural Schools and Community 
Self-Determination Act (P.L. 106-393). My testimony will focus on key 
findings from our 18 month study, offer some recommendations based on 
these findings, and conclude with a view of the future for this 
legislation.
                               the study
Methods and County Participation
    To give you a sense of the breadth and depth of our study, we 
conducted 16 case studies in nine states. A case study includes an 
analysis of the Resource Advisory Committee (RAC) and the projects they 
approved and that were funded, as well as Title III projects in the 
associated county areas. The 16 case studies themselves include over a 
third of all Title II and a fifth of all Title III allocations for the 
first four years of the program.
    To improve our understanding of Title III, as part of the 
Mississippi case study we reviewed the Title III expenditures for the 
entire state. We also examined Title III expenditures for all of 
California for the first three years to track patterns across 32 
counties.
    Nationwide, a total of 85% of all counties eligible to opt into the 
secure payment program have done so. The high proportion of counties 
that opted into the program is an indication of the difficulties 
counties and forest-dependent communities have faced in providing road 
and school services based on a tax base that is constrained sometimes 
by poverty, always by the tax-exempt status of the public lands within 
their boundaries, and by declining revenues due to reduced timber 
harvests. Difficulties counties face in serving their own citizens are 
compounded by increased settlement adjacent to wildlands and by their 
obligation to provide further services such as search and rescue and to 
assist with fire prevention on public lands within the county 
boundaries. Secure payments under P.L. 106-393 have been an essential 
source of revenue allowing counties to meet these obligations.
Title II and Resource Advisory Committees
    One of the most important findings from our study is RAC success. 
There are few pieces of legislation that exceed the expectations of 
even the most optimistic supporters, but the collaborative 
relationships established and learning among RAC members, and between 
RACs and the counties and the federal agencies has, in general, been 
exceptional. As the first legislation to require multi-stakeholder 
collaboration to advance resource management projects, few would have 
predicted the breadth and depth of success it achieved.
    The initial trepidation and skepticism among environmentalists, 
timber industry, and other interest group representatives over simply 
sitting in the same room together after years of conflict gave way to 
joint work and learning. RACs have supported a plethora of projects 
that are now improving forest and watershed health on federal lands and 
enriching education and services associated with the counties' natural 
resource endowments.
    A key ingredient of success is that RACs have money for projects 
and on-the-ground work.
    RAC members know that unless they can come to an agreement, no 
projects will be funded. This proved to be a powerful motivator to work 
together and is different from coming together to talk policy. While 
the money was critical, members of many RACs reported an increasing 
openness among representatives from the different interest groups to 
consider projects that would previously have been anathema to them. One 
environmentalist said that had someone in the past suggested she would 
support the old growth thinning project she did as a RAC member, she 
would have dismissed that individual as ``crazy.''
    RAC-funded projects have leveraged millions of additional dollars, 
many partnerships, and thousands of volunteer hours.
    Many projects have been implemented that demonstrate the power of 
multi jurisdictional and public-private partnerships. All of the RACs 
funded some projects that leveraged additional resources, partnerships, 
and volunteer work. Some of the largest projects were the most 
leveraged, including funds from other federal programs. Project record 
keeping was insufficient to determine the precise number of dollars and 
volunteer hours, but by all reports it was impressive.
    Similar to interest group collaboration, an equally impressive 
collaboration has taken place between RAC interest groups and the 
federal agencies.
    The RAC process has led to a new and qualitatively different kind 
of interaction between the RAC interest groups and the agencies. As a 
result of their participation, many RAC members have a greater 
appreciation for agency constraints, processes, and requirements for 
engagement with the public. In a similar vein, agency representatives 
spoke of their enhanced and more nuanced understanding of interest 
group perspectives. In many cases Forest Service and Bureau of Land 
Management personnel have become more responsive to public concerns as 
a result of interactions with the RAC. Agency representatives 
acknowledged that work with the RAC has helped them learn new ways of 
doing business.
    By the close of our study, no RAC project had been appealed or 
challenged, confirming the success of Title II. Two other indicators of 
the success of RACs came from members reporting that they are learning 
from each other and collectively generating new ideas. This was not 
just ``happy talk.'' These same members often expressed surprise at how 
well things were working. Many RAC members reported that relationships 
are being carried into other collaborative endeavors.
    Additional evidence of RAC success is the shift in funding: as 
counties grew more comfortable with RACs and their accomplishments, we 
saw a significant increase in the amount of funding allocated to Title 
II from early to later years, a pattern slightly more pronounced with 
Forest Service RACs.
    Collaboration is fertile ground for more collaboration.
    Previous experience with collaborative approaches in local 
government and with natural resource management has helped RACs to 
become operational sooner. In the West, the history of community 
involvement with the federal agencies has speeded RAC development. For 
example, in the Northern Panhandle of Idaho, years of working together 
as a five-county region not only helped the RAC get started, but also 
helped its members avoid the temptation to negotiate to receive project 
support equivalent to their Title II allocations--as many RACs did--and 
to focus more on the quality of and regional need for individual 
projects. The Southwest Mississippi RAC, whose members lacked a history 
of resource-based collaboration, is proving more successful in those 
counties that have had successes in overcoming a historic legacy of 
racial conflict. These RAC members are still learning about how best to 
use RAC funds, but they already view their work as positive and 
offering unique future possibilities.
    Despite RAC successes, the general public is still in the dark 
about RACs and RAC work.
    In most of the RAC areas, there remained a disappointing lack of 
knowledge among the general public about the RAC. The wider population 
simply knows little about RAC work. Project and collaborative learning 
was primarily confined to members of the RAC, with one key effect being 
a reduced number of non-agency and non-county applications for RAC 
funding.
RAC Membership and ``Replacement'' Members
    For the most part, interest group representation on RACs is sound, 
although some interest categories are filled with inappropriate 
representatives.
    Some interest group designations like ``wild horse and burro'' do 
not fit the diversity of environments, regional economies, or 
sociodemographic conditions found in all regions of the country. Other 
categories like ``organized labor'' have proven difficult to fill.
    The wild horse and burro position reflects an idealized west and is 
relevant only in certain regions; it was the most difficult category to 
fill in the RACs we examined in our study. The labor category has also 
proven difficult to fill in part because of the general decline in 
organized labor and in part because of the decline in the number of 
timber industry jobs, a sector that at one time historically 
constituted the highest number of unionized workers in forest dependent 
rural areas. Where other labor organizations exist they should be 
considered appropriate surrogates when traditional organized labor 
representatives are unavailable.
    Despite their historic and continuing relationship to natural 
resources, including those on federal land, Native American groups are 
under-represented or not represented on some RACs and do not receive 
project support to the degree that might be expected.
    Filling the Native American position on RACs proved difficult for a 
number of RACs. Reasons varied. In some cases tribes had little 
experience with collaborative groups, and, federally recognized tribes 
may view collaboration with a RAC as inappropriate given their unique 
relationship to the U.S. government. In areas with multiple tribes, 
obtaining representation is further challenged by the fact that a 
tribal member may not speak for more than one tribe. One solution to 
this is to recognize that participation by tribal members should not be 
limited to one reserved position on the RAC. Tribal members are often 
well qualified to serve in other positions such as an environmental or 
industry group representative or as a public official, and should be 
invited to do so. Tribes have participated effectively on some RACs, 
but more consistent attention by the agencies and by RAC members alike 
are needed to engage more tribal members.
    Some RAC members and agency officials misunderstand the role of 
``replacements.''
    Many RAC members and officials spoke of replacement and alternate 
members interchangeably. They felt a ``replacement'' could step in as 
an alternate at meetings, filling in for an absent member. Replacement 
members are appointed to move into an interest group position within 
their subgroup when one of five positions is vacated. While perhaps 
assuring continuity in RAC functioning, this process can lead to 
inappropriate filling of interest positions since there is no way to 
ensure that the replacement fits the vacated interest position.
RAC Projects
    The largest category of spending for the 15 case study RACs we 
examined is roads, representing 26% of total RAC expenditures (see the 
attached Figure 1). This category also includes culvert replacements. 
The second largest category of RAC expenditures is for projects that 
restore, maintain, or improve wildlife and fish habitat totaling nearly 
17% of all RAC expenditures. A total of 9% was allocated for watershed 
restoration and maintenance-related projects such as upslope 
stabilization efforts, downslope sediment reduction projects, and 
estuary-related projects, such as fish-friendly tidegates. Given that 
most habitat projects involved watershed improvement, project work in 
these three categories met the legal requirement that 50% of all Title 
II projects be used to fund road maintenance/obliteration or watershed 
improvement/restoration.
    Forest health-related projects constitute the third largest RAC 
categorical expenditure, with 95% of these expenditures concentrated in 
three Oregon RACs. A total of 13% of total Title II expenditures for 
the 15 case study RACs was allocated in this project category. Most 
forest health projects involve pre-commercial thinning. Few RACs have 
supported forest health projects that involve extraction of 
merchantable timber. At 9% of total expenditures, fuels reduction 
projects represent the fourth highest categorical expenditure. Noxious 
weeds were the fifth highest, receiving just under 8% of the funds.
    Given the budget shortfalls the agencies are experiencing, RAC 
dollars have enabled the Forest Service and the Bureau of Land 
Management to implement projects that would otherwise not be done. 
There are hundreds of examples of RAC funds being used to complete 
projects that the agencies need to do and that the public wants. RAC 
money represents a new source of funds for the agencies to do needed 
work, and to do so through partnership with a RAC.
RAC Administrative Fees: The Cost of Collaboration
    Agency administrative fee charges for RAC support and project 
administration have been confusing, shifting, and inconsistent. First, 
it is important to recognize that good RAC support and coordination is 
no accident: it consumes considerable agency personnel time and 
dollars. Second, agencies need to establish clear and simple guidelines 
for charging and ensuring that administrative expenses are covered.
Funding the RACs
    A common challenge of multi-county RACs is the demand by some 
county officials that each county should receive project dollars 
commensurate with their RAC contribution. This has sometimes led to 
project approval processes that respond primarily to county priorities, 
with a few county officials threatening to reduce or terminate Title II 
allocations when they are dissatisfied with the distribution of project 
dollars between counties. This form of control over RAC decisions is 
relatively uncommon, but where it occurs it can be destabilizing.
    There has been concern about Title III, and this is discussed 
below, but it is important to note that there is an important 
relationship established between county commissioners or supervisors 
and the RAC and federal agency as a result of local officials having 
the choice to allocate dollars to Title II. This provides additional 
pressure on the RAC and the federal agencies to support and implement 
good projects and equitably distribute Title II dollars.
Title III
    Title III funds have proved to be most valuable to counties in 
covering services they are expected to provide to their citizens and 
the general public: search and rescue on public lands, fire prevention, 
and county planning.
    The highest funded category of Title III expenditures in the case 
studies is ``search and rescue and emergency services,'' totaling 34%. 
``Fire prevention and county planning'' at 24% and ``forest-related 
education'' at 22% were the next highest funded categories.
    Title III funds have been used successfully to develop community 
wildfire protection plans and other capacity building work that has led 
to effective leveraging of Title II and National Fire Plan dollars, and 
other resources.
    Considerable sums of Title III funds have been used for planning 
and for building the capacity of communities to engage in fuels 
reduction and forest thinning, qualifying them for National Fire Plan 
funds as well as other funding. This kind of leveraging has been an 
extremely effective tool for developing fire plans in the wildland-
urban interface and in completing fuels thinning projects. Title III 
projects that build local capacity and leverage funds are even more 
important in light of declining National Fire Plan funding, the loss of 
Economic Action Programs of the Forest Service, and other funding 
shortfalls. Title III funds have also been used productively to 
implement a multitude of educational projects. County support for these 
programs has allowed local people and others to learn about forest 
communities, and the role and importance of stewardship of a working 
landscape.
    Up to half the study counties did not disburse funds through open 
and competitive processes of project solicitation and approval. Roughly 
half of all Title III funds were allocated through administrative 
allocations. This had the effect of restricting the diversity of groups 
and projects receiving Title III project support.
    On the whole, the majority of Title III funds appear to have been 
used for authorized purposes, but some clearly did not meet the spirit 
and intent of the act. Unacceptable allocations included payment for 
county officials' salaries and for reimbursement of PILT funds lost as 
a result of Title III payments. Administrative allocations and lack of 
oversight contributed to funds being allocated in ways that did not fit 
approved categories. Senate Bill 380 begins to get at this issue with 
the call for Secretary review of Title III projects, but more is 
needed.
    In addition to Secretary review, the study team learned that many 
counties sorely needed an authoritative source for information about 
Title III. There was no agency or entity designated to provide Title 
III oversight or offer Title III consultation. As a result, county 
officials had no one to call if they had questions or needed an 
interpretation about a project's fit with the legislation. Bureau of 
Land Management and the Forest Service officials informally provided 
information, but this exceeded their responsibilities and many 
officials were clearly uncomfortable in this role. Some state-level 
associations of counties provided information, but it was not always 
consistent from one state to another and sometimes questionable with 
respect to how well recommendations fit with the spirit and intent of 
the law. This was complicated by the fact that Title III was not as 
clearly written as Title II.
Employment
    Across almost all of the cases, RACs and Title III projects have 
supported youth employment projects.
    Millions of dollars have been invested in Youth Conservation Corps 
(YCC) or similar employment programs, as well as programs for at-risk 
youth. Almost all RACs examined supported one or more youth employment 
projects. RACs in general are quite pleased with experiences projects 
have offered youth, the benefits youth have gained from working on the 
land, as well as the landscape improvements. These programs have 
improved trails, reduced fire risks, and removed noxious weeds, among 
their many accomplishments. They are also developing the human capital 
needed for continued management of forests and watersheds as 
participants move into resource-related jobs or educational programs.
    Job creation, beyond youth employment, has been indirect and 
piecemeal, despite this being a goal of P.L. 106-393. Most projects 
offer only part-time or short-term work.
    In a few cases the RACs or the agencies have attempted to provide 
projects that bridge seasons and slow-work periods in order to offer 
year-round work. While a number of RAC members expressed interest in 
generating employment, they quickly learned how difficult this is and 
how limited a project-by-project approach to this issue is. Some RACs, 
like the Siskiyou County RAC in California, have actively discussed 
funding large projects. They recognize, however, that tradeoffs involve 
reduced funding for other worthwhile and needed smaller projects, and 
are accompanied by the risk that large projects provide no guarantee of 
providing long-term, family wage employment. Lack of good monitoring 
and review prevents RACs and others from building a knowledge base of 
successful approaches to employment generation.
Monitoring
    Monitoring of both Title II and Title III has been inadequate and 
needs to be improved.
    A few RACs and counties took it upon themselves to monitor funded 
projects, but even the best of them focused primarily on general 
project reporting and implementation monitoring, not on outcome-based 
or project effectiveness monitoring. To be fair, given the relatively 
short duration of the legislation, effectiveness monitoring is 
difficult if not impossible with many projects. P.L. 106-393 also did 
not specify an entity responsible for monitoring. The Forest Counties 
Payments Committee in its 2003 report identified this issue. Good 
monitoring builds accountability, contributes to program learning and 
project development, and ultimately improves resource management.
    Title III lacks a coherent system of project recording and 
monitoring. It proved difficult for the study team to locate reliable 
data on how Title III money was spent, what projects were funded, and 
on project success. Like Title II, there was no effectiveness 
monitoring, and in a few cases there were only informal records of 
Title III use. Requiring a review by the Secretary as SB 380 does 
places federal officials in an awkward position of reviewing county 
expenditures.
                  conclusions and some recommendations
    Given the successful collaboration, learning, and on-the-ground 
project accomplishments, P.L. 106-393 has exceeded expectations and 
accomplished more than most thought possible. The work that counties 
and RACs have accomplished during the first five years of the 
legislation has laid the groundwork for continued and improved future 
collaboration and learning. This work has accomplished valuable 
projects that are restoring health to working, forested landscapes, as 
well as a variety of other important work. This legislation has also 
significantly reduced gridlock that has characterized resource 
management over the last two decades. Below are some recommendations 
from our study about how to improve Secure Rural School and Community 
Self-Determination Act legislation.

          1. RACs, the agencies, and possibly third parties need to do 
        more outreach and education to inform others about the work and 
        lessons of RACs and to encourage more project applications from 
        non-agency groups.
          2. RAC interest categories should be changed to reflect 
        changing demographics and to enable them to respond more 
        effectively to issues facing forest communities across the 
        country (bolded words are our recommended changes to P.L. 1-06-
        393 RAC interest categories):
                  A. (i) represent organized labor, another labor 
                organization, or non-timber forest product harvester 
                groups,
                          (iii) represent energy and mineral 
                        development, or commercial and recreational 
                        fishing, interests
                          (v) hold federal grazing permits, or other 
                        land use permits within the area for which the 
                        committee is organized, or represent non-
                        industrial private forest land owners.
                  B. (v) nationally or regionally recognized wild horse 
                and burro interest groups, wildlife organizations, or 
                watershed associations.
          3. Eliminate use of replacement members associated with the 
        RAC subgroups since there is no way to assure that one 
        individual can ``fit'' in all five vacated interest group 
        positions. If they're retained, replacements should not replace 
        a RAC member unless the individual can appropriately represent 
        an interest group and receive Secretary approval.
          4. The meaning of ``project'' in title III needs to be made 
        consistent with title II. More open, competitive, and 
        transparent processes for project solicitation, review, and 
        approval by the counties are needed.
          5. A single organization or entity should have responsibility 
        for ensuring accurate and timely recording and possibly 
        monitoring of title III projects. This entity could also 
        provide training for counties to improve project development, 
        selection, and implementation.

                         looking to the future
    Findings from the Sierra Institute study strongly support 
continuing P.L. 106-393, and Senate Bill 380 is a step in the right 
direction.
    While it is widely recognized that fuels and forest management must 
continue and even be expanded, and products can be produced that will 
provide revenue, counties should not expect harvest totals and timber 
revenues to return to levels of the 1980s. Similarly, counties should 
not expect funding from the federal government based on the high three-
year harvest average to continue in perpetuity. This is brought home by 
the current federal budget limitations and the challenges in finding 
funding for re-authorization. Other revenue streams need to be 
developed to support forest and watershed management and respond to the 
federal commitment to rural communities and landscapes.
    Re-authorization should be viewed as a ``bridge'' to a program that 
combines deriving revenue from resource production with ecosystem 
services. Revenue from both ecosystem products and services can and 
should be part of sustainable funding of the legislation.
    An ecosystems products and services approach can launched by 
identifying ways to secure resources to support management that 
contributes to improvements in water quality and quantity as well as 
generating wood products. Services can be expanded to carbon credits 
and payment for habitat, as these are quantified and equitable 
mechanisms are developed to collect revenue. An ecosystem products and 
services approach will result in the inclusion of other areas with 
national forests, like the Northeast, the South, and the Midwest, that 
have not participated because they lacked sufficient historic timber 
revenue.
    We recommend building on RAC collaboration to develop this new 
``ecosystem products and services'' approach.
    This leads to one final recommendation: should the legislation be 
extended by five to seven years--and my study team believes it should--
where the combined total of Title II and Title III funding exceeds 
$200,000 yearly in a RAC area, there should be a requirement that 3-5% 
of these funds be dedicated to projects examining how forest products 
and ecosystem services can provide a future stream of revenues to 
replace the current P.L. 106-393 funding mechanism.
    Any period of re-authorization of the Secure Rural School and 
Community Self-Determination Act should be used as a time to not only 
focus on the work at hand, but to identify ways ecosystem products and 
services or some other funding can be tapped to ensure program 
sustainability, and expansion of the program into new geographic areas 
to expand a powerfully successful program across the country.*
---------------------------------------------------------------------------
    * Figure 1 graphic has been retained in committee files.

    Senator Wyden. Thank you very much. Mr. Robertson, welcome. 
I was in your beautiful county just last week and we're glad 
you're here.

    STATEMENT OF JOHN DOUGLAS ROBERTSON, CHAIRMAN, BOARD OF 
               COMMISSIONERS, DOUGLAS COUNTY, OR

    Mr. Robertson. Mr. Wyden, thank you very much. I want to 
begin by thanking you Senator Wyden and you Senator Craig, for 
your effort. I can't tell you how encouraged all of us are to 
hear you make the public commitment to come together once again 
and bring this reauthorization to fruition.
    Mr. Chairman and members of the committee, I come before 
you today in an effort to provide information and answer 
questions that will hopefully be of assistance as you consider 
the reauthorization of Rural Schools and Communities Self-
Determination Act of 2000.
    On September 30, 2006, the act expired, leaving over 700 
counties and 4,400 school districts in 39 States in financial 
limbo as they approached the end of their fiscal year. It was 
hoped when the original safety net was passed in 1993 and then 
updated in 2000, that the forest service, the BLM and various 
stakeholders involved in Federal forest management issues would 
be able to move forward with new plans and solutions. It was 
the intent of Congress that these updated plans and solutions 
would provide stability for rural communities, counties and 
schools while improving forest health and strengthening 
environmental values we all support.
    While some progress has been made, the communities of rural 
America continue to struggle as a result of the precipitous 
decline in forest management jobs and revenue combined with the 
grim prospect of the future in which there are no safety net 
dollars to fill the gap.
    What are some of the factors that have contributed to the 
current conditions faced by our rural counties? Consider the 
significant increase over the last decade in visitor days to 
our national parks and Federal forests. This increase alone has 
put an enormous strain on local governments in the form of 
search-and-rescue responsibilities, on public works departments 
that are responsible for road and bridge maintenance, and on 
local law enforcement. Recent multimillion dollar search-and-
rescue efforts on Forest Service land performed by local 
counties in Oregon have been well-covered in the national 
press. Adding to the burden of rural counties and communities 
has been a significant increase in the size, number, and 
intensity of forest fires. If that weren't enough, a recent 
audit by the USDA Office of Inspector General suggests that the 
Federal Government will expect even more from rural communities 
and counties in the form of resources and assets to fight these 
fires.
    While rural counties and communities continue their 
struggle to meet these challenges, there are few components of 
rural America more impacted by the loss of safety net dollars 
than rural education. I think most people can agree with the 
concept of ``no child left behind''. Consider this: over 8 
million youngsters in rural schools throughout our country will 
potentially be hurt by the loss of Pub. L. 106-393. That's a 
lot of youngsters to leave behind. Those kids attend 18,000 
schools in 4,400 school districts, and are taught by thousands 
of teachers in rural communities.
    If there is not significant progress made toward 
reauthorization by March 14 of this year, 7,000 of those rural 
educators will receive layoff notices. Add to that the 
thousands of termination notices being prepared by rural 
counties and the loss of critical public services supported by 
those county employees, and you begin to get a sense of the 
breadth and depth of the catastrophe about to befall rural 
America.
    One of the greatest setbacks, as already been noted, if 
reauthorization does not occur, will be the loss of the 
Resource Advisory Committees. Over the last 6 years we have 
seen communication and cooperation among stakeholders who, 
prior to Pub. L. 106-393, had never been in the same room 
together and had little interest in even speaking to each 
other. Because of opportunities to make meaningful 
contributions to land management by serving on RACs, interest 
groups which formerly shunned one another are now collaborating 
and starting to find common ground. In addition to these 
developing relationships, we have also witnessed thousands of 
projects nationwide that have greatly improved forest health 
and made meaningful contribution to local economies.
    Many of our States have been blessed with natural resources 
in the form of rich deposits of oil, gas, coal and other 
minerals. Other States like California, Oregon, Washington and 
Idaho have been similarly blessed with high-value timber lands. 
These natural resources, to a large extent, were the driving 
force for the development of the west. The social, physical, 
and cultural infrastructures that were developed around these 
federally controlled assets are now at risk.
    What does ``at risk'' really mean? Well again, consider 
Curry County in southern Oregon that has approached the 
Attorney General seeking advice on how a public entity files 
for bankruptcy. Without reauthorization, they will become 
insolvent.
    Consider the situation in Greenlee County, Arizona where 
the school that accommodates the special needs of severely 
physically and mentally challenged children will be closed. Add 
to that the dozens of counties and school districts in 
Mississippi, where they are already struggling to recover from 
Hurricane Katrina, who will lose an additional $8,457,000. As 
you can imagine, the list of what ``at risk'' means could go on 
all day. Suffice it to say, the loss of the resources provided 
to rural counties and schools would be devastating.
    In closing, let me ask, on behalf of thousands and 
thousands of counties, communities, and schools in rural 
America, that you reauthorize this legislation and that you do 
so quickly. We, who inhabit the more remote areas of this 
country, don't want a handout or welfare. We want the 
opportunity to solve the issue of Federal payments to rural 
counties and schools. While progress has been made, 6 years was 
simply not enough time. By working with us as full 
participating partners, we can improve forest health, stabilize 
rural economies, strengthen our system of rural education, and 
save the Federal Government money. Thank you.
    [The prepared statement of Mr. Robertson follows:]
   Prepared Statement of John Douglas Robertson, Chairman, Board of 
                   Commissioners, Douglas County, OR
    Mr. Chairman and members of the committee, I come before you today 
in an effort to provide information and answer questions that will 
hopefully be of assistance as you consider the reauthorization of the 
Secure Rural Schools and Community Self-Determination Act of 2000.
    On September 30, 2006 that Act expired, leaving over 700 counties 
and 4,400 school districts in 39 states in financial limbo as they 
approach the end of their fiscal year. It was hoped when the original 
safety net was passed in 1993 and then updated in 2000, that the Forest 
Service, the BLM and various stakeholders involved in the federal 
forest management issues would be able to move forward with plans and 
solutions. It was the intent of Congress that these updated plans and 
solutions would provide stability for rural communities, counties and 
schools while improving forest health and strengthening the 
environmental values we all support. While some progress has been made, 
the communities of rural America continue to struggle as a result of 
the precipitous decline in forest management jobs and revenue, combined 
with the grim prospect of a future in which there are no safety net 
dollars to fill the gap.
    What are some of the factors that have contributed to the current 
conditions faced by our rural counties and schools? Consider the 
significant increase over the last decade in visitor days to our 
national parks and federal forests. This increase alone has put an 
enormous strain on local governments in the form of search and rescue 
responsibilities, on public works departments that are responsible for 
road and bridge maintenance, and on local law enforcement. Recent 
multimillion dollar search and rescue efforts on Forest Service land 
performed by local counties in Oregon have been well covered in the 
national press. Adding to the burden of rural counties and communities 
has been a significant increase in the size, number and intensity of 
forest fires. If that wasn't enough, a recent audit by the USDA OIG 
suggests that the federal government will expect even more from rural 
communities and counties in the form of resources and assets to fight 
these fires.
    While rural counties and communities continue their struggle to 
meet these challenges, there are few components of rural America more 
impacted by the loss of the safety net than rural education. I think 
most people can agree with the concept of ``no child left behind''. 
Consider this: Over 8 million kids in rural schools throughout our 
country will potentially be hurt by the loss of P.L. 106-393. That is a 
lot of kids to leave behind. Those kids attend 18,000 schools in 4,400 
school districts, and are taught by thousands of teachers in rural 
communities. If there is not significant progress made towards 
reauthorization by March 14th of this year, 7,000 of those rural 
educators will receive layoff notices. Add to that the thousands of 
termination notices being prepared by rural counties and the loss of 
critical public services supported by those county employees, and you 
begin to get a sense of the breadth and depth of the catastrophe about 
to befall rural America.
    One of the greatest setbacks, if reauthorization does not occur, 
will be the loss of the Resource Advisory Committees. Over the last 6 
years we have seen communication and cooperation among stakeholders 
who, prior to P.L. 106-393, had never been in the same room together 
and had little interest in even speaking to each other. Because of 
opportunities to make meaningful contributions to land management by 
serving on RACs, interest groups which formerly shunned one another are 
now collaborating and starting to find common ground. In addition to 
these developing relationships, we have also witnessed thousands of 
projects nationwide that have greatly improved forest health and made 
meaningful contributions to local economies.
    Many of our states have been blessed with natural resources in the 
form of rich deposits of oil, gas, coal and other minerals. Other 
states like California, Oregon, Washington, and Idaho have been 
similarly blessed with high value timber lands. These natural 
resources, to a large extent, were the driving force for development of 
the west. The social, physical, and cultural infrastructures that were 
developed around these federally controlled assets are now at risk.
    What does ``at risk'' mean? Consider Curry County in southern 
Oregon that has approached the Attorney General seeking advice on how a 
public entity files for bankruptcy. Without reauthorization, they will 
be insolvent.
    Consider the situation in Greenlee County, Arizona where the school 
that accommodates the special needs of severely physically and mentally 
challenged children will be closed. Add to that the dozens of counties 
and school districts in Mississippi, where they are already struggling 
to recover from Hurricane Katrina, who will lose an additional 
$8,457,000. As you can imagine, the list of what ``at risk'' means 
could go on all day. Suffice it to say, the loss of the resources 
provided to rural counties and schools would be devastating.
    In closing, let me ask, on behalf of thousands and thousands of 
counties, communities, and schools in rural America that you 
reauthorize this legislation and that you do so quickly. We, who 
inhabit the more remote areas of this country, don't want a handout or 
welfare. We want the opportunity to solve the issue of federal payments 
to rural counties and schools. While great progress has been made, six 
years was simply not enough time. By working with us as full 
participating partners, we can improve forest health, stabilize rural 
economies, strengthen our system of rural education, and save the 
federal government money.

    Senator Wyden. Thank you very much and we'll have some 
questions in just a moment.
    Mr. Francis.

  STATEMENT OF MICHAEL A. FRANCIS, DIRECTOR, NATIONAL FORESTS 
                PROGRAM, THE WILDERNESS SOCIETY

    Mr. Francis. Thank you, Mr. Chairman for this opportunity 
to testify on S. 380. The Wilderness Society supports permanent 
reauthorization to the County Payments law provided it is a 
clean bill with no changes except for housekeeping measures.
    The Wilderness Society has one major concern with S. 380, 
as introduced, which is the elimination of the merchantable 
materials contracting pilot program of title II. It is 
premature in our opinion to eliminate the pilot program. The 
program has not yet had a chance to have results, enough 
results, to make an informed judgment about the usefulness of 
the separate contract procedure.
    Giving RACs an added responsibility of requesting a pilot 
program without, would inject new and needless controversy into 
the title II processes. As everyone on this committee is aware, 
the Wilderness Society was originally skeptical of title II 
when it was being written, believing it could promote 
unsustainable development of national forest; however, based on 
our research, done before the night before the 2005 testimony, 
title II projects have been successful so far in achieving 
resource stewardship objectives established under the law. We 
believe the success of these title II projects, along with a 
lack of controversy about them, is due in part to the pilot 
program, which would create incentives for the RACs to 
recommend projects with goals of conservation and restoration.
    By all accounts the Resource Advisory Committee process has 
been very successful in bringing together community members 
with diversity and strongly-held views, helping them interact 
with, understand, and accommodate each other's needs and 
approaches, and helping them work together to achieve an 
agreement on project proposals that benefit the community as a 
whole. This is a very considerable achievement that should not 
be lost.
    Removing the break of separate contracting is likely to be 
perceived by some in the community as a signal from Congress 
that it finds the stewardship and restoration components of 
title II to be less than compelling.
    Mr. Chairman, for the second consecutive year, the 
President's forest service budget includes a proposal to sell 
off up to $800 million of national forest land. A similar 
proposal announced last year met with strong widespread 
opposition from hunters, anglers, locally elected officials, 
businesses, Governors, and both Democrat and Republican Members 
of Congress. The proposal to sell public lands to fund other 
government programs sets a dangerous and an irresponsible 
precedent, especially in times of budget pressures and 
deficits.
    This proposal marks a significant change in forest service 
policy. Never in the history of the agency has land been 
auctioned off to raise revenues for other government programs. 
The administration's claim that many of these lands are 
isolated, difficult to manage or simply not important, is 
misleading. In many ways the lands proposed for sale are some 
of the most critical places to protect either because they 
provide hunters and anglers access to larger tracts of public 
land, for their proximity to watersheds or other private 
developments.
    In closing, Mr. Chairman, members of the subcommittee, the 
Wilderness Society strongly supports permanent reauthorization 
of the Secure Rural Schools and Community Self-Determination 
Act and we are equally opposed to the sale of national forest 
lands. We stand ready, as we stated in 2005, to work with the 
committee about our concerns about the merchantable contract 
provisions.
    [The prepared statement of Mr. Francis follows:]
 Prepared Statement of Michael A. Francis, Director, National Forests 
                    Program, The Wilderness Society
    Mr. Chairman and members of the Subcommittee, I want to thank you 
for this opportunity to testify on S. 380--the Secure Rural Schools and 
Community Self Determination Reauthorization Act of 2007. PL 106-393 
has proven to be successful in stabilizing payments to rural school 
systems and county governments and funding many environmentally 
beneficial projects on national forests. We commend the members of this 
Committee who helped to craft this law.
    The Wilderness Society concurs with the conclusion of a study of PL 
106-393 conducted by Boise State University that the legislation is 
effectively meeting its stated purposes. Payments have been stabilized, 
investments in Federal lands have increased, and cooperative 
relationships have improved since passage of the Act. More than 85% of 
the eligible counties have opted to participate in the guaranteed 
payments program established under Title I. Title II of the legislation 
has funded hundreds of environmentally beneficial and non-controversial 
resource projects on the National Forests. Funding through Title III 
has allowed many counties to begin developing community fire protection 
plans as well as perform other important government services. The Boise 
State study found overwhelming support for renewal of the legislation 
among Resource Advisory Committee members and county officials that 
oversee use of the Title II and III funds.
    The Wilderness Society supports reauthorization of the county 
payments law, provided that it is a clean bill, with no changes except 
for housekeeping provisions that are clearly necessary to ensure the 
continued success of the program. Section 2(d) of the bill apparently 
removes the Secretary's current explicit role in reappointing members 
of a Resource Advisory Committee (RAC) and removes the prohibition on 
non-Agriculture Department employees serving more than six consecutive 
years on an advisory committee. These proposed changes address a need 
identified by conservationists and other members of the RACs to enable 
them to continue their work.
    The Wilderness Society's one major concern with S. 380, as 
introduced, is the elimination of the merchantable materials 
contracting pilot program in Title II. Under Section 204(e)(3) of PL 
106-393 the Secretary ``shall'' establish a pilot program for 
implementing Title II projects involving the ``sale'' of merchantable 
trees. The pilot program required that increasing proportions--up to 
50% by 2006--of such projects, on a national basis, be implemented 
using separate contracts for (a) the harvesting, and (b) the sale, of 
such material, commonly known as ``separating the log from the 
logger.''
    Under the proposed language in section 2(e) of S. 380, the 
Secretary ``may'' establish a pilot program in response to a request 
from a RAC to establish such a program for the purpose of implementing 
a project proposed by that RAC.
    This change is problematic for three main reasons.
    First, it is premature to eliminate the pilot program: the program 
has not had a chance to yield enough results to make an informed 
judgment about the usefulness of separate contracts. In a written 
response to Senator Bingaman's question in the February 8th, 2005 
Subcommittee hearing, the Forest Service responded that the less than 
seven percent of the 1300 projects under Title II had any merchantable 
materials associated with them may indicate that the pilot program is 
helping to deter federal land managers from using Title II funds to 
conduct potentially controversial and inappropriate logging projects. 
If so, this is a very salutary effect.
    Second, the new language eliminates the current requirement in Sec. 
204(e)(3)(B) that a certain percentage of merchantable tree projects be 
conducted with separate contracts for logging and selling the wood. The 
federal land management agency would have full discretion to deny any 
request from a RAC.
    Third, giving RACs the added responsibility of requesting a pilot 
program would inject new and needless controversy into the Title II 
process. The current RAC decision-making process requires all three 
subcommittees--industry, environmental, and government--to approve any 
projects. Under the proposed change, a request by the environmental 
subcommittee members for use of separate contracts on a particular 
project could be vetoed by either the industry or government 
subcommittees. That, in turn, could compel the environmental members to 
veto a project that they otherwise might have approved under the 
current law.
                                title ii
    The Wilderness Society was originally skeptical of Title II when PL 
106-393 was being written, believing it could promote unsustainable 
development of national forests; however, based on our research, Title 
II projects have been successful so far in achieving the resource 
stewardship objectives established under the law.
    We believe that the success of these Title II projects, along with 
the lack of controversy about them, is due in part to the pilot 
program, which creates incentives for the RACs to recommend projects 
with the goals of conservation and restoration. Title II projects that 
The Wilderness Society has reviewed implement stewardship-type 
practices which benefit forests, as well as improve the overall health 
of the land. For some examples of ecologically beneficial Title II 
projects, please refer to our March 8, 2005 testimony before this 
Subcommittee.
                  merchantable materials pilot program
    There does not seem to be a clear and compelling rationale for 
changing the pilot program, especially when considering The Wilderness 
Society's findings, and a preliminary status report from the Government 
Accountability Office (GAO).
    The Wilderness Society's review of Title II projects and pilot 
program projects in 2005 revealed significant support from the 
conservation community where the pilot program projects we reviewed are 
located (all of them in Oregon and California). It is crucial to 
recognize and value the opinions of people involved in project 
implementation. RAC members representing local, regional, or national 
environmental groups are in strong support of keeping the pilot program 
as a requirement in the new law. They believe that the program 
facilitates decision making between the timber industry and 
environmentalists, especially on projects that would have originally 
been difficult to approve (i.e. fuels reductions). In addition, they 
feel that without the program there would be greater emphasis on 
commercial values instead of conservation, making it more complicated 
to achieve any outcomes authorized by Title II. For example, the RACs 
may be presented with projects that would thin large natural stands 
that are economically more attractive than the plantations of smaller 
trees now being thinned. Conservationists strongly believe that the 
current merchantable materials pilot program will be essential to the 
continued success of Title II.
    An interim status report from the GAO in 2003 on the merchantable 
materials pilot program stated that out of the approximately 1,300 
forest-related projects at the time, 13 were expected to generate 
merchantable material, and six of those were to be conducted within the 
pilot program. The report stated that none of those six projects had 
been implemented at that time. However, our research in 2005 found that 
one project had successfully been completed, and others were to be 
completed by the end of the year. Please refer to our March 8, 2005 
testimony before this Subcommittee for details about these projects.
    Mr. Chairman, as a matter of principle The Wilderness Society is 
concerned that the Forest Service has largely ignored the congressional 
directive to establish and monitor a pilot program. Section 204(e)(3) 
directs the Forest Service to establish a pilot program for the purpose 
of assuring that, for Title II projects generating merchantable 
material, a graduated percentage of such projects would be implemented 
using separate contracts for (a) the harvesting, and (b) the selling, 
of the material. The intent of the sponsors was to establish an 
important safeguard insulating Title II ecological restoration projects 
from economic incentives that could cause them to become ecologically 
damaging. Using separate contracts removes the profit motive from the 
design and placement of the project and helps retain the proper focus 
on restoration.
    The national office of the Forest Service simply never set up such 
a pilot program, and has failed to assure compliance with the law's 
separate contracting requirements. The agency's written response to 
Senator Bingaman's query shows that of 88 Title II projects generating 
``merchantable materials,'' only six were implemented using separate 
contracting. Further, the Forest Service seems not to have 
institutionalized consistent criteria for the term ``merchantable,'' 
thus making it difficult to evaluate on a region-wide basis which 
projects have generated only incidental ``merchantable'' materials, and 
which generated saw-timber or other non-incidental materials, or in 
what amounts. But even allowing for projects generating only incidental 
materials, the agency seems to have fallen far short of implementing 
the law.
                     the role of separate contracts
    When a project is implemented utilizing a single contractor for 
removal and sale of merchantable trees, the economics of the project 
are tied to the value of the trees on the stump. This situation--
present in the normal timber sale--inevitably militates towards pushing 
the project into areas of higher commercial value and into potential 
conflict with ecological values.
    But with separate contracts, the harvester has no incentive to 
remove materials of higher commercial value, since he will not be 
realizing any of that value, and the project can thus focus on its 
proper restoration mission. The existing law's percentage requirement 
is a brake, allowing half of all such projects to be implemented with a 
single contract, but preventing the program from lurching onto a 
largely commercial course.
             the achievement of the racs should not be lost
    By all accounts, the Resource Advisory Committee process has been 
very successful in bringing together community members with divergent, 
strongly held views; helping them interact with, understand and 
accommodate each other's needs and approaches; and helping them work 
together to achieve agreement on project proposals that benefit the 
community as a whole. This is a very considerable achievement, and 
should not be lost.
    However, the proposed changes in the law removing the pilot program 
and separate contracting percentage requirements threaten to sow 
dissension in the RACs. Removing the brake of separate contracting is 
likely to be perceived by some as a signal from Congress that it finds 
the stewardship and restoration component of Title II to be less than 
compelling. It is likely to increase proposals for projects generating 
merchantable materials--that is, for projects whose community benefit 
is more closely tied to cutting and selling saw-timber. And because of 
their perceived economic benefits, such proposals will be strongly 
supported by some RAC members and by some in local communities.
    On the other hand, such project proposals are likely to be even 
more strongly opposed by RAC members for whom conservation is a more 
important goal. As we discussed above, given the voting structure of 
the RACs, wherein a majority of the members of each of the three 
recognized categories of community interest is required for project 
approval, the proposed change in the law could polarize RAC members, 
undermine the law's most impressive accomplishment, and significantly 
hinder the program from going forward.
    The Wilderness Society recommends that S. 380 be amended to strike 
Section 2(e) and replace it with the language of Section 204(e)(3) of 
PL 106-393. The goal of this amendment is to restart the Merchantable 
Materials Pilot Program in Fiscal Year 2007 for the authorization 
period covered by the bill in the same manner as contained in Public 
Law 106-393.
                          land sales proposal
    For the second consecutive year, the President's Forest Service 
budget includes a proposal to sell off up to $800 million of National 
Forest lands. A similar proposal announced last year met with strong 
and widespread opposition from hunters, anglers, locally-elected 
officials, businesses, governors, and both Democratic and Republican 
Members of Congress.
    The Administration has failed to listen to the American people and 
their overwhelming opposition to selling off National Forest lands. 
It's a sad commentary that the Administration would completely ignore 
the vehement opposition that this misguided plan created last year, by 
releasing a nearly identical proposal to sell the country's public 
lands to help remedy their poor fiscal decisions.
    The Administration's claim that many of these lands are isolated, 
difficult to manage, or simply not important is misleading. In many 
ways the lands proposed for sale are some of the most critical places 
to protect, either because they provide hunters and anglers access to 
larger pieces of land or for their proximity to watersheds and other 
private development.
    The Administration's FY 2008 budget has set its sights on selling 
over 270,000 acres of Forest Service land in 35 states and possibly as 
many as 500,000 acres of Bureau of Land Management lands in the West. 
The state hit hardest by the Administration's Forest Service proposal 
is California, where they are targeting over 65,000 acres for possible 
sale. National Forests in the Southeast (Forest Service Region 8), 
where private forests are rapidly being lost to development, account 
for over 50,000 acres of the land sales.
    The following information comes from media coverage from last 
year's proposed land sales in some of the states that are represented 
on this Subcommittee:

   North Carolina--5,685 acres.--Sixth graders at a middle 
        school that backs into the Croatan National Forest in North 
        Carolina wrote letters to Mark Rey in opposition to last year's 
        land sale proposal. In reaction to the proposed sale of 900 
        acres in the middle school's own backyard, sixth grader 
        Stephanie Rose asked Mark Rey, ``Wouldn't you rather be known 
        for helping save our national natural beauty, instead of 
        helping to destroy it?'' Another sixth grader, Jamie Lewis, 
        told Rey, ``I don't think that we should put it up for sale 
        because not only are we losing beautiful land that is great for 
        outdoor activities, but we are also losing part of North 
        Carolina.'' Another sixth grader, Will Holloway, said, ``The 
        government has been saving this forest and if we sell it there 
        is no way to get it back.'' North Carolina's Governor, Mike 
        Easley, issued a formal protest against the Bush 
        administration's plan to sell nearly 10,000 acres of national 
        forest land in North Carolina last year, saying ``selling our 
        valuable natural land is not the answer'' to the long-term 
        challenge of financing rural schools. He also wrote to Mark 
        Rey, ``[w]ith all due respect, this proposal violates all the 
        tenets of good public policy . . . You are proposing to sell 
        9,828 acres in North Carolina, or nearly 9 percent of our total 
        National Forest acreage. This proposal comes at the very time 
        when North Carolina is in the midst of a decade-long effort to 
        conserve land and add to our system of public parks and 
        forests.''
   Oregon--7,591 acres.--Kevin Gorman, a resident of Oregon, 
        found fault with last year's proposed land sale. ``The Forest 
        Service's rationale for the sell-off is that these lands are 
        `disposable' because they are isolated, inefficient and often 
        right next to urban areas. As my family and I walked through 
        the Balfour Klickitat area to the eagle-viewing site, it 
        occurred to me that this particular Forest Service property 
        also is isolated, certainly inefficient and adjacent to the 
        town of Lyle. Under slightly different circumstances, it, too, 
        could have been put on the list to sell. What are they 
        thinking?"
   Idaho--26,021 acres.--Republican and Democratic leaders in 
        the Idaho Senate joined to introduce a resolution opposing any 
        sell-off of Idaho's federal lands, as proposed by the Bush 
        administration in 2006. The Idaho legislature is considered the 
        most Republican in the nation, yet it was critical of the White 
        House on the issue of land sales. ``There's not that much 
        daylight between the Republicans and the Democrats on this 
        issue,'' said Senate Majority Caucus Chairman Brad Little, R-
        Emmett. ``The Democrats obviously want to stir the pot a little 
        bit, but there's pretty good agreement on both sides.'' Senate 
        Minority Leader Clint Stennett, D-Ketchum, added, ``This is of 
        grave concern to a large number of people.'' Larry Craig was 
        quoted as saying ``Heck No'' to the proposal.
   Colorado--21,699 acres.--The Colorado House stood in 
        opposition to the ill-considered federal plan to sell off 
        chunks of national forests and other public lands in response 
        to last year's land sale proposal. Fully two-thirds of the 
        state's representatives signed on as co-sponsors to a 
        resolution opposing the land sale plan, and it passed without 
        dissent. Sen. Ken Salazar has said that selling land as a one-
        time budget fix is short-sighted and not in the best public 
        interest.
   Kentucky--3,843 acres.--In an op-ed, U.S. Representative Ben 
        Chandler found that Kentucky schools would lose a net total of 
        $257.9 million in federal education dollars for K-12 and 
        vocational education programs over the next five years under 
        the Bush budget. However, the President's proposal would set a 
        dreadful precedent of trying to fund education by selling 
        federal land instead of practicing fiscal responsibility. 
        Fiscal responsibility and being good stewards of our land are 
        two of the most important lessons we can pass on to future 
        generations. This proposal stomps on both principles and begs 
        the question--how is auctioning off our children's land 
        investing in their future?
   Washington--5,549 acres.--Sen. Maria Cantwell, D-Wash., said 
        in response to last year's proposal, ``Our state's forests are 
        an important legacy. We shouldn't throw them away to make up 
        for this administration's mixed-up priorities.''
   South Carolina--4,656 acres.--In South Carolina, the 
        Charleston County Council adopted a resolution urging Bush and 
        Congress not to sell off any parts of the National Forest. The 
        resolution was added to ones from Berkeley County and others 
        who oppose plans to sell off some of the 250,000-acre forest 
        that covers the northeastern parts of Charleston and Berkeley 
        counties.
   South Dakota--13,310 acres.--``Funding our rural schools is 
        very important, but it would be inappropriate to do so by 
        selling parts of the Black Hills,'' said Sen. John Thune, R-
        S.D. ``The Senate is already working on an alternative proposal 
        that would reauthorize the Secure Rural Schools law, and I will 
        work to pass this viable option that does not include selling 
        off our nation's public lands.''
   Wyoming--15,498 acres.--In response to last year's proposal, 
        Sen. Michael Enzi, R-WY., called the land sales proposal a 
        ``ridiculous idea.'' He added, ``There are towns that are 
        hurting, there are ways we ought to take care of them, but 
        selling off the public lands isn't one of them.'' Rep. Barbara 
        Cubin, R-WY., said in a statement that she's ``not convinced'' 
        federal land sales are the best way to fund the rural schools 
        act and will watch the process. Sen. Craig Thomas, R-WY., 
        questioned Rey at the hearing about the need for land sales. 
        After the hearing, Thomas said he remains concerned that people 
        have enough time to examine the proposal and added that while 
        some lands need to be sold, others shouldn't. ``About all they 
        did (at the hearing) was say that they're going to have lots of 
        opportunity for people to see what lands they're talking about, 
        have some local input, so I really think they do understand 
        that it's going to be very important to do that,'' Thomas said.

    Mr. Chairman, millions of Americans who rely on their National 
Forests and other public lands and for clean water, recreation, and 
hunting and fishing opportunities will not tolerate the selling of 
these lands. Instead of such an unpopular proposal, we should be 
looking to assist rural schools and counties through alternative 
funding sources that do not include selling off America's natural 
heritage.
                               conclusion
    The Wilderness Society strongly supports reauthorization of Public 
Law 106-393, including the current merchantable materials pilot 
program. Congress should expeditiously debate and pass a solution that 
supports rural schools and communities while protecting our public 
lands for their enjoyment and use by all Americans.
    In closing, Mr. Chairman and members of the Subcommittee, The 
Wilderness Society stands ready to work with the Subcommittee on our 
strong concerns about certain provisions of S. 380 in order to 
reauthorize the Secure Rural Schools and Community Self Determination 
Act (PL 106-393) this year.

    Senator Wyden. Thank you very much to all three of you. As 
usually is the case when it comes down to County Payments, my 
friend Senator Craig and I remain trying to figure out how to 
forge the coalition, and that's really what I wanted to start 
with you, Mr. Robertson, about. I felt when I had the honor of 
being chosen Oregon's first new United States Senator in 30 
years that what I wanted to do, as much as anything else, was 
to try to bring people together in the natural resources area.
    What we have seen again and again is this polarizing battle 
that basically means we don't get much of anything that 
Oregonians want. Almost everybody I meet in Oregon says, 
``Protect our treasures, but also make sure that rural 
communities can prosper economically.'' That's what they want, 
and unless you find a way to bring people together, instead of 
that win/win, what you get is inevitably a lose/lose. You don't 
protect your treasures, nor do you address economic needs. My 
sense is there is no other Federal program that relates to 
natural resources that has done as much to bring people 
together as the County Payments legislation.
    I know in Lane County one of the former commissioners who 
was quite close to the forest products industry said, ``I 
couldn't even imagine sitting there, as I did, with 
environmental people.'' Is that true, is this program really 
making a difference in terms of bringing people together and 
helping us build that kind of western coalition that finds 
common ground, the ways communities want so much?
    Mr. Robertson. There's no question, Senator Wyden that the 
title II aspect of the Public Law 106-393 has been a success 
beyond anybody's expectations. It was an experiment, as you so 
aptly coined the phrase, when this bill was first passed, in 
hopes that it would do exactly what it's done, by putting money 
on the table and allowing the different stakeholders to discuss 
openly what ultimately resulted in forest health. We've seen 
achievements that just simply would not have been so otherwise 
and had not been so up to that point. It has brought 
communities of interest together. It has brought stakeholders 
together like nothing else that has occurred up to this point. 
There's no question about it.
    Senator Wyden. The reason why I ask is because we are going 
to go on to these other areas that Senator Cantwell and Senator 
Craig talked about, in fact we touched upon them in Douglas 
County. I mean we have hundreds of thousands of acres that need 
to be thinned, over-stocked stands. That's something that 
environmental folks and people in the timber industry and 
communities can come together on. What we're going to have to 
do is keep this coalition of people together who want to find 
common ground.
    I think my friend from Idaho and I can even remember how we 
came up with the resource advisory committees. We were in that 
period right after we had had the debate about sufficiency 
language and locking people out of the courthouse and the like, 
and we were looking for something else that might bring people 
together. Somehow that managed to do it and I'm just not going 
to let it go by the boards.
    I thank you for all of your work. Rural communities could 
have chosen a lot of people to come today and represent them, 
but they really chose the very best. We're really proud that 
you came, and it's a long trek, and we thank you for it.
    Mr. Francis, your views with respect to what this has done 
to bring people together: I know you have a debate about one 
provision or another, but I would like your views with respect 
to what this has done to get beyond this sort of litigation 
derby that we had so often in the past.
    Mr. Francis. It's phenomenal, in a sense, from where I sat 
back in 2000. Mr. Rey did accurately quote me at one point, 
although I don't remember that one, but I remember a lot of 
other times.
    Mr. Rey. That was a pretty good one though, Mike.
    [Laughter.]
    Mr. Francis. It got quoted, was the point. The issue here 
is what has happened. It seems that based on the research--when 
we came to look at the 2005, when the bill was introduced--so 
we actually put some staff on it. We researched the projects 
and at the start of that research I was kind of saying, ``Okay, 
what's happened, I haven't had a chance to pay attention to 
it,'' and I was stunned by the results that came in on the 
projects and everything that was going on.
    I went out and talked to a lot of my colleagues who 
participate on the RACs and a lot of my colleagues who are in 
the communities not on the RACs, and hardly anybody came back 
to me and said, ``Oh, this has been a bad idea.'' They all said 
it's been a lot of work. It has been important to our 
development in the community. It's been important here. They 
all felt that it was the part of the law--next to making sure 
that school children in rural communities had money so they 
could go to school--that was the most significant thing that 
happened. So from our point of view, this is a success, and we 
would hope to be able to see this thing continue.
    Senator Wyden. My 5 minutes is up. I'm going to recognize 
Senator Craig, and then I'll come back with another question or 
two for you, Mr. Kusel.
    Senator Craig.
    Senator Craig. Thank you very much, Mr. Chairman. Michael, 
let me stay with you for a moment. The last time in discussing 
the success of the RACs, we also discussed the pros and cons of 
the pilot program. This time, I would like to ask you just one 
question. Is there something fundamentally wrong with putting 
the decision on sorting yards in the hands of RACs that you 
yourself have testified are working so very well?
    Mr. Francis. It is our feeling that these decisions in the 
RAC could cause a new level of controversy injected into the 
RACs, which are working so well right now. But the actual pilot 
projects that we wanted to see happen during the first part of 
the enactment of the 2000 law have never taken place. The 
administration just pretty much ignored them and didn't provide 
any real definition to the RACs. How do you define what is 
merchantable material, and what are you looking at in a project 
that would fit this kind of demonstration project?
    So, I don't think there's enough evidence out there to say 
whether that type of decision could be moved down to a lower 
level and not cause some controversy and contention inside, 
which I think is a very delicately-balanced process that's now 
happening in the RACs. That has developed over the last several 
years.
    As you and I discussed the last time, we would support the 
idea of restarting the projects, with a few projects, and 
building back up to get some kind of track record to see how 
the decision process is made, how it is impacted. Then we would 
have a better idea for the future about whether a decision can 
and should be moved to a different level.
    Senator Craig. Okay, thank you for that. Dr. Kusel, first 
and foremost, I appreciate the work you have put into this 
issue. Your report highlighted many important aspects of the 
Act that are working and are proof of the clear need for the 
Act to be reauthorized. In short, I think you've confirmed what 
we all know is true, and the studies show that.
    In your testimony, you state reauthorization should be 
viewed as a bridge to a program that combines driving revenue 
from resource production with ecosystem services. I wrote that 
down with a mark to ask you about it. Could you please further 
elaborate on this point before the committee? What do you mean 
in the context of how you understand it?
    Mr. Kusel. Senator Craig, in our work on this it became 
clear that there still was quite a bit of contention on how to 
fund this. We also identified that in this interim period, 
there is an opportunity to begin to examine the ecosystem 
services. By that I mean, things other than standard timber 
products. It's not doing it to the exclusion of those, it is in 
fact looking at products, timber--forest products including 
timber--but in addition to that looking at the full array of 
values the forests offer. So again by ecosystem services, we 
are talking about the water that's produced, talking about 
recreation opportunities, talking about carbon sequestration, 
and habitat. The challenge of course, is identifying: first, 
how we value those; and second, how we establish mechanisms 
that will actually generate dollars that can be returned to the 
forest for continued improvement in the forests.
    So by ecosystem services, what we're saying within this 
bridge to the future is to begin to look at ways to derive 
additional funding that goes back to the forest and continues 
to support resource management, as well as the sorts of things 
that secure rural schools supports.
    Senator Craig. Thank you. My last question, Mr. Chairman, 
of course is of Doug. We've always had a great working 
relationship, this subcommittee, with you and all who you 
represent, as we've struggled through these issues over the 
last several years. You've obviously traveled a long way to 
this hearing as many do, out of the most rural parts of our 
States, and thank you for that kind of dedicated work.
    What, if anything, has Douglas County and other counties in 
Oregon and elsewhere for that matter, done to promote active 
forest management and to generate receipts to support community 
services and infrastructures?
    Mr. Robertson. Well, several things, Senator Craig, as has 
been mentioned before and elaborated by Julie Jacobson. There's 
an effort going on, on the O&C lands, with the resource 
management planning process. Our county, along with the 
Association of O&C counties--of which I am the President--is a 
cooperator in that process. We're moving along with the U.S. 
Fish and Wildlife Service, or the Department of Fish and 
Wildlife in the State of Oregon, to update those plans and take 
into consideration the protection of the listed and threatened 
species.
    The progress that has been made up to this point has been 
very positive in terms of a larger output of timber on those 
lands while at the same time, being able to hold the 
environmental indicators for threatened or endangered species 
either neutral or actually improve them. We have modeled that 
at Oregon State University and it's a type of new forestry that 
is emerging that is very interesting. That's one thing we've 
been involved in.
    As you know, we were deeply involved in the Federal 
legislation on the House side. Recovering areas that have been 
the subject of catastrophic events--whether it's wind, whether 
it's fire, whether it's insect infestation--is something that 
we have worked very hard on. Walking away from those areas of 
devastation, allowing that material to become the next source 
of the next fire, we find is not acceptable and it's not 
acceptable to the public. So we work very hard with Congressman 
Walden and others to provide information that helped in that. 
That bill has come to you for consideration as you know, and we 
continue to work in other areas.
    We are particularly proud of the fact that we were able to 
identify title III and title II dollars to come together to 
help implement the community wildfire protection plans that 
were part of the Healthy Forest Restoration Act that you passed 
with great success. There was a requirement, as you know, for 
rural communities to identify community wildfire protection 
plans, but no resources to do it. We have found a way through 
combining title II and title III dollars to help communities 
with that, with some success.
    Senator Craig. How many of these projects that you talked 
about were in part, an activity of the RAC?
    Mr. Robertson. Many of them, many of them. The RAC, the 
title II dollars helped to a large degree with the 
implementation of many of the community wildfire protection 
plans.
    The combination of some title III dollars and title II 
dollars and the RACs working together in that regard, as other 
have pointed out, has been an enormous step forward. That, as I 
mentioned in my testimony, would be one of the most noticeable 
casualties in the loss of this legislation, because there's 
nowhere else to go.
    What made it work to a large extent, as I mentioned before, 
was the fact that there were resources to work with. It enabled 
the agencies to come forward with projects resulting in forest 
health and a variety of other things that they otherwise would 
not be able to do and would not have gotten done.
    Senator Craig. Thank you all very much for being with us 
this afternoon. Mr. Chairman, thank you for scheduling and 
holding this hearing. I think it's been very valuable.
    Senator Wyden. I just want to tell my friend, I'm going to 
ask another question or two. I'll also check if you want to say 
anything else.
    Mr. Kusel, you did a number of case studies of forests in 
Oregon. Were there some that you thought would be particularly 
helpful? I know you talked to the staff; you mentioned a couple 
that you thought really were illustrative of the potential of 
the law. Were there a couple you wanted to give us a brief 
explanation about?
    Mr. Kusel. Would you like me to restrict those to the 
Oregon examples?
    Senator Wyden. Yes.
    Senator Craig. Unless there's a good Idaho example.
    [Laughter.]
    Mr. Kusel. There are some wonderful Idaho examples. The 
Fremont-Winema has done some wonderful work. Actually I'm 
reluctant to talk to about a single RAC simply because there 
was exceptional work done by so many, and I feel that by 
talking about one, I slight them. But let me add that the 
Fremont-Winema did some exceptional projects and I love telling 
the story of one of the projects that involved students coming 
back, monitoring a watershed, doing extensive work that was 
really quite helpful in understanding the dynamics. The RAC 
contributed a fair bit of money to that project.
    I can say that the Fremont-Winema, the Medford RACs were 
really quite successful in how they operated and how they 
worked with one another. The way the people spoke about the 
projects that they had accomplished was really quite 
exceptional. Again, it's hard with the vast numbers of projects 
that were accomplished by the RACs in Oregon, but I pick this 
one project just because it involved kids and they did 
exceptional work. The RAC was thrilled with what they were 
doing.
    I feel compelled also to add an Idaho example here; in that 
there were a couple that we looked at in Idaho and the 
Panhandle RAC in the southwest Idaho RAC. The Panhandle 
exhibited a wonderful example of counties coming together and 
really working toward, or really working for, the entire area, 
as opposed to dividing dollars and thinking about, ``What do I 
get for my particular county?'' It's, ``What can we do for this 
particular area, for the whole area?'' and we were quite 
impressed with that particular perspective with the Panhandle 
RAC.
    Senator Wyden. You all have been very patient and it's been 
an excellent panel. I think you have given us a sense of what 
can be done if we can come together once more, and I'm 
committed to that. I can tell from Senator Craig's comments 
that he's committed to doing that. What is always so striking 
to me as I move around my State and get out to the rural 
communities and have these town halls, is how so much of this 
is interrelated.
    For example in Douglas County, Mr. Robertson, I went and 
met with students who have a terrific program, an anti-
methamphetamine program, doing a terrific job, really model 
programs. I could see in Douglas County how committed they were 
to stepping up the fight against meth and then I went off and 
met with the sheriff who was talking about how he was concerned 
about whether or not he'd be able to have a plain vanilla law 
enforcement program, be able to keep prisoners there.
    That sheriff and all the other sheriffs throughout rural 
Oregon, throughout the rural west, want to do more to win this 
fight against meth. They want to step up the offensive against 
meth and they're going to be in a situation where they're going 
to have difficulty funding the essential services they have 
today. I see that in the school districts as well, with school 
districts telling me they're going to be at school 3 days a 
week.
    So I want it understood that this is my top priority as it 
relates to this session of Congress, and we are going to get 
this law reauthorized and insure that our rural communities can 
survive.
    When we do that we're going to go on to touch on many of 
the issues that you all have been talking about, starting with 
the chance to increase a clean energy source through biomass. 
We'll also touch on rural communities, bringing people together 
around a thinning program, overstock stance, something people 
talked about in Douglas County, and we'll look at a variety of 
other areas where there can be bipartisan cooperation.
    So, Senator Craig and I helped to bring about two major 
initiatives in forestry, and hopefully we're going to be able 
to bring about several more. It will be easier with the 
excellent cooperation you all have shown today.
    I want to give Senator Craig the opportunity for the last 
word, if he'd like it, then we'll wrap up.
    Senator Craig. Thank you.
    Senator Wyden. The subcommittee is adjourned.
    [Whereupon, at 3:45 p.m., the hearing was adjourned.]
                               APPENDIXES

                              ----------                              


                               Appendix I

                   Responses to Additional Questions

                              ----------                              

  Responses of the Sierra Institute for Community and Environment to 
                    Questions from Senator Domenici
    Question 1. Mr. Kusel, understanding your support for the re-
authorization of this law, how should a Senator from New Mexico feel 
when he sees the counties in Oregon, Washington and California get so 
much more funding per student or per mile of road, when our State gets 
so little?
    Answer. You are correct in your understanding that I support re-
authorization of P.L. 106-393; however, as stated in my written 
testimony I am not in support of a simple re-authorization. There are a 
number of important modifications that ought to be made to improve 
Title II and Title III. I will not recite specific changes here because 
they can be accessed in my written testimony and in our research report 
to the Departments of Agriculture and Interior for the study they 
funded (Assessment of the Secure Rural Schools and Community Self-
Determination Act, Sierra Institute for Community and Environment, 
2006).
    I believe two key issues lie at the heart of this question: federal 
obligation to rural counties and the funding mechanism of P.L. 106-393. 
I also believe that the funding mechanism for P.L. 106-393, while 
initially reasonable, needs to be changed.
    Federal land in rural counties creates a unique federal obligation. 
These lands cannot be taxed and often generate a variety or uses that, 
in turn, generate costs for a county. The 1908 legislation (16 USC 500) 
affecting national forest land and the 1937 Oregon and California Act 
for Bureau of Land Management land area affirmed this commitment 
through the sharing of revenue with counties.
    Asking if it's fair that students in three states receive more than 
those in New Mexico is, of course, on its face, reasonable, but at its 
core questions whether the principles underlying P.L. 106-393 should be 
modified. That is, should the basic relationship between the federal 
government and rural counties (and communities) and a long-established 
revenue sharing formula be changed from one based strictly on natural 
resource product receipts to one in which distribution among counties 
is linked to social criteria? I do not believe that shifting receipt 
payments based on natural resource product revenue to a distribution 
scheme based on a per student or per mile of road is consistent with 
the basic principles that informed the drafters of the 1908 or 1937 
legislation.
    I am not in any way suggesting that students from New Mexico should 
not receive needed funding. But I do not believe it sound to change 
long-established relationships between natural resource production and 
revenue sharing on O&C and national forest lands to a socially-based 
program, which would be the result if funding is based on per student 
or per mile of road.
    That said, I believe that the high three-year average (1986-1999) 
as a basis for revenue sharing with national forest and O&C counties in 
perpetuity needs to be changed. It was justifiable to launch a program 
using this formula given the hardships rural timber-dependent 
communities were facing. And rather than simply stopping the program in 
2006, it makes eminent good sense to slowly ramp down the program. Some 
have suggested that six years is plenty long for economic re-
adjustment. We learned from our assessment of the $1.2 billion 
Northwest Economic Adjustment Initiative that communities take far 
longer to develop a new economic base as they transition from 
longstanding timber-based economies (see our report, Assessment of the 
Northwest Economic Adjustment Initiative, December 2002: http://
www.sierrainstitute.usineai/NEAIindex.html).
    I believe there is a better solution for all, one that preserves 
the long-established principle of revenue tied to resource management, 
and offers opportunity for New Mexico and its students, as well as 
numerous counties and states across the country to derive more benefit 
from federal land and participate in other benefits, like Resource 
Advisory Committees (RACs), of P.L. 106-393.
    As I suggested in my testimony, re-authorization should be viewed 
as a ``bridge'' to the future and to a program that combines deriving 
revenue from resource production and ecosystem services. Revenue from 
not just products but from both ecosystem products and services can and 
should be part of this bridge to a program that generates more revenue 
and leads to more sustainable future funding of the powerfully 
successful P.L. 106-393 legislation.
    An ecosystem products and services approach would increase the 
revenue forest counties in New Mexico receive as a result of revenue 
generated from water flowing off national forests in New Mexico, along 
with revenue from wood products. Ecosystem services could eventually be 
expanded to include carbon credits and payment for habitat, among other 
``services,'' as these are quantified and equitable mechanisms 
developed to collect revenue.
    I don't believe that funding school children in New Mexico needs to 
be seen as a zero-sum game. The Secure Rural School and Community Self-
Determination Act legislation has proven to be so successful that it 
should be continued and expanded. The challenge, of course, lies in 
securing the funds needed for a five to seven year re-authorization 
that will support the program where it has existed, as well as launch 
the building of a program that has both the incentives and a mechanism 
(as I described in my written testimony) that advances an ecosystem 
services approach.
    The bridge to the future that I am advocating ramps down the 
required dedicated federal funding and ramps up funding from products 
and services to support projects like the many outstanding projects 
already developed through the legislation. It will also expand the 
reach of the legislation by providing funding or increased funding 
where the legislation has had little impact because the three-year 
average timber harvest was low. Funding from ecosystem services would 
be provided by beneficiaries of those services, such as downstream 
municipalities using water flowing off national forest lands. In 
addition to preserving the original intent of national forest and O&C 
receipt sharing, it will also lead to long-term stable funding to more 
rural areas, not less, thereby benefiting far more people. Hence, in 
addition to including rural communities in the East, the South, and 
elsewhere, this approach will result in more benefits being secured for 
and going to the students of New Mexico.
    Question 2. I am told that your report documented a fair amount of 
spending of Title III funding for projects that didn't conform to the 
six areas for which those funds could be spent for.
    What would you recommend we do about this problem?
    Question 4. What would you recommend to avoid the misappropriations 
of those Title III funds in the future?
    Answer to Questions 2 and 4. It is important to first note that in 
our study we were not asked to nor did we make a determination about 
strict conformance of Title III projects with the law. We did, however, 
in our research report point out instances in which Title III 
expenditures were questionable with respect to conformance with the six 
approved areas. I would not characterize the total number or amount of 
questionable expenditures that we found constituting a ``fair amount'' 
of all Title III spending. Labeling this total a ``fair amount'' 
suggests a level of misuse beyond what we did in fact find. I believe 
the nonconformances that could be identified as clear violations 
represent perhaps roughly five percent of the total expenditures we 
evaluated.
    I believe the ``fix'' to the problem is relatively straightforward. 
I offer the following seven suggestions to this end.

          A) Make the meaning of ``project'' in Title III the same as 
        it is in Title II.
          B) Require all counties to disburse Title III funds through 
        open and competitive processes involving project solicitation 
        and approval.
          C) Prohibit administrative allocations (half of all Title III 
        funds were distributed this way, contributing to, if not actual 
        noncompliance, the appearance of noncompliance).
          D) Provide an authoritative source of information for Title 
        III. Too often agency personnel were asked to provide 
        information, which was inappropriate. (Throughout the research 
        project the Sierra Institute for Community and Environment was 
        regularly asked by counties about what was appropriate for 
        Title III expenditures.)
          E) Require at minimum yearly reporting of project 
        expenditures, the Title III category(ies) under which the 
        expenditures are made, and project accomplishments. (The Sierra 
        Institute found that our collection of data compelled internal 
        review on the part of a number of counties and, in a few cases, 
        modification of spending.) SB 380 begins to address this issue 
        by calling for Secretary review.
          F) Spot monitor projects through project visits and through 
        phone interviews with project leaders and/or funding 
        recipients. More monitoring might be conducted in counties 
        where there have been previous questions or perceived problems.
          G) Consider using a third-party organization (like the Sierra 
        Institute) to assist with management of D, E, and F. This will 
        help avoid conflict of interest issues associated with agency 
        monitoring of county projects. This, in turn, will help avoid 
        retribution by counties affecting Title II allocations. As P.L. 
        106-393 is currently written, counties allocate Title II funds; 
        if they are displeased with agency action regarding Title III 
        they may restrict Title II allocations.

    Question 3. Since the old formula is based on the sale of timber, 
something that no longer has the political and social support that it 
once had on the West Coast, why should Congress continue to base the 
formula on that old paradigm? And why on the highest three years of 
receipts the high-end states received?
    Answer. As I stated in my answer to question number one, I do not 
believe it makes sense to base funding of the legislation on an 
inflation adjusted high three-year timber harvest average in 
perpetuity. However, I do believe that the historic relationship 
established between the federal government and rural communities in the 
1908 and 1937 receipt sharing formulas should be maintained. Adding an 
ecosystems services component to the legislation offers the opportunity 
to replace the old paradigm and the opportunity to place the 
legislation on more secure financial footing, as funding is obtained 
from a more complete array of benefits (or services) that forests 
provide. Because of its focus on timber receipts, the 1937 O&C 
legislation will require expansion to bring it in line with the more 
expansive national forest legislation. (The seeds of this expansion, 
however, already exist in the 1937 O&C Act language that states the 
lands `` . . . shall be managed . . . for the purpose of providing a 
permanent source of timber supply, protecting watersheds, regulating 
stream flow, and contributing to the economic stability of local 
communities and industries, and providing recreational facilities.'')
    The short-term challenge lies in building the bridge to the future, 
both funding the legislation in the short-term and developing the 
financial and institutional mechanisms that will supplement forest 
product receipt payments. I support P.L. 106-393 re-authorization for 
five to seven years to allow for the development of mechanisms that 
will augment payments for forest products and support P.L. 106-393 
legislation in the future. I also support some decline in payments to 
make clear that this legislation will sunset in its current form, as 
well as to provide incentives to both identify and implement 
appropriate ecosystem service funding mechanisms. As I suggested in my 
written testimony, RACs receiving $200,000 or more should be required 
to dedicate three to five percent of their total funding to projects 
evaluating ecosystem services.\1\ Using the RAC as learning 
laboratories will help generate ideas about how to implement an 
ecosystem products and services approach and will help build a 
constituency to advance what truly is a paradigm for the future.
---------------------------------------------------------------------------
    \1\ Rather than focus only on RACs, this could be applied to 
counties that are part of a RAC collectively receiving $250,000 or more 
in order to prevent them from limiting their RAC contribution to less 
than $200,000.
---------------------------------------------------------------------------
    The federal budget constraints make clear that other revenue 
sources need to be developed to support forest and watershed management 
and respond to the federal commitment to rural communities and 
landscapes. While my suggestion does not identify a source of funding 
for the needed near-term re-authorization, it does construct a bridge 
to the future that extricates the federal government from funding this 
program in perpetuity, while preserving the historic relationship 
between the federal government and rural communities, and truly 
developing a new paradigm for the future.
                                 ______
                                 
         Responses of the Wilderness Society to Questions from 
                            Senator Domenici
    Question 1. I note that S. 380 includes a provision to allow the 
Resource Advisory Committees to decide whether or not to require that a 
certain percentage of projects involving the sale of merchantable 
material will utilize separate contracts for (1) the harvesting or 
collection of the material and (2) for the sale of such material.
    Mr. Francis, if the section on sort yards that is currently in S. 
380 is maintained, does your organization support or oppose the overall 
bill?
    Answer. Since The Wilderness Society believes that the Merchantable 
Materials Contracting Pilot Program is helping to deter federal land 
managers from using Title II funds to conduct potentially controversial 
and inappropriate logging projects and giving Resource Advisory 
Committees the added responsibility of requesting a pilot program would 
inject new and needless controversy into the Title II projects, we 
would have to reevaluate our support for S. 380. It would be very 
difficult for The Society to support S. 380 without the Merchantable 
Materials Contracting Pilot Program.
    Question 2a. Mr. Francis, recently American Lands, the Cascadia 
Wildlands Project and several other groups released a proposal that 
asks Congress to establish, initially endow, and periodically fund an 
``Western Oregon Old-Growth Protection and Rural Investment Fund'' to 
permanently end the linkage between the management of BLM federal 
public forests in Western Oregon and the provision of essential local 
government services.
    Are you aware of this proposal and what does the Wilderness Society 
think about the proposal?
    Answer. The Wilderness Society has concerns about the proposal. 
While we do support the transfer of the O&C Lands from the Bureau of 
Land Management to the U.S. Forest Service, we are opposed to the 
proposal on two other issues. (1) The Society supports a permanent 
authorization for the Secure Rural Schools and County Self 
Determination Act and the proposal would phase out funding for rural 
schools over the several year life of the trust fund. (2) The 
Wilderness Society opposes the use of very limited Land and Water 
Conservation Fund dollars to support this proposal.
    Question 2b. Do you read this proposal to mean that only the 
counties in Western Oregon would be benefited by this proposal?
    Answer. Based on my limited knowledge of the proposal only the 
Western Oregon counties would benefit.
                                 ______
                                 
     Responses of the Department of the Interior to Questions From 
                            Senator Domenici
    Question 1. I note that the Bureau of Land Management's budget does 
not include a proposal to sell BLM lands to help pay for the cost of 
the Secure Rural Schools and Community Self-Determination Act.
    The BLM hasn't included a request similar to the Forest Service's 
request to sell lands to pay for these payments in either of its last 
two budgets. Why is that?
    Answer. During the formation of the FY 2008 Budget, the 
Administration looked for a mandatory offset for the Secure Rural 
Schools and Community Self-Determination Act. The Administration 
determined that the land sale proposal referenced in the U.S. Forest 
Service Budget to be most appropriate.
    Question 2. Do you think it fair for the Forest Service to shoulder 
the entire burden of generating the funds to make these payments?
    Answer. During the formation of FY 2008 Budget, the Administration 
looked for a mandatory offset for the Secure Rural Schools and 
Community Self-Determination Act. The Administration determined that 
the land sale proposal referenced in the U.S. Forest Service Budget to 
be most appropriate.
    Question 3. Ms. Jacobson, recently American Lands, the Cascadia 
Wildlands Project, and several other groups released a proposal that 
asks Congress to establish, initially endow, and periodically fund a 
``Western Oregon Old-Growth Protection and Rural Investment Fund'' to 
permanently end the linkage between the management of BLM federal 
public forests in Western Oregon and the provision of essential local 
government services.
    Are you aware of this proposal and what does the Bureau of Land 
Management think about the proposal?
    Answer. As stated in the Budget, the Administration could support 
an extension of SRS provided that it is fully offset, targeted to the 
most affected areas, capped, adjusted downward each year and eventually 
phased out.
    We recently became aware of the ``Western Oregon Old-Growth 
Protection and Rural Investment Fund'' proposal, but have not fully 
analyzed it. Our preliminary understanding is that the proposal would:

   establish an endowment that would at least partially provide 
        funds to the 18 O&C Land Grant Counties;
   transfer the O&C and Coos Bay Wagon Road lands from the BLM 
        to the Forest Service; and
   sever the link between sustainable management of the O&C 
        forest lands and county services.

    We also understand that these checkerboard lands would be managed 
as an old growth preserve,
    Transferring the lands to the Forest Service would not eliminate 
the need to fund the management of the lands, Congress and the 
Administration would need to find the funds to establish the endowment.
    Question 4. Is it something that you think Congress should spend 
time on?
    Answer. It is up to the Congress to set its priorities and 
schedules.
    Question 5. Do you read this proposal to mean that only the 
counties in Western Oregon would be benefited by this proposal?
    Answer. As we understand the proposal from an initial reading, it 
would apply only to the 18 western Oregon Counties included in the 
original O&C Land Grant.
                                 ______
                                 
      Response of Mark Rey to Question From Senator Maria Cantwell
    Question. Mr. Rey, in your remarks you suggested that we reevaluate 
the revenue distribution formula from timber proceeds as set in the 
Secure Rural Schools Act of 2000. You stated that the formula for 
payments to counties, including to large economically vibrant counties 
like King County in my state, as set in the 2000 legislation was a 
reflection of historical timber receipts they received in 1908 or in an 
earlier time. Yet, the formula--as set in the 2000 legislation for 
payments to counties like King--is actually based on the average of the 
highest three-years of timber receipts from 1985-1999. Even so, you 
suggested that we take money from those counties that are more 
economically vibrant and reallocate to counties that are in greater 
need. How would you propose evaluating the relative need of particular 
counties that are eligible to receive payments under this program? How 
much economic development is enough to disqualify counties that are 
currently eligible to receive payments under the 2000 legislation?
    Answer. The Secure Rural Schools and Community Self-Determination 
Act of 2000 (SRS Act) legislation was intended to be a transitional 
solution to allow states and counties to readjust their priorities and 
programs so that they are less dependent on timber receipts. Some 
counties and States in the intervening years have accomplished this and 
others have not. The Administration's FY 2008 Budget supports the 
President's continuing commitment to States and counties impacted by 
the ongoing loss of receipts associated with lower timber harvests on 
Federal lands. In its budget and in congressional communications, the 
Administration has indicated it could support an extension of the SRS 
Act provided it is fully offset, targeted to the most affected areas, 
capped, adjusted downward each year, and eventually phased out. The 
Administration has not adopted a position on SRS payments based on a 
county's total of acreages or income. However, these types of payments 
would represent a shift in the program's purpose away from receipts 
transition and towards an entitlement funding approach. We have not 
advocated ``disqualifying'' counties that have received payments in the 
past.
        Responses of Mark Rey to Questions From Senator Domenici
    Question 1. You want to sell almost 7,373 acres of National Forest 
lands in New Mexico. Under the distribution formula in P.L. 106-393, 
the counties in New Mexico received about $9 per impacted student and 
the students in Oregon received more than $430 per impacted student. 
Can you assure me that none of the funds generated from the sale of 
lands in New Mexico will be used to pay for county payments in counties 
outside New Mexico?
    Answer. Our proposal does not address how payments would be 
distributed to States and counties. The fifty-percent portion of 
National Forest System land sale receipts available for funding 
payments to States and counties will be available for whatever funding 
distribution is authorized in subsequent legislation.
    Our legislative proposal provides that half the receipts from the 
sale of National Forest System lands will be used to make payments to 
States and counties. The other half would remain within the State from 
which the land sale receipts were derived for National Forest purposes, 
including the acquisition of land, conservation education, improved 
access to public lands, wildlife and fish habitat improvement, and 
restoration.
    Question 2. The data shows that over the last four years, the gross 
receipts on the National Forests in New Mexico have been slowly 
decreasing. I also see from the 1996 Timber Sale Information Program 
Reporting System (TSPIRS) that the Forest Service timber sale program 
in New Mexico generated over $9.6 million of direct and indirect 
employment income and nearly a $650,000 in 25% Payments to the counties 
in my state and over $1.5 million in federal income tax revenues.
    Looking at the difference between the $2 million federal payment 
made to New Mexico counties under P.L. 106-393 and the $9.6 million in 
employment income, plus nearly a million dollars of 25% payments made 
to the State as recently as 1999, can you help me understand why we 
aren't focused on getting the revenues back up to levels in the 1990's 
in my State along with the economic activity it generated?
    Answer. The national trend for all national forest timber sale 
receipts has been on the increase since 2002. We expect the upward 
trend in receipts to continue as we implement additional thinning 
projects to improve the health of forested stands, increase the amount 
of hazardous fuel treatments, and improve our efficiency in conducting 
vegetative treatments across the country. We do not expect a return to 
the level of timber harvesting and associated receipts that were 
prevalent during the decades of the 80's and 90's.
    The national forest timber sale program in New Mexico changed 
emphasis in the 1990's from harvesting mostly mature, over-story trees, 
to one of thinning from below to reduce wildland fire risk and restore 
fire-adapted ecosystem function.
    Currently, National Forests in New Mexico are implementing the 
National Fire Plan, and are utilizing the Healthy Forests Restoration 
Act, and stewardship contracting to restore fire dependent ecosystems. 
However, there is little industry left to pay for the forest products 
that are available and often appropriated funds must be used to treat 
and remove small diameter logs. The Southwest Region of the Forest 
Service is encouraging new and appropriately scaled industry that could 
utilize and pay for the many small and some larger trees that will 
become available through restoration efforts.
                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

       Statement of the American Federation of State, County and 
                          Municipal Employees
    This statement is submitted on behalf of the American Federation of 
State, County and Municipal Employees (AFSCME). The Union strongly 
supports S. 380 which would reauthorize the Secure Rural Schools and 
Community Self-Determination Act of 2000 (P.L. 106-393). P.L. 106-393 
expired last year, and the law's expiration has already had adverse 
consequences for rural and forest communities all across the nation. 
Over 775 counties in 42 states will be impacted if this law is not 
renewed. AFSCME represents public employees in many of these states 
whose livelihood is being jeopardized as a result of Congress' 
inability to reauthorize and fund P.L. 106-393.
    More than half of the land in the State of Oregon is owned by the 
federal government making it exempt from property taxation. The loss of 
revenue resulting from the inability to impose taxes or to develop the 
land led to the Congress enacting P.L. 106-393 in 2000. The expiration 
of this statute will have a devastating effect on Oregon because 
funding for essential government services will be drastically reduced. 
Some counties in the State will lose more than half of their 
discretionary general operating and road funds. Important government 
services, including health care, law enforcement, disaster relief, 
homeland security and tax collection, are threatened.
    AFSCME members in Oregon are already facing tremendous hardship. 
Local government employees have already been given lay-off notices 
because the various counties who depend on this funding can no longer 
afford to pay their salaries.
    Important public services in other states are also being 
threatened. In some forest communities across the country, schools are 
scheduled to close and young students may be forced to take school 
buses as far as 90 miles each way. Communities are also reporting that 
they will be forced to eliminate teaching and administrative jobs in 
the schools and that they will be unable to purchase classroom supplies 
including computers. Other communities are concerned about road safety 
because they will be forced to reduce their road maintenance personnel 
resulting in service cutbacks threatening snow and vegetation removal, 
ditch cleaning and repair and other road safety functions.
    The federal government must continue to compensate forest and rural 
communities for the revenues local governments lose as a result of the 
federal government's control of these lands. P.L. 106-393 appropriately 
provides payments to forest and rural counties in order to achieve this 
goal. The federal government should not abandon rural America by 
failing to renew this important law.
                                 ______
                                 
                                            State of Oregon
                                          Salem, OR, March 6, 2007.
Hon. Ron Wyden,
Chairman, Subcommittee on Public Lands and Forests, Energy and Natural 
        Resources Committee, Dirksen 364, Washington, DC.
Hon. Richard Burr,
Ranking Member, Subcommittee on Public Lands and Forests, Energy and 
        Natural Resources Committee, Dirksen 364, Washington, DC.
    Dear Chairman Wyden and Senator Burr: As you know, Congressional 
failure to reauthorize the Secure Rural Schools and Community Self-
Determination Act (PL 106-393, county payments) is threatening 33 of 
Oregon's 36 counties with devastating budget choices right now. I am 
writing today to support the passage of S. 380, a bill to reauthorize 
this Act.
    In the past two years, I and my fellow governors have passed 
resolutions supporting reauthorization for the Western Governor's 
Association and National Governor's Associations. In addition, given 
the importance of this issue to my state, I have had many conversations 
with our congressional delegation and have written letters urging 
reauthorization to congressional leadership. In addition, I have called 
other congressional leaders, including the Chairman of this Committee, 
informing them of the dire consequences for Oregon if they fail to 
reauthorize the Act.
    Mr. Chairman, I am willing to work for reauthorization of this law, 
at any time and any place, with anyone willing to work with me, Oregon, 
our counties and our delegation.
    If this law is not reauthorized, and quickly, no state in the Union 
will suffer the impacts of the magnitude and severity that affect the 
State of Oregon--because no state has a greater a share of its local 
resources committed to federal forest lands. The current funding 
formula that provides the much needed funding to Oregon is based on the 
historic value and volume of timber that Oregon produced for the 
nation. Quite simply, no other state has been blessed with the volume 
or value of timber of Oregon. On the flip side, no other state has had 
to suffer as much as Oregon with the environmental necessity and 
societal acceptance of less timber management.
    In addition to transportation and school funding that all the 
states covered by this law, get from the Forest Service forest lands, 
some Oregon counties, historically known as Oregon and California Lands 
Counties (O&C Counties), get general funding from the only timber lands 
owned by the Bureau of Land Management, Department of the Interior 
(BLM). Out of the BLM funds those counties pay for public safety, 
health and community services, as well as assessment and taxation and 
other public functions.
    A good example is Lane County, an O&C county and one of Oregon's 
major recipients of county payments funding, which is the size of 
Connecticut. Connecticut has 1,199 state troopers supported by a state 
budget that is, in turn, supported, in large part, by property taxes. 
Lane County, on the other hand, has 16 county police that are supported 
largely, from BLM county payments. It has to be because over 55 percent 
of the county is owned by the federal government and therefore not 
taxable.
    With limited places to turn for revenue, Lane County does the best 
it can with what it has, but the result of having 16 police for an area 
the size of Connecticut is that they often ignore property crimes as 
they respond to more serious events. Recently, though, and this is not 
the sort of advertisement a governor likes to make about his state, an 
individual stole 28 cars from Cottage Grove, a community just south of 
Eugene (home to the University of Oregon). This individual was 
eventually apprehended--but, imagine what a person like this will be 
able to get away with in Lane County if the county payments money 
disappears or is decreased significantly and the 16 county police drops 
to one or two?
    I relate this story because it is important for the Committee and 
for Congress to understand that Oregonians are not eating off of gold 
plates because of county payments. In fact, some Oregonians won't eat 
at all without county payments: Lane County will have to stop 
supplementing Women Infant and Children (WIC) funds and the 8,000 
people that were assisted last year will drop to 4,000 next year.
    Mr. Chairman, we are barely hanging on now--please don't push us 
off the economic cliff.
    I stand ready to assist in reauthorization in any way I can.
            Sincerely,
                                     Theodore R. Kulogoski,
                                                          Governor.
                                 ______
                                 
                        Forest Counties Payments Committee,
                                 Washington, DC, February 23, 2007.
Hon. Jeff Bingaman,
Chairman, Senate Committee on Energy and Natural Resources, 304 Dirksen 
        Senate Building, Washington, DC.
    Dear Senator Bingaman: The Forest Counties Payments Committee 
(FCPC) has provided Congress with information related to implementation 
of the Secure Rural Schools and Community Self-determination Act (P.L. 
106-393), and recommendations for making long-term payments to states 
and counties. The Committee is also aware there are efforts by others 
to identify payment alternatives. The Payments Committee was recently 
requested to consider alternatives to existing formulas for making 
payments to states. Therefore, the members of the Forest Counties 
Payments Committee believe it is important to provide some context to 
these efforts.
    Members of the Payments Committee understand there is a strong 
desire by some to re-distribute the payments so some states and 
counties will see an increase in their annual payments. This will 
require that some States experience a reduction in annual payments. The 
five States receiving the largest payments in order are:

          1. Oregon
          2. California
          3. Washington
          4. Idaho
          5. Montana

    States in the Pacific Northwest, and especially Oregon, receive the 
largest payments for one primary reason. The method of making payments 
to states and counties has historically been based on land productivity 
and managed under a utilitarian concept. Because states in the Pacific 
Northwest have some of the most productive forested lands, and public 
ownership of those lands is so extensive, payments have historically 
favored those states. This model holds true in the East as well. The 
State of Pennsylvania has highly productive forests and valuable tree 
species. As a result, it receives the highest payments per acre of 
national forests of any state. However, because federal land ownership 
in Pennsylvania is much less than in Western states, total payments are 
less.
Purpose for 2008 25% Payments Act
    Congress created the 1908 25% Payments Act to accomplish one 
primary purpose--to compensate counties for the impacts created by 
setting aside public lands. They were not considered payments in lieu 
of taxes. If they had been, there would be justification for increasing 
the current level of payments to counties based on a recent tax value 
study conducted by the Payments Committee (2003 Report to Congress). 
The purpose for creation of the 25% Payments Act can be found in 
congressional records and opinions rendered through judicial review.
1937 O&C Act
    The O&C Grant Lands are managed by the Bureau of Land Management in 
Western Oregon, and receive payments from the sale of timber. However, 
the O&C lands were once private lands that reverted into Government 
ownership. The 18 counties within the original O&C Land Grant, managed 
under the Act of August 28, 1937 (O&C Act), were to receive 75% of the 
receipts from the sale of timber. However, the counties never received 
more than 50% for various reasons including the counties ``investing'' 
25% of the receipts in the future productivity of the land. Unlike 
receipts from Forest Service sales, O&C receipts serve a different 
purpose and are deposited to the counties for use in their general 
fund. Therefore, any formula change may want to consider the different 
effect it may have on these counties.
Guidelines for Establishing a New Payment Formula
    The Forest Counties Payments Committee recommends the following 
guidelines for developing a new formula that would change current 
payment amounts to states and counties. These guidelines are based on 
the belief that the original purpose of the Payments Act should not be 
changed, that the federal government has a long-term commitment to 
public lands counties, and that education programs remain the highest 
and best use of these funds.

    Payment Amounts should be based on certain needs related to 
        impacts created from the presence of federal lands, not socio-
        economic indicators.
          There are at least 10 categories of fiscal impacts counties 
        experience from the presence of federal lands (FCPC 2003 Report 
        to Congress). At least five of these categories create 
        significant fiscal impacts to a large number of counties. They 
        are listed below.

          1. Search and Rescue
          2. Law Enforcement
          3. Road Maintenance
          4. Fire Protection/Control
          5. Road Construction

          It is reasonable to assume counties that have more acres of 
        public land within their boundary experience greater impacts 
        from the activities listed above. Therefore, acres of public 
        land in a county provide a legitimate indicator of fiscal need. 
        Two of the top five impact categories are related to roads. 
        Miles of road would seem like a good indicator of need, but 
        there are many variables that can influence this. A number of 
        states do not have county roads. In those cases all roads are 
        managed by the State Highway Department. Also, payments based 
        on road miles could create an incentive to add more roads to 
        the system in order to receive additional funds.
          A payment formula based on needs defined by any number of 
        social indicators such as per-capita income, Free and Reduced 
        Lunch Program participants, or amounts of certain government 
        transfer payments can be misleading, and manipulated. These 
        social indicators may have no relationship to the purposes for 
        which the Payments Act was created, and a payment program based 
        on these criteria would appear more like some block grant 
        programs. Also, there are approximately 20 federal revenue 
        sharing programs that benefit some states more than others. Any 
        ``needs test,'' or new formula, should include total payments 
        made to a state from all revenue sharing programs related to 
        natural resources, i.e. oil & gas, coal, etc..
   A new payment formula could utilize an equalization approach 
        commonly used within the education system to provide a minimum 
        amount to each state, while reducing the larger funded states 
        by no more than a certain amount agreed to by policy makers.
          This type of funding adjustment is common among some states 
        where smaller school districts are provided adequate financial 
        resource to operate their education programs when they don't 
        quite fit into a standard allocation formula. The Payments 
        Committee determined that at least 8 states who receive 
        payments from the Secure Rural Schools Program allocate those 
        funds under an equalization formula.
   Total Payment Amounts could be reduced over time.
          The Payments Committee believes there is sufficient 
        justification for maintaining current payment amounts (FCPC 
        2006 Report to Congress). However, if policy makers desire to 
        reduce the total amount paid to states and counties they could 
        adopt an approach recommended by the Payments Committee in its 
        2006 Report. In brief, total payments are reduced by 3% per 
        year for 10 years, after which a new base is established. This 
        strategy assumes a 3% increase in receipts and charging fair 
        market value for commercial uses of federal lands. Also, if it 
        is the intention of Congress to return to receipts only 
        payments, then recent decisions to exempt some programs from 
        making receipt contributions should be revisited.
          As pointed out in past reports, changes to certain Bureau of 
        Land Management and Forest Service Programs have allowed 
        receipts to be retained instead of being deposited in accounts 
        used to make payments to states and counties. These decisions 
        should be revisited if it is the intent of Congress to 
        eventually phase out any guaranteed payment program.
   Consider environmental services, or environmental 
        contributions to society from lands removed from timber 
        production.
          While difficult to identify a specific monetary value, policy 
        makers need to recognize the benefits to society from the 
        reallocation of lands historically used for timber production 
        to other purposes, primarily protection of habitat for certain 
        federally listed wildlife and fish species. The original 
        purpose of the 1908 Payments Act was to compensate counties for 
        impacts created by the presence of public lands, and to do this 
        through revenue sharing. Congress did not foresee a time when 
        society would place a higher value on natural resources that do 
        not have an easily identifiable market value. Nonetheless, the 
        federal government should make every effort to identify what 
        these values are and compensate public lands counties 
        accordingly.
   States that receive a significant increase in funds as a 
        result of a change in the payment formula should be required to 
        establish resource advisory committees as described under Title 
        II of the Secure Rural Schools and Community Self-determination 
        Act of 2000.
          Many counties took the initiative to establish resource 
        advisory committees. This was influenced to a great degree by 
        the amount of funding they received. However, this was not true 
        in all cases. Results have been highly successful and 
        documented by several studies. The Forest Counties Payments 
        Committee previously recommended the creation of financial 
        incentives to increase the number of resource advisory 
        committees. Counties that benefit from an increase in payments 
        as a result of a change in the current payment formula should 
        be willing to maintain the natural resource focus of the Secure 
        Rural Schools Act by establishing resource advisory committees.
    The Forest Counties Payments Committee is available to discuss 
these recommendations, and provide additional analysis as determined by 
your Committee. Please do not hesitate to contact the Committee's 
Executive Director, should you need further assistance on these 
matters.
            Sincerely,
                                                 Mark Evans
                                                             Chair.

                                    

      
