[Senate Hearing 114-262]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 114-262

IMPROVING FOREST HEALTH AND SOCIOECONOMIC OPPORTUNITIES ON THE NATION'S 
                             FOREST SYSTEM

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

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                                   ON

     IMPROVING FOREST HEALTH AND SOCIOECONOMIC OPPORTUNITIES ON THE
                         NATION'S FOREST SYSTEM

                               __________

                             MARCH 24, 2015


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]





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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                    LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming               MARIA CANTWELL, Washington
JAMES E. RISCH, Idaho                RON WYDEN, Oregon
MIKE LEE, Utah                       BERNARD SANDERS, Vermont
JEFF FLAKE, Arizona                  DEBBIE STABENOW, Michigan
STEVE DAINES, Montana                AL FRANKEN, Minnesota
BILL CASSIDY, Louisiana              JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado               MARTIN HEINRICH, New Mexico
ROB PORTMAN, Ohio                    MAZIE K. HIRONO, Hawaii
JOHN HOEVEN, North Dakota            ANGUS S. KING, JR., Maine
LAMAR ALEXANDER, Tennessee           ELIZABETH WARREN, Massachusetts
SHELLEY MOORE CAPITO, West Virginia
                    Karen K. Billups, Staff Director
                Patrick J. McCormick III, Chief Counsel
   Lucy Murfitt, Senior Counsel and Natural Resources Policy Director
           Angela Becker-Dippmann, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
        Bryan Petit, Democratic Senior Professional Staff Member
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
                            C O N T E N T S

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                           OPENING STATEMENTS

                                                                   Page
Murkowski, Hon. Lisa, Chairman, and a U.S. Senator from Alaska...     1
Cantwell, Hon. Maria. Ranking Member, and a U.S. Senator from 
  Washington.....................................................     3

                               WITNESSES

Bonnie, Robert, Under Secretary for Natural Resources and the 
  Environment, U.S. Department of Agriculture....................     5
Brown, Brian, Director, Alcan Forest Products LP.................    19
Owen, Carlton, President and Chief Executive Officer, U.S. 
  Endowment for Forestry and Communities, Inc....................    45
Peck, Mark, County Commissioner, District No. One, Libby, Montana    68
Vaagen, Duane, President, Vaagen Brothers Lumber Company.........    76

          ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Bonnie, Robert:
    Opening Statement............................................     5
    Written Testimony............................................     8
    Responses to Questions for the Record........................   112
Brown, Brian:
    Opening Statement............................................    19
    Written Testimony............................................    34
    Responses to Questions for the Record........................   139
Cantwell, Hon. Maria:
    Opening Statement............................................     3
Dahlstrom, Kirk:
    Statement for the Record.....................................    20
Intertribal Timber Council:
    Statement for the Record.....................................   143
Owen, Carlton:
    Opening Statement............................................    45
    Annual Report 2014, Investing for Impact.....................    46
    Written Testimony............................................    57
    Responses to Questions for the Record........................   134
Murkowski, Hon. Lisa:
    Opening Statement............................................     1
National Association of Home Builders:
    Statement for the Record.....................................    90
Peck, Mark:
    Opening Statement............................................    68
    Written Testimony............................................    70
    Responses to Questions for the Record........................   137
Salt River Project:
    Statement for the Record.....................................   146
Vaagen, Duane:
    Opening Statement............................................    76
    Written Testimony............................................    78
    Responses to Questions for the Record........................   141
 
IMPROVING FOREST HEALTH AND SOCIOECONOMIC OPPORTUNITIES ON THE NATION'S 
                             FOREST SYSTEM

                              ----------                              


                        TUESDAY, MARCH 24, 2015

                                        U.S. Senate
                  Committee on Energy and Natural Resources
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:03 a.m. in 
Room SD-366, Dirksen Senate Office Building, Hon. Lisa 
Murkowski, Chairman of the Committee, presiding.

  OPENING STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR FROM 
                             ALASKA

    The Chairman. Good morning. We are calling to order the 
Energy Committee hearing this morning. Welcome everyone.
    We are here today to review the management of our national 
forests and what we can do together responsibly to make them 
healthy and productive for the people who enjoy them and who 
rely on them.
    Over the last 20 plus years the management of our forests, 
and I would probably say reluctantly the lack of management 
thereof, has resulted in a crisis of epic proportions for local 
communities. According to the Forest Service's own statistics 
there are 65,000,000 to 82,000,000 acres in need of some kind 
of restoration treatment, because they are at high risk from 
severe wild land fires that threaten human safety and ecosystem 
integrity.
    I noted in my hometown newspaper just over the weekend that 
with the low snow pack, low precipitation over the winter and 
probably an early spring that we are looking at an early and 
perhaps an extensive fire season. That does not make us feel 
too good up there. Mr. Bonnie, you know what I am talking 
about.
    Of the acreage that requires restoration treatment, 12-1/2 
million acres require some level of mechanical treatment to 
thin overly dense stands. Nearly 18,000,000 acres of conifer 
trees have been lost to bark beetle alone and recently the 
Forest Service designated 45,000,000 acres as insect and 
disease epidemic areas in need of treatment at the request of 
governors under the 2014 Farm Bill. A million and a half of 
those acres are in my State of Alaska.
    At the same time the annual timber cut has dropped by more 
than 80 percent resulting in the loss of tens of thousands of 
timber jobs, closed schools and local government budget 
shortfalls.
    The Secure Rural Schools program provided a temporary 
lifeline to timber dependent communities, but in these tough 
budget times paying for it is increasingly difficult and the 
prospect of simply continuing to make payments from the Federal 
Treasury is increasingly unsustainable.
    The California loggers who visited my office last week had 
it right. American forests work only if they do.
    Now there are many factors that have contributed to where 
we are with this crisis situation. The policies that govern our 
national forests have evolved over time to reflect new, 
sometimes competing, priorities of a changing society. Policy 
makers and the Forest Service have not done a very good job of 
effectively integrating the body of laws, regulations and court 
decisions so there is no clear guidance for the management of 
our national forests. Still gripping the Forest Service is what 
former Chief, Dale Bosworth described as ``analysis 
paralysis.''
    This maze of congressional mandates, Administrative 
directives, executive orders, Secretarial memos and court 
decisions is a mine field of litigation opportunity as some 
have only been too eager to exploit. Progress today has been 
redefined to be the completion of the process rather than 
implementation of a project on the ground.
    Southeast Alaska is a case in point. Its forest industry, 
once the second largest in the state, is barely hanging on. We 
have one medium size sawmill that is left.
    In 1990, a decade after passage of the Alaska Lands Act 
that cut Federal timber harvest in Southeast Alaska by more 
than half, timber accounted for 6,113 direct and indirect jobs 
or 79 percent of all manufacturing jobs in the state. By 2000, 
due to a host of restrictive factors like the 1990 Tongass 
Timber Reform Act and the Inventory Roadless Area Rule, timber 
accounted for only 1,500 manufacturing jobs. By early 2014 
there were only 547 wood and forestry jobs left in the state 
accounting for just 1.5 percent of our employment.
    Now some may welcome the demise of our forest industries. I 
certainly do not, and many in Southeast share my concern.
    We saw a net loss in population in the area between the 
year 2000 and 2010. While mining and seafood industries have 
picked up some of the economic slack, the region's economy is 
still weak. Unemployment was at 17 percent last month on Prince 
of Wales Island, the largest remaining timber producing area in 
the state.
    Now the Secretary of Agriculture is ready with, what I have 
said, could be the final nail in the coffin and that is this 
transition moving from harvesting old growth to second growth 
in 10 to 15 years. Now to its credit the Forest Service 
recognized that there is not enough young growth to support the 
current forest products industry, so it put up the Big Thorne 
Stewardship Contract to provide this bridge timber. The notice 
of intent for Big Thorne was issued in February 2011, over 4 
years ago. The sale was awarded last November. Since then this 
critical project has been tied up in litigation.
    We passed a big hurdle last Friday on Big Thorne when a 
Federal District Court judge upheld the sale and dismissed the 
claims challenging it. The lawsuit though, we know, is not 
necessarily over. The environmental activist plaintiffs could 
appeal the decision to the Ninth Circuit and seek an 
injunction. The Forest Service Tongass Supervisor eloquently 
stated the problem with that when he mentioned this to the 
Juneau Empire last November. He said, ``The plaintiffs don't 
have to win. They just have to delay. And if they delay long 
enough Viking goes out of business.'' Some would argue that has 
been the plan all along, not to cut it off but to delay enough 
that those in the industry just give up. That is not what a 
forest policy should look like, and that is why many 
communities including in Alaska believe the only solution is to 
get out from under the existing management structure and take 
control of their own destiny. Given everything we have seen it 
is sure hard to blame them. The goal of this Committee and this 
Congress will be to help them, and that is what my intention is 
this morning.
    I want to thank all of our witnesses who are here with us 
today. Some of you have traveled long distances to be with us, 
and we certainly appreciate that. We look forward to your 
comments and your perspectives this morning.
    With that, I turn to my Ranking Member, Senator Cantwell.

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

    Senator Cantwell. Thank you, Madam Chair, and thank you for 
holding this important hearing.
    Mr. Bonnie, I want to thank you for coming today to talk 
about the U.S. Forest Service and for your time appearing 
before this Committee in your role as Under Secretary.
    I also want to recognize Duane Vaagen, who is here from the 
Pacific Northwest. Mr. Vaagen lives in Colville, Washington and 
has experience partnering with the Forest Service on many of 
its restoration initiatives and for our region has been a 
leader. So thank you very much for being here today.
    I want to start by reflecting on the lawmakers of the 60's 
and 70's. These members saw the problems that were being 
created with the way the Federal Government was managing our 
forests, and they set out to fix them. They passed some of the 
most sweeping reforms in the 20th Century and we really have 
not seen anything like it since.
    In recent years I have seen a lot of attempts in various 
piecemeal fashions and what is really needed, I think, is an 
overall 21st Century Management Plan. We need a strategy that 
will improve the health of our national forests, conserve 
important areas and encourage recreation, and public input 
needs to be unambiguous in the plan.
    Most of us would agree that our forests are in pretty bad 
shape. One hundred years of fire suppression has left our 
national forests prone to catastrophic wildfires, and decades 
of clear cutting have left the overall structure of our 
national forests unbalanced. In many places habitat, for our 
threatened and endangered species, is in short supply.
    Here are a few of the sobering facts. Over the last decade 
bark beetles destroyed 32,000,000 acres of 193,000,000 acres 
managed by the Forest Service. I think that was the same 
factoid you just mentioned.
    The Chairman. Yes.
    Senator Cantwell. So we agree on that. The National 
Forest's latest disease model shows that another 37,000,000 
acres of the national forest will die from disease before 2027. 
Here is another one. Another model shows 58,000,000 acres are 
at risk of imminent burning in a catastrophic fire.
    As we talk about this we need to assess how much these 
percentages are related to the lack of management and how many 
are made more difficult by the changing climate.
    So how do we move forward? That is obviously the topic of 
today's hearing. We have serious challenges, and we need to 
address them in a shorter amount of time than the 100 years it 
took us to get to this place. We need to be more efficient in 
ways to manage and restore our forests.
    To do that the Forest Service needs to use management 
approaches that are different than the approaches of the last 
century. The previous approaches created the conditions today. 
In the past 2 years we have seen restoration efforts take hold 
when the Forest Service has collaborated with stakeholders. 
Collaboration on watershed issues has been particularly 
important in the Pacific Northwest where salmon receive and 
deserve so much attention. These collaborative efforts around 
watershed management have been very helpful.
    Now restoration projects need funding to move forward. As 
such, markets for forest products are also critical to the 
success of these projects. To expand forest restoration efforts 
we need to expand markets. We have to figure out how to 
generate moderate value products from low value wood and how to 
generate them at a scale large enough to reduce the increasing 
devastation of wildfires. The increased use of cross-laminated 
timber and wood pellets could provide us with such an 
opportunity. I will say that the Forest Service really needs to 
also use different technologies.
    One example worth highlighting just because later today we 
are having a hearing in the Commerce Committee on this, is 
drones. Multiple organizations now have built drones that can 
be used to reforest areas. Each of these drones would be able 
to plant 36,000 trees per day at 10 percent of the Forest 
Service's current cost. After the devastating wildfires like we 
had at the Carlton Complex, there is a need to obviously 
stabilize and restore these areas.
    Overall the Forest Service is working hard to restore the 
health of the forest, but trying to measure the agency's 
success only in the amount harvested is simply misguided. We 
need to look at other things as well. The Forest Service must 
keep mills nearby. I think I have already talked about the 
importance of markets, but we also need to make sure that we 
talk about stewardship contracts and their access to some of 
these smaller mills and also recreation.
    Recreation on national forests contributes $13 billion to 
our economy, about 40 percent of their total contribution to 
the economy. In conversations that will be unfolding I believe 
recreation also deserves consideration in revitalizing and 
expanding recreation on our national forests.
    We had a hearing earlier about this and had a lot of 
questions of the Forest Service on just how difficult or 
challenging it is for school organizations to get access to our 
Forest Service lands without these permits. So I think we need 
to look at that.
    We all know that wildfires are probably the biggest problem 
facing the forests every summer. That is why I look forward to 
working with Chairman Murkowski and my colleague, Senator 
Wyden, with whom I am happy to co-sponsor his legislation, to 
put resources at play to help us manage this.
    Finally I want to reiterate the importance of the public's 
input in management decisions. This has been very important. 
With any bill in this Committee I want to make sure that we 
continue to streamline the process but also receive input, and 
it must remain a major building block of how we manage our 
public lands.
    So thank you to all the witnesses for being here today. And 
thank you, Madam Chair, for this important hearing.
    The Chairman. Thank you, Senator Cantwell.
    With that we will proceed to our witnesses. I will 
introduce each of you, and then we will just go down the line.
    I would ask you to try to keep your comments to 5 minutes, 
then we will have an opportunity to present our questions to 
you. Your full testimony will be included as part of the 
record.
    We will lead off the panel with Mr. Robert Bonnie. Mr. 
Bonnie, thank you for being before the Committee today. It is 
greatly appreciated, in your capacity as Under Secretary for 
Natural Resources and the Environment there at the Department 
of Agriculture. Thank you and we appreciate your work.
    Next we have Mr. Brian Brown. Brian is the Director of 
Alcan Forest Products out of Alaska. Thank you for being here 
this morning, and thank you for traveling so far.
    Next we have Mr. Carlton Owen, the President and CEO of 
U.S. Endowment for Forestry and Communications, Incorporated. 
Good morning to you and welcome.
    We also have Mr. Mark Peck, who is the Commissioner in 
Libby, Montana. Thank you for joining us.
    Rounding out the panel we have Mr. Duane Vaagen, who is 
President of Vaagen Brothers Lumber. Thank you for joining us 
as well.
    With that, Mr. Bonnie, if you can lead off the panel and 
good morning.

    STATEMENT OF ROBERT BONNIE, UNDER SECRETARY FOR NATURAL 
 RESOURCES AND THE ENVIRONMENT, U.S. DEPARTMENT OF AGRICULTURE

    Mr. Bonnie. Madam Chairman, Ranking Member Cantwell and 
members of the Committee, I want to thank you for the 
opportunity to be with you today and to talk about the U.S. 
Forest Service efforts to increase the pace and scale of forest 
restoration and management on the national forests.
    There's a growing consensus around the need to restore and 
manage our national forests to address climate change, 
catastrophic wildfire and watershed conservation while 
providing economic opportunities for local communities. In 
national forests across the country we have moved from the 
timber wars of the past to a more collaborative approach that 
brings forest industry, local communities and conservation 
groups together to develop plans and projects that make our 
forests more resilient to a variety of threats.
    In Idaho, for example, former foes from the environmental 
community and forest industry are charting a path in the 
national forest of that state to address forest health while 
providing a sustainable timber supply to local mills. In 
Arizona later this spring the Forest Service will finalize a 
plan developed a diversity of stakeholders to restore Ponderosa 
Pine across 1,000,000 acres and four national forests. In the 
Malheur National Forest in Oregon environmentalists and the 
timber industry are working together on a 10-year stewardship 
contract developed collaboratively to restore the Blue 
Mountains, and on the Tongass National Forest in Alaska the 
Forest Service is working with the Tongass Advisory Committee 
and other stakeholders to develop a transition plan that will 
maintain forest industry while moving to second growth timber.
    The Forest Service is developing new approaches and using 
new authorities to bolster projects like these across the 
National Forest system. Let me give you some examples.
    Under the Collaborative Forest Landscape Restoration 
Program the Forest Service has made significant progress in 
reducing wildfire threats while exceeding the program's 5-year 
timber target by 25 percent.
    The agency is using new approaches to improve NEPA. On the 
Rim Fire in California we invested in science and collaboration 
to produce a final environmental impact statement in less than 
a year.
    Under the new Farm Bill, last summer we announced 
46,000,000 acres of lands designated as impacted by insects and 
disease where collaboratively developed projects will have 
streamlined requirements. And we're investing in markets for 
woody biomass, solid wood products and other forest products to 
bolster the forest industry.
    To be sure these collaborative approaches are not a 
panacea. They require patience and commitment. But this 
approach, working with local stakeholders, using the best 
science and working across large landscapes is paying 
dividends. The agency is able to treat more acres and as a 
result since 2009 we have increased the amount of timber sold 
from the national forests. Ultimately however, the ability of 
the agency to further increase the pace and scale of 
restoration and management is not a matter of will, it is a 
matter of capacity.
    To be blunt, the way the Forest Service budgets for fire 
suppression is crippling the agency. Our fire seasons are 78 
days longer than they were three decades ago. Fires are larger, 
more severe and more expensive. In 1995 the agency spent 16 
percent of its budget on fire fighting. Today the figure 
approaches half of our annual budget.
    Since 1998 staff on the National Forest System has been 
reduced by 39 percent. Further, in most years the Forest 
Service is forced to transfer dollars from the non-fire budget 
to pay for fire. If there's one action Congress could take to 
further forest restoration and management on the national 
forests it's to change the way we budget for fire.
    The Wildfire Disaster Funding Act introduced by Senators 
Crapo and Wyden will end fire transfers. Importantly that 
legislation which is mirrored by a proposal in President 
Obama's budget would allow the agency to increase the number of 
watersheds and acres treated to 2.9 million acres while 
increasing our timber production to 3.2 billion board feet.
    I want to conclude by noting the incredible commitment of 
Forest Service staff to the mission of the agency. Despite the 
budgetary challenges, despite fire transfers, despite having 
fewer people on the national forests, we're getting more done 
through gains and efficiency, innovation and hard work. Working 
with Congress we look forward to furthering the work to restore 
and manage our national forests.
    Thank you very much.
    [The prepared statement of Mr. Bonnie follows:]
    
    
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    The Chairman. Thank you, Mr. Bonnie.
    Mr. Brown, welcome.

  STATEMENT OF BRIAN BROWN, DIRECTOR, ALCAN FOREST PRODUCTS LP

    Mr. Brown. Thank you.
    Madam Chairman, Ranking Member Cantwell, members of the 
Committee, thank you for the opportunity to testify today.
    My name is Brian Brown. I'm a director of Alcan Forest 
Products. We're a timber sale operator that does business in 
Alaska, Washington State and British Columbia (BC). We purchase 
timber sales from Federal, State, and private land in all three 
areas and harvest these sales for production by mill operators 
in these and other markets. We have employees in each of these 
three areas.
    As a long time member of the Alaska Forest Association and 
part owner of Alcan Forest Products I am here to ask for this 
Committee's help. Our company's operations support over 200 
jobs in Alaska. We purchase our timber from the state, the 
University of Alaska, Mental Health Trust as well as the U.S. 
Forest Service.
    However, the Federal Government controls nearly 95 percent 
of the land in the region and a small amount of private, state 
and municipal lands are inadequate to sustain our operation in 
the future. Much of the timber we harvest on Federal lands is 
sold to local manufacturers. For example, over the past couple 
of years we have supplied virtually 100 percent of the saw logs 
used in the Wrangell sawmill and also to the local Ketchikan 
mill which provides pellets to the Federal building in 
Ketchikan as well as a large percentage of Viking's outside log 
purchases.
    But all of our Federal timber sales will be harvested this 
year, and the Forest Service's latest 5-year schedule further 
reduces the already inadequate timber supply in our region. 
There is a small, very small, amount of young growth timber 
that the Forest Service indicates it will sell in the future, 
but most of that timber is too small and scattered to be 
economically viable for harvesting operations. In another 30 
years there will be much larger acreages of young growth 
potentially available but until then the young growth cannot 
replace the mature timber stands that we need to remain 
profitable.
    Alcan does about $80 million worth of business including 
payroll expenses in Washington State, including Washington 
State resident employees located in Aberdeen and Port Angeles. 
We also operate a large business segment now in British 
Columbia. Unfortunately British Columbia is the only location 
near Southeast Alaska or Washington State that provides a 
business environment that encourages major investments in the 
forest products industry. Federal timber policy increasingly 
forces us to look to BC for our operational and investment 
future.
    At this point I would like to submit for the record 
testimony from my fellow AFA Board Member, Kirk Dahlstrom.
    The Chairman. It will be included as part of the record.
    [The information referred to follows:]
    
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    Mr. Brown. Thank you. He's the operator of Viking's 
sawmill. I am prepared to answer questions on his testimony 
also.
    Most of the local communities in our region have declined 
commensurate with the 90 percent decline in Federal timber 
sales over the past 20 years. Government jobs and subsidized 
make work projects have provided the minimal amount of economy 
for the region but it's a false economy and it's not 
sustainable, particularly in light of the State of Alaska's 
difficult budget situation.
    For instance, fish populations have doubled in the most 
heavily harvested watersheds in the region, and all of the 
waters meet the State and Federal water quality standards. Yet 
the Forest Service is spending millions of dollars performing 
stream restoration projects in these areas. These projects 
might be nice gestures but they will likely not result in 
additional fish or more clean water.
    The projects rely on Federal expenditures, and they are not 
sustainable without more Federal subsidies because these 
project investments do not permit any investment in 
infrastructure. A state forest managed under the State Forest 
Practice Act, on the other hand, can provide thousands of jobs 
and millions of dollars in net revenue.
    All of this can be accomplished without impacting fish and 
wildlife populations or subsistence or recreation or any other 
beneficial uses of the forests. That is why our Governor, Bill 
Walker, has endorsed the creation of this state forest. He 
recently confirmed this support in two meetings. He had one in 
Juneau and one in Ketchikan. He supports the creation of this 
state forest and strongly supports the idea of value added 
products such as our timber industry can and will provide if we 
just get a decent supply of timber.
    Attached to my testimony are two documents that I ask to be 
part of the record. The first is a history of the Alaska timber 
industry. The second is an Alaska State Forest Concept paper 
which describes the state forest and which AFA urges this 
Committee to create through Federal legislation.
    The Chairman. Those will also be included as part of the 
record.
    Mr. Brown. Thank you.
    If a state forest is not established, the surviving timber 
industry will perish and this region will become another 
Appalachia doomed to endless poverty and families dependent 
upon government jobs or welfare.
    Thank you for the opportunity to address you.
    [The prepared statement of Mr. Brown follows:]
    
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    The Chairman. Thank you, Mr. Brown.
    As I mentioned, all of the reports as well as Mr. 
Dahlstrom's testimony, will be included in full as part of the 
record.
    Mr. Owen, welcome to the Committee.

   STATEMENT OF CARLTON OWEN, PRESIDENT AND CHIEF EXECUTIVE 
   OFFICER, U.S. ENDOWMENT FOR FORESTRY AND COMMUNITIES, INC.

    Mr. Owen. Thank you, Chairman Murkowski and members of the 
Committee. It's my privilege to be with you today.
    I'm a forester and a wildlife biologist that next year will 
reach 40 years in the profession. Half of that has been in the 
forest products industry and half working with non-profits in 
the forest sector. It's been my privilege for the last eight 
and a half years to head the U.S. Endowment for Forestry and 
Communities.
    We're a little bit of a rare critter. We came out of the 
trade settlement between U.S. and Canada over softwood lumber 
in 2006. We were given a one time, $200 million endowment with 
two purposes. One to promote healthy working forests in the 
U.S., and second to promote family wage jobs in forest rich 
communities.
    We go about that in a number of ways but primarily in 
trying to work with either those in the public or the private 
sector that are willing to look for systemic transformative and 
sustainable ways to address the issues of forest health and 
productivity and jobs.
    I ask that you accept our annual report that we provided 
with our testimony as part of the record, Chairman.
    The Chairman. It will be included as part of the record.
    [The information referred to follows:]
    
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
   
    
    Mr. Owen. Thank you.
    I work as forest centric where we focus on private forests, 
the issue that's a number one concern is conversion. Forest 
Service predicts that land area between the size of West 
Virginia and Wisconsin will be lost to conversion over the next 
40 years. One of the issues that's most important to keep those 
forests as forests or vibrant markets.
    When we talk about the Federal lands we have a very 
different set of issues. We're not worried about conversion. 
We're worried about keeping those forests healthy and 
productive, but again, markets are a critical part of making 
that so.
    As author Eric Rutkow in his book, ``American Canopy,'' 
notes, ``nowhere else has a culture been so intimately 
associated with wood like that in the U.S.''
    We like wood. We build our homes from it. We use paper 
products. Look around this room, wood ordains every wall and 
the very desk we sit at today.
    Remarkably over two centuries later 320,000,000 Americans, 
we have about 70 percent of the forest estate that we had when 
we originally colonized this country. One third of our nation 
is covered in forest. Public forest represents about four of 
ten of those acres. And they're important not only to future 
generations for the ecological values they promote, but for 
also economic opportunity in rural communities and as an 
example to everyday Americans that we can, through forestry 
indeed, have our cake and eat it too, with forest management.
    The endowment does not advocate a return to timber 
management as an overriding use of the public forest, but we do 
believe that timber management has an appropriate role on the 
public lands. In fact, without management keeping those lands 
intact it is nearly impossible. As a dear friend of mine, Neil 
Sampson, former head of American Forest, says, ``Our 50-year 
love affair with the concept of wilderness is running headlong 
into the reality of climate change and the fact that we can't 
preserve dynamic ecosystems.''
    We've talked about the planning processes over the last 
couple of speakers, and we would agree that planning processes 
are one of the challenges we have to find ways to bring reason 
to them and shorten them to the speed of need. Forests are 
dying much more rapidly than we can move. Collaborative are one 
of the best efforts that have been put in place to achieve 
that, and I think one of the reasons has already been mentioned 
that they involve local communities and local residents in 
decision-making.
    As it relates to NEPA we're encouraged by some of the 
things that the agency is doing to address NEPA, but the bottom 
line, again, we have to find ways to shorten the process while 
still founding it on science to address the needs of those 
forests.
    Stewardship contracting has been one of the bright spots. 
And if we look for one negative in there it's probably that the 
limit of 10 years is too short to make the kind of economic 
investments in the private sector to take those risks. So we 
would encourage either extending that period of time or at 
least allowing extensions without having to restart the 
process.
    On watersheds and water, we think it is the most important 
product that flows from our forests. Two out of three Americans 
get their drinking water, every day, from a forest. One out of 
two get it from a public forest.
    We can't wait for examples like Denver where a catastrophic 
wildfire on public lands sends $150 million bill downstream to 
the utility and to the citizens of that community. We've got to 
find new ways to work together to address that.
    The endowment is working with the Forest Service on two 
initiatives to address the challenges that face public lands, 
and that's primarily around low value, small diameter, dead and 
dying wood. One is a product of the future. Cellulosic 
nanotechnology, products that are based on green building 
materials, products of the 21st century that can use low value 
wood to make high value products. The second is torrefaction, 
essentially roasting low value wood as a carbon substitute.
    And let me end real quickly by saying we also have to 
redirect our R and D initiative in the future to have a more 
collaborative, public/private partnership to address the needs 
of the forests.
    Thank you, Madam Chairman.
    [The prepared statement of Mr. Owen follows:]
    
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    The Chairman. Thank you, Mr. Owen.
    Mr. Peck, good morning.

STATEMENT OF MARK PECK, COMMISSIONER, DISTRICT NO. ONE, LIBBY, 
                            MONTANA

    Mr. Peck. Madam Chair Murkowski and Ranking Member 
Cantwell, I want to thank you for the honor and opportunity to 
testify here today.
    The 2.2 million acre Kootenai National Forest constitutes 
78 percent of Lincoln County's land base and has served as a 
cornerstone of our rich cultural and economic history and holds 
the key to our future prosperity. The forest is the most 
productive in the state growing an estimated 400,000,000 board 
feet of timber annually and is home to the 96,000 acre Cabinet 
Mountain Wilderness Area.
    Raised in Lincoln County I lived an ideal childhood raised 
in a proud logging family, hiking and fishing the lakes of the 
Cabinet Wilderness Area. I learned to love them both. After a 
20-year career in the Air Force I returned home to a community 
dramatically different from the one of my childhood.
    Lincoln County is in artificial and unnecessary war between 
economic and environmental philosophies. The conflict has 
wreaked havoc on a once vibrant community and a once vibrant 
forest landscape.
    When I graduated in 1977 Libby High School had more than 
700 students. We now have approximately 300, and we've lost 
over 1,000 students from all grades since 1998.
    We used to be one of the wealthiest counties in the state. 
We're now one of the poorest. We lead the state in 
unemployment. There are no longer major mills in Lincoln 
County, and the logging industry has dwindled to just a handful 
of small operators. The number of Forest Service personnel has 
dropped from over 500 to just over 300. Our county and school 
income from forestry seats has fallen from $4.5 million in 1994 
to just over $300,000 in 2013.
    We have severe forest health issues, increased threat of 
severe wildfire, marginal, if any, progress recovering 
threatened and endangered species and a devastated local 
economy. We do have a new motto in the county. It's poverty 
with a view.
    Gifford Pinchot stated, ``The planned and orderly 
development and conservation of our natural resources is the 
first duty of the United States.'' Orderly development and 
conservation, not development or conservation. We must move 
past the tired old arguments of timber verses wilderness. The 
two are not mutually exclusive. They are both essential tools 
in maintaining the social, economic and ecological balance we 
all seek.
    It is agreed that the grizzly bear needs an extensive open 
space with limited influence from man, but the interagency 
grizzly bear guidelines also tell us that through proper timber 
harvest and I quote, ``Grizzly habitat can probably be 
increased or enhanced by creating openings producing high 
quality grizzly food, facilitating greater grizzly use in 
forest habitat where normal grizzly use appears light.'' We 
must begin to manage the forest for the forest, habitat for the 
habitat and the social, economic and ecological balance we all 
desire will be more achievable.
    Agencies, State, and local governments in concert with 
local collaborative groups are creating local balanced 
solutions. Hours and years of collaboration have created on the 
ground solutions but have no avenues of implementation. We must 
empower local collaborative management.
    Special recommendations for consideration to be immediate 
priority full funding of PILT and funding of Secure and Rural 
Schools until harvest levels increase to meet established 
forest plan allowable sale quantity levels.
    Establish a professional tiger team to develop a 
revolutionary plan for managing Federal lands into the next 
century. Solve the fire funding drain on Forest Service 
operational budgets. Authorize and fund innovative pilot 
projects. Modify the Equal Access to Justice Act to balance 
between an individual's right to due process and protection 
against frivolous or excessive use in Federal land management 
cases. Staff local Forest Service units to meet established 
Forest Service plan objectives. Modify the Endangered Species 
Act to be more inclusive. Move away from single species 
management and provide more emphasis on socioeconomic concerns.
    Once again, I thank you for the opportunity to share my 
testimony and look forward to your questions.
    [The prepared statement of Mr. Peck follows:]
    
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    The Chairman. Thank you, Mr. Peck.
    Mr. Vaagen, welcome.

 STATEMENT OF DUANE VAAGEN, PRESIDENT, VAAGEN BROTHERS LUMBER 
                            COMPANY

    Mr. Vaagen. Good morning, Madam Chairwoman, Ranking Member 
Cantwell, members of the Committee.
    I'm Duane Vaagen, President of Vaagen Brothers Lumber, a 
60-year old, family-owned company based in Colville, 
Washington. I'm here today to discuss the urgent need to 
restore responsible, sustainable management to our Federal 
forests. We have survived over the years by focusing on 
technology, good forest management and a commitment to healthy 
forests and communities. Our company has also invested into 
collaborative process long before Federal programs were 
established to encourage it.
    We own and operate two small log mills in North East 
Washington, one at Colville, one at Usk. The Usk is down right 
now for the last 4 weeks because of lack of logs, and we only 
have enough logs to run it at 50 percent per year.
    We employ over 225 people and contribute $125 million to 
the local economy. Until last fall we operated a small log mill 
in Eager, Arizona when a lack of timber from the Forest Service 
forced us to shut it down.
    This Committee is well aware of the crisis facing the 
health of our Federal forests. The Carlton Complex in 
Washington last summer gave us a glimpse of this, burning 
236,000 acres, the largest fire in our state's history. 
Washington State's Commissioner of Public Lands, Dr. Peter 
Goldmark, recently summed up the situation in our state when he 
said, ``Millions of acres of Federal forest land have become an 
all you can eat buffet for forest killing insects.''
    Nationwide the Forest Service says between 60,000,000 and 
80,000,000 acres are at particular risk. Federal forests across 
the country, including Colville, are overstocked and in need of 
management. There is great agreement on the need to expand 
management to more acres. Unfortunately current policies in 
place will not allow that expansion to happen.
    Our experience on the Colville is unique. Due to 
collaboration we haven't seen litigation on our forests and 
have had only one appeal in the last decade. There's broad 
support to increase acres treated and timber outputs.
    Our industry infrastructure makes it possible to treat the 
forest and to generate significant revenue in doing so. Despite 
this the Colville National Forest cannot meet the treatment 
levels supported by the collaborative. I'm often asked, how 
could this be?
    While we haven't seen lawsuits on the Colville, our forest 
still operates under a significant NEPA compliance burden 
imposed by Congress and made excessively complicated by the 
courts which sap resources needed to maintain healthy, vibrant 
forests including forests like mine where collaboration is 
alive and well and litigation is not. Collaborative efforts are 
often still litigated by those who refuse to participate. They 
tie up and delay forest management projects and suffer no 
consequences while those who work in good faith see their time 
and energy squandered.
    The Forest Service has several tools they can use to 
address this problem including further experiments with third 
party NEPA and using retained receipts to fund further project 
work. We're close to implementing the first of its kind A to Z 
project to demonstrate substantial savings in complying with 
NEPA, but this approach will not work everywhere and it is up 
to Congress to take action to reform this broken system.
    Congress must address this complex NEPA process and seek 
innovative solutions including streamlining NEPA analysis and 
ESA consultation for projects on some productive timber land 
and for projects proposed by local collaboratives.
    Next, use retained receipts through stewardship and timber 
sale contracts to fund NEPA analysis and planning for future 
projects.
    Congress must put reasonable limits on destructive 
litigation including requiring those who sue to post a bond to 
discourage frivolous litigation. Use baseball style binding 
arbitration as an alternative to litigation.
    Congress can help clarify where management can and can't 
take place on National Forests focusing on the small portion of 
the system which is supposed to be available for timber 
harvest.
    The industry is poised to help address the significant 
challenges facing the National Forest System and to ramp up the 
number of acres treated to the point where we would be making 
progress in reducing the threats of future fires and insect 
infestations. By rapidly restoring burned acres aggressively, 
the need to protect watersheds and offering valuable timber 
where it can be done we can both help our forests and our rural 
communities. But the forest needs Congress to provide the road 
map and the direction to use it.
    We stand ready to work with you to define the future.
    Thank you.
    [The prepared statement of Mr. Vaagen follows:]
    
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    The Chairman. Thank you, Mr. Vaagen.
    Thank you all, gentlemen, for your comments this morning as 
we discuss the future of our forests around the country, an 
amazing renewable resource that, I think, we would all agree 
requires a level of management. How we do that appropriately 
and effectively with good stewardship, not only of the forest, 
but of taxpayer dollars as we address that, is a challenge.
    We have heard in this Committee and in other committees 
from Chief Tidwell the comment that what we really have to get 
our arms around is the fire borrowing issue so that we change 
the way that we budget for fire. I absolutely concur, but I 
also recognize that there are other issues out there that are 
at play. If we were to fix the fire borrowing issue today, it 
still leaves us with some of the policies that are locking us 
in and that is what I want to talk to you about this morning.
    First, Mr. Bonnie, when we talk about the Tongass 
transition going from old growth to young growth, that has 
always been part of the plan for the Tongass. But the 
disagreement has really been on the timeframe. The Secretary's 
memorandum from 2013 calls for transition to take place between 
10 and 15 years, and most within the industry, certainly all 
within the industry in Alaska, say it is going to take much 
longer than that.
    Regardless of arguing over the time period, what you have 
in play with this transition is management is still subject to 
the existing laws, the existing regs, that are generally 
applicable with respect to our timber harvest. The Secretary's 
memorandum, so far as I know, does not propose making any 
changes that currently apply.
    There is no departure from the National Forest Management 
Plan that requires that the timber be harvested on sustained 
yield. There is no modification from the existing Tongass Land 
Management Plans, the beached setback rule, no departure from 
the stream buffer rules that are set out in the Tongass Timber 
Reform Act. So how do we do this?
    Unless there is some willingness to perhaps look to 
departing from some of these statutes or regulations, how do we 
get to what you are discussing, Mr. Bonnie, which is this 
transition to second growth? Because my assessment and that of 
many who have been studying this for a long time is that you 
cannot get to where you are seeking to with the volume of 
second growth given these statutory and regulatory 
requirements.
    Mr. Bonnie. So, thank you, Madam Chairman.
    I think, you know, we've got some flexibility in the 
Sealaska legislation for culmination to meet annual increment 
that will allow us to get into stands earlier. We're obviously 
looking right now at a plan amendment on the Tongass Land 
Management Plan working closely with the Tongass Advisory 
Committee there. We think, we hope, there will be good 
recommendations that come out of there that will look at the 
land base where we can get to second growth timber.
    So I think we're confident that both looking at the land 
management plan, working through--looking at lower rotation 
ages so we can get into younger timber earlier will be 
important elements.
    In addition to that we want to look at ways that we can 
provide assistance to the local industries. So are there 
grants, programs or other things? We've already had an initial 
conversation I think with your staff and need to followup about 
ways that we can provide assistance there for the transition.
    I think the, you know, old growth timber continues to be 
controversial there. The promise of a transition is both to 
hold on to the industry and to get to a place where, not only 
we can provide a sustainable timber base, but perhaps we can 
actually put more on the market as--because those sales will be 
easier to move.
    The Chairman. Well, you are using the same buzzwords that 
we have heard from the Chief about flexibility and about 
assistance, but you have also heard my criticism that we have 
not seen that assistance. We have not seen the retooling that 
has been promised. The flexibility has been in word only. You 
mention the CMAI waiver, and I am very, very familiar with 
that, of course, because we worked with Forest Service on that 
in the Sealaska legislation.
    What we have got with the Tongass, and I am not telling you 
anything that you do not know, but we harvested there in the 
early 60's and the harvest was along the beach and along the 
streams. Harvest of the oldest of the young growth timber 
cannot be permitted because of the restrictions under the 
Tongass Timber Reform Act and the amended restrictions. So the 
oldest of the young growth is not going to be available for 
harvest, notwithstanding the departure from CMAI.
    So my time is over on this, but I want to come back and 
have a further discussion because I think sometimes it is real 
easy to throw some terminology around, make it sound like help 
is on the way. But for people like Mr. Brown, for people like 
Kirk Dahlstrom and his testimony is really quite compelling 
when he says, look, I've got no other available sources of 
timber supply. We need to make sure that it is more than just 
words that give assurance, that is there is flexibility and 
that there is some workability because right now I do not have 
it and I do not think that the operators on the ground have it.
    I will go to our Ranking Member.
    Senator Cantwell. Thank you, Madam Chair.
    I have a bunch of questions, but I am going to start with 
you, Mr. Vaagen, about well, maybe I will just throw it all out 
there, and people can answer it. What about predictability 
because obviously you do a lot restoration work. What else does 
the Forest Service need to give you so that you can have more 
predictability? Obviously you had some attempts in Arizona and 
then the Forest Service did not bid, so you could not do that 
work. So what do we have to do about predictability?
    Mr. Owen, you mentioned the issues of new materials and 
pellets. What else do we need to do to help that value chain 
grow? Is that something we need to do or what? How do we help 
that?
    Mr. Bonnie, Mr. Brown mentioned something about fish and 
water saying we did not get results, but I am pretty sure that 
we have had pretty good results in the Northwest from our 
forest plan on improving water quality. That has been pretty 
critical. So if you could comment on that?
    Mr. Vaagen. Okay. Thank you, Senator.
    The predictability is always important because you have an 
asset and you have your employees and the economic of all that 
to put into play.
    We did go to Arizona, very good learning curve, very 
expensive learning curve. We were enticed to go down there and 
visit a White Mountain stewardship which is the largest 
stewardship at its time ended August 10th last year. When that 
timber dried up, the mill dried up. The good news, somewhat on 
wheels, they were moving it to Snowflake. We'd get another run 
at it, another chance.
    I can tell you 10 years is not enough to move a mill or 
build a mill. So without mills there's no markets, and it's 
hard to build new mills.
    I think what's needed is that predictability for all the 
current mills because there's somewhere we have got to connect 
the dots that we have these tools. We have the forests that 
need this 60,000,000-80,000,000 acres of treatment. We're 
counting other things of treatment when we really need to 
process it to its highest and best value for the economical 
gain, and we hate to see it all burn up.
    So, predictability is very important. I like the idea of a 
21st Century Plan that would include that. I am an advocate of 
collaboration, but it has to be adequate collaboration, you 
know, you've got to have some side boards on it so it works. 
And it can be very successful. So predictability is what's 
important, and we don't even have that on our current mills. We 
would like to help others do more.
    Our trees are dying in the Colville National Forest at an 
alarming rate. I didn't think they'd come. Colorado and Wyoming 
and Montana had the brunt of it, but BC taught us a lesson but 
we didn't get the lesson.
    Senator Cantwell. Thank you.
    Thank you, Mr. Owen.
    Mr. Owen. Senator Cantwell, on the issue of new products 
and markets there's sort of a two-phased approach.
    Number one, we've got to rebuild our R and D infrastructure 
in this country. We're the country that invented innovation. In 
the forest products sector we're spending about one half of one 
percent of sales, and most data says that if you're not 
spending one to two percent in R and D you're going backward. 
And that's across the entire sector. That's public and private 
investment together. We need a new model. Our neighbors to the 
north are spending six times as much on products of the future 
than we are.
    The Forest Service R and D budget has continued to shrink. 
It also needs to be retargeted in a way that is more oriented 
toward products and the tools to get the wood out as we've seen 
the declines across the agency.
    They've been, intended to be, not targeted to take out the 
fat or to reorient to a new way. We think there has to be a new 
public/private partnership, and that means the private sector 
has to put in and then has to help oversee and direct that 
research to make sure it meets their needs and objectives. 
That's point one.
    Point two is we have to have new markets that currently are 
not available. We've lost over 500,000 jobs in the forest 
sector since 1990. Those aren't going to come back. 
Collaboratives aren't going to produce those kinds of jobs. We 
need new products. We think nanotechnology which is predicted 
to yield a $200 billion market in wood alone, $2 trillion 
market worldwide, but if we use that low value wood as an 
opportunity. One of the things we're doing is working with the 
Forest Service and saying R and D in its traditional format or 
just research for research purposes isn't enough.
    At the endowment we come with a real sense of urgency. And 
so we put together a collaborative with the agency and said in 
2 years we're going to either push this over the curb and say 
there is a viable market there using woody cellulose or there's 
not.
    At the same time that's looking at high value products and 
high wage jobs of the future. We're looking at the mass amount 
of wood and the low value of opportunities, and we believe one 
of the best options is to create a domestic green energy that 
would use torrefaction which is roasted wood. You do it in the 
forest, and then you can ship it out. You can't ship green wood 
long distances due to the 50 percent water.
    Those types of things need to have an urgency and a 
directive, and right now we're putting in about $6 million 
collectively. That's pennies compared to the opportunity.
    Senator Cantwell. Thank you.
    I see my time has expired. I will just have to get a yes or 
no out of you on the forest plan and watershed.
    Yes, it's been effective?
    Mr. Bonnie. Absolutely, absolutely critical. And yes, we've 
been effective in a number of areas.
    Senator Cantwell. Thank you.
    The Chairman. Thank you, Senator Cantwell.
    Senator Daines?
    Senator Daines. Thank you, Madam Chair.
    I ask unanimous consent to submit a letter for the record 
from the National Association of Home Builders indicating their 
support for an increase in the supply of Federal timber 
products.
    The Chairman. It will be accepted.
    Senator Daines. Thank you.
    [The information referred to follows:]
    
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    Senator Daines. Commissioner Peck, it is great to have you 
here from Montana. Thanks for making the trip out here.
    I was struck by your testimony as we look at the sharp drop 
in timber harvests in Montana. Your testimony powerfully 
captures the unacceptable situation we have in Montana and 
other parts of our country. As you mentioned your home in 
Libby, home of the Libby Loggers, I understand we have some 
students just behind you today from Libby. Welcome to all of 
you as well.
    In many ways this hearing is about their future we are 
talking about so that they can raise their families and stay in 
Lincoln County if they want to.
    I heard a very troubling statement in one of our 
roundtables recently up near Lincoln County when somebody said 
perhaps the Libby Loggers should be renamed the Libby Lawyers 
because there no longer is a large active sawmill in Libby. The 
economy there, your unemployment rate, is completely 
unacceptable.
    Commissioner Peck, like you I believe it is important to 
incentivize and protect collaborative driven projects, but it 
seems clear to me that current laws and policies do not 
adequately do this. Do you agree the Forest Service needs 
better direction and latitude to ensure that timber projects in 
Montana and elsewhere are implemented more quickly?
    Mr. Peck. I would agree with that.
    Senator Daines. How would you characterize the level of 
timber harvest today compared to what is both sustainable and 
healthy for Montana's National Forest?
    Mr. Peck. If I look back historically as a young man 
growing up, the cut volumes on the Kootenai were averaging over 
100,000,000 board feet a year. The past few years we've been 
averaging between 30,000,000 to 50,000,000 feet depending on 
different circumstances. As I stated in my opening testimony, 
the Kootenai on the average grows an estimated 400,000,000 
board feet a year. It's a very productive forest. You can't 
keep trees from growing there.
    Having said that, there's no question that the cuts that 
we've been seeing are, in my opinion, not only as a County 
Commissioner but as a former Montana Department of Natural 
Resources timber manager, far below what we need to see from a 
forest health standpoint and definitely from an economic 
standpoint.
    Senator Daines. Just a few months ago a notice of intent to 
sue was filed against the East Reservoir Project in the 
Kootenai. It was a collaborative driven project that took years 
to go through the NEPA process and yet now faces an uncertain 
future. We have got to stop these obstructions, certainly, in 
the process.
    You mentioned that for several years you worked alongside 
the Montana Department of Natural Resource and Conservation. As 
you know the Montana State law requires that DNRC meet an 
annual timber sale requirement which now exceeds 57,000,000 
board feet.
    There is an old saying in business, if you aim at nothing, 
you'll hit it. I think we see that increasingly right now how 
the forests are being managed.
    What, in your view, is the value of having a clear timber 
target in statute that must be met?
    Mr. Peck. You know from our standpoint on the state lands 
it was absolutely critical. It provides not only motivation, 
but predictability and accountability, not only from a 
sustained yield and health of the forest and habitat 
standpoint, but it brings predictability to industry as well.
    So to me, without it, it would be like playing football 
without keeping score. Eventually you get tired of getting beat 
up so I think it's critical. It was very effective in our 
operations at the state level.
    Senator Daines. Alright. Thank you, Commissioner Peck.
    Secretary Bonnie, the Forest Service Chief Tom Tidwell was 
recently here on the Hill and acknowledged before Congress the 
negative impacts associated with litigation. He also stated 
that the goal of nearly tripling harvests in Montana's National 
Forest is very reasonable. We used to be at 600,000,000 board 
feet on our national forests across Montana. Last year we were 
at 113,000,000.
    I appreciate the work of the Forest Service and what they 
do in Montana, and I want to work with you in finding solutions 
that will bring about this outcome in the near future. In your 
testimony you highlight the steps the Forest Service has taken 
to increase and accelerate forest restoration. While these 
might be positive steps, Montanans can tell you with certainty 
that they are really not nearly enough.
    I would like to quickly run through some possible reforms 
and ask that you provide just a quick yes or no as to whether 
USDA supports them or would consider supporting them as we look 
to move forward here with some reforms.
    First, a simplifying environmental review for all timber 
sales that are the result of a collaborative process?
    Mr. Bonnie. I think we'd welcome a conversation on that.
    Senator Daines. Is that a yes or a no?
    Mr. Bonnie. Well, it obviously depends on what it is, but 
that's been part of the type of approach we've used. We think 
collaborative approaches are good. We would welcome the 
conversation.
    Senator Daines. You support collaboratives?
    Mr. Bonnie. Absolutely.
    Senator Daines. Alright. Establishing a categorical 
exclusion for all collaborative and timber sales that is 
comparable over the size of the new 3,000-acre CE projects 
combating insect infestation?
    Mr. Bonnie. So I think we're very interested in ramping up 
the insect and disease CEs significantly, and if there are 
comparable approaches we're interested.
    Senator Daines. So, the 3,000-acre CE is something that we 
could do?
    Mr. Bonnie. Absolutely. That's what's in the Farm Bill, and 
we're looking forward to putting that on the ground.
    Senator Daines. Simplify----
    The Chairman. The Senator's time has expired.
    Senator Daines. Okay, I will come back. We will talk some 
more.
    Mr. Bonnie. Please.
    Senator Daines. Thank you.
    The Chairman. Senator Franken?
    Senator Franken. Thank you, Madam Chair.
    The forest product industry is the fifth largest 
manufacturing sector in Minnesota. It employs about 30,000 
people statewide, and it is particularly vulnerable to the 
effects of climate change.
    For example, Aspen, Birch and Balsam Fir trees are all 
economically important timber species and all are expected to 
decline significantly due to rising temperatures. In order for 
the forest products industry to continue to thrive in Minnesota 
and elsewhere we have to ensure that appropriate strategies are 
in place to mitigate the loss of valuable tree species.
    This question is either for Mr. Owen or Mr. Bonnie. Can you 
talk about what the Forest Service is doing to better 
understand and to adapt to the effects of climate change, 
specifically the loss of economically important tree species?
    Mr. Bonnie. So on the research side this is an area that 
our research staff are looking at not only the loss but the 
type of management activities that we can do to retain forest 
resiliency including those species. We're also trying to build 
this into the work we're doing on the ground. Whether it's 
forest restoration to deal with insect and diseases, whether 
it's forest restoration dealing with catastrophic wildfire, 
there's a climate overlay on a lot of that work and so 
increasing the Forest Service's understanding of that, but then 
also being able to monitor the work as it's being done is going 
to be critically important going forward.
    Mr. Owen. Senator, the U.S. Endowment and the Forest 
Service have been working for a little over five years on what 
we call the Forest Health Initiative, and it's looking at 
modern sites to deal with 21st Century problems.
    Trees can't move at the speed of climate change so we need 
to address some of the challenges that are occurring almost 
monthly. We lost the American Chestnut and we lost the American 
Elm due to blights, but that was over a period of lifetimes. 
We're now losing species literally as we watch it happen.
    We believe that that collaborative work we're doing and it 
involves some of the major environmental groups in the country 
of saying, can we not use modern scientific tools to help 
address the changes that are occurring in the forest genetics 
and genetic modification? We have shown that instead of taking 
30 years to deal with a forest health challenge we can do it in 
3 years using modern science.
    We're at the place now of having proven the scientific 
aspects and we're dealing with the regulatory and the social 
aspects of that which are probably far more challenging than 
the science challenges are.
    So again, targeting that work at the speed of need I think 
is one of the greatest things. Scientists, and I'm a scientist 
with a little s, I don't practice science in the lab all day 
long. But often there's not that sense of urgency to address a 
specific problem. We want to keep studying and peeling back the 
onion. We need to look at what's good enough rather than 
looking for the perfect.
    One of the things we're going to have to see is some 
recognition and flexibility in APHIS, FDA and EPA that if we're 
going to address forest health challenges we have to do them in 
ways that we'd never anticipated before under legislation.
    Senator Franken. I got it. Thank you.
    Let me talk about the climate change and wildfires. We 
cannot any longer deny the devastating impacts that the climate 
change is having on the intensity and length of the season and 
the size. Fighting wildfires is costing a lot of money, about 
half of the Forest Service's total budget. All that spending 
means that preventive measures such as removing hazardous fuels 
is receiving less funding.
    So I am very interested in finding new markets for forest 
waste in order to help pay for the removal of hazardous fuels 
and simultaneously bring economic benefit to plants that can 
burn the waste.
    Mr. Bonnie, what are your recommendations to Congress for 
improving the viability of woody biomass markets, particularly 
in addressing this kind of dual use of removing hazardous waste 
which is to make the wildfire less likely and to use this for 
distributive energy and that sort of thing?
    Mr. Bonnie. So I think it's vital. If we're going to 
restore our forests, it's vital that we have a vibrant 
industry. And it's vital that we have markets, not only for 
solid wood products but also for smaller diameter trees and so 
biomass becomes really, really important.
    On the research side there are things we can do. Carlton 
has talked about some of the things we can do whether it's 
nanotech or other technologies that are important. Forest 
products lab is involved in many of those, so I think that 
would be a critical piece of this. I think also how we look at 
treating biomass in terms of missions, those types of policy 
issues are going to be important as well.
    Senator Franken. Thank you.
    Thank you, Madam Chair.
    The Chairman. Thank you, Senator Franken.
    Senator Barrasso?
    Senator Barrasso. Thank you very much, Madam Chairman. I 
want to thank you for holding this hearing today. The condition 
of forest health, of rural economies and wildlife habitat are 
some of the issues that I plan to continue addressing as 
Chairman of the Public Lands Subcommittee.
    Under Secretary Bonnie, I want to welcome you to the 
Committee. Thank you for being here. I think it is important 
for you to personally understand my views relating to the 
Forest Service.
    For over a dozen years Congress has steadily provided the 
Forest Service with new authorities that allow but do not 
require the agency to actively manage our forests. The Forest 
Service has become a bureaucratic agency emphasizing internal 
process over real results and improvements on the ground. The 
Forest Service, I believe, has lost its direction, has lost its 
purpose and Congress can no longer trust the Forest Service to 
use the tools that it has been given to improve forest health 
because the agency itself has failed to make any meaningful 
improvements.
    While I am encouraged by your written testimony today, I 
have concerns with the Forest Service's draft Good Neighbor 
agreements. In comments to the Forest Service the State of 
Wyoming submitted the following, ``As presented Wyoming State 
Forestry Division sees limited utility in the agreements and 
does not currently foresee pursuing projects under the Good 
Neighbor Authority.''
    You know how hard Congress has worked to try to get the 
Forest Service another useful tool to get more work done. It is 
simply unacceptable for the Forest Service to turn what is a 
very useful tool into something that a state has no desire to 
use.
    Also in your testimony you noted the agency has designated 
over 46,000,000 acres or approximately 25 percent of the 
national forest system as areas experiencing or at risk of 
experiencing insect and disease infestation. This figure does 
not include insect and disease infested acres in wilderness 
areas, so there is obviously more than that.
    So when it comes to forest health I believe that the agency 
is guilty of malpractice. If we are going to save our forests 
Congress must direct and mandate results and outcomes, and for 
this reason I plan to reintroduce an updated version of my 
National Forest Jobs in Management Act later this spring.
    I view this hearing as an important step in gaining 
additional insight into what Congress must do to improve forest 
health, to increase wildlife habitat, to grow rural economies 
and to protect top soil and watersheds from wildfires.
    Under Secretary Bonnie, the Forest Service reports there is 
up to 82,000,000 acres in need of treatment. The report that 
you provided today for Fiscal Year 2013 says the agency treated 
fewer than 3,000,000 acres, and for Fiscal Year 2014, again, 
fewer than 3,000,000 acres and over half of that relied on fire 
treatments. So it means roughly only 3 percent of the acres in 
need of treatment actually receive it. I am curious what grade 
would we give a doctor at a health maintenance organization who 
annually treated only 3 percent of the patients who needed 
attention?
    Mr. Bonnie. So we've increased the amount of acres we've 
treated since 2009. We're selling more timber on average than 
over the last six years. You're right though, we need to get 
more work done. There's no question, we agree with that.
    There are two ways to think about that problem. One is to 
drive more efficiency into the system. You mentioned Good 
Neighbor Authority. I think we'll get to a good place on that.
    Insect and disease, ability to get more work done with 
fewer people, at the end of the day we still have a capacity 
challenge. We've got over a third fewer people than we used to 
have in the National Forest system. We're doing more with less. 
We have to both deal on the efficiency side as well as the 
budget side and the fire budget is going to be critical to 
that.
    Senator Barrasso. Thank you.
    Mr. Vaagen, your written testimony states one of the 
primary challenges for your family business is the lack of 
forest management and the subsequent shortage of raw materials. 
I hear the same concern from the owners in Wyoming. We know 
there is excess material needing to be harvested to prevent 
fires, to improve habitat, to create jobs. Yet the Forest 
Service, I believe, is unable to make that happen. In your view 
does Congress need to mandate active management targets to 
achieve ecological and economic benefits?
    Mr. Vaagen. I think that is one of the key answers.
    Senator Barrasso. Mr. Brown, both Alaska and Wyoming have 
filed lawsuits opposing the roadless rule. How has the roadless 
rule impacted the State of Alaska, and in your view, what 
actions should Congress take to address these impacts?
    Mr. Brown. Alaska, of course, has sued and initially we 
were exempt from the roadless rule up there, but now we have 
it.
    For me it's just another impediment. I don't want to kick 
the Forest Service around too much because Congress has set up 
a lot of road blocks these guys have to navigate through, and 
the roadless rule is just another one. They're making it a very 
difficult thing. Doesn't really have any, I don't know, 
concrete boundaries or anything in Alaska. So it's just another 
impediment.
    Senator Barrasso. My final question is to you, Mr. Vaagen. 
In your testimony you describe a decisionmaking process weighed 
down by litigation and top heavy environmental analysis. 
Consequently actual results to address poor forest health, 
wildfires, insect and the like never happened. One of your 
reform recommendations is arbitration. How would binding 
arbitration to dispute resolution foster real results to 
improve forest health?
    Mr. Vaagen. Binding arbitration takes both parties closer 
to the center and comes out with the potential of a good 
decision.
    Senator Barrasso. Thank you.
    Thank you, Madam Chairman.
    The Chairman. Thank you, Senator Barrasso.
    Senator Wyden, a leader on forestry issues in the 
Northwest.
    Senator Wyden. Thank you, Madam Chair.
    This is an important hearing, and all of you have been very 
good because it is very obvious that all over the country 
citizens are saying that the Federal Government has got to do a 
better job in managing the forests. That is what I hear when I 
have town meetings and John Day in Medford and Brookings. I am 
sure all my colleagues are going to say the same thing.
    So here is what my concern has been, and it has really 
evolved. I was, not very long ago, the Chairman of this 
Committee and reached that judgment then and my sense is that 
it is just going to grow and grow with the concern.
    It seems that this debate is really presented as a choice 
that legislators have the option of either supporting a safety 
net for communities which is what we have done in this 
Committee through the Secure Rural Schools bill or getting the 
harvest up. In effect it is presented as either/or. I want to 
make it clear that I think our policy has got to be do both, 
and we have got to do both in a sustainable fashion.
    I have tried to do that in my state through what is called 
the O and C bill. The agencies, as you know, Mr. Bonnie, have 
indicated that it would double the harvest on average each year 
for half a century. Some dispute the agency's analyses, but 
clearly we are trying to get the harvest up.
    The same is true with the safety net. In the Budget 
Committee we linked Secure Rural Schools with PILT and the Land 
and Water Conservation Fund and 18 out of 22 members said that 
they wanted to do that as well. So there is strong support for 
a vision that ensures that we get the harvest up and in a 
sustainable way and we have a safety net.
    So on that point, Mr. Bonnie, just one question. How high 
would the national and Oregon timber harvest have to go in 
order to no longer need the safety net? You have heard me say 
we have got to do both--get the harvest up and we need a safety 
net. Some people do not agree with that. How high would the 
harvest have to go nationally and in my state in order to no 
longer need a safety net?
    Mr. Bonnie. So assuming a level of Secure Rural Schools in 
Fiscal Year 1914, I think nationally it has to go north of 
16,000,000,000 board feet annually, and I think in the State of 
Oregon it would have to go more than 3,000,000,000 board feet.
    Senator Wyden. So that is what a three or four fold 
increase? I mean, make sure people walk away with this because 
there is this, sort of, myth out there that somehow we can get 
the harvest up high enough so you no longer need a safety net. 
I want people to see, and I spend a significant amount of time 
at every town meeting walking through this, that the numbers do 
not work. We are going to have to do both. So you just gave us 
the numbers in terms of the harvest. At what fold increase 
would that be?
    Mr. Bonnie. So in Fiscal Year '14 the Forest Service 
harvested nationwide 2.8 billion board feet. This year we plan 
to hit 2.9 billion board feet. In Oregon I believe the figure 
was below 500,000,000 last year, maybe 480,000,000, something 
like that last year.
    Senator Wyden. So we are talking about a fivefold increase 
at least?
    Mr. Bonnie. Yes.
    Senator Wyden. Okay. I only am excusing you other four 
because I have to run off and take care of some Finance 
Committee business. You all have been very good.
    I want to tell our Washington guest, I am very interested 
in all of the issues with respect to expediting litigation, and 
what we have done in all our bills is tried to create a fast 
track kind of process for people like yourself who want to be 
sensitive to environmental values. So I know a number of you 
have touched on that and we will want to followup.
    I would ask more questions if not for the fact that I have 
to get out the door.
    Thank you, Madam Chair.
    The Chairman. Thank you, Senator Wyden.
    Let's go to Senator Risch.
    Senator Risch. Thank you very much.
    Mr. Bonnie, you have heard all the discussion here about 
trying to get the harvest up, and I think everybody is in 
agreement that it needs to go up. I am not convinced that we 
have hit the sweet spot yet in finding the answer.
    A couple of things obviously are the provisions were in the 
Farm bill to treat certain lands. The Governors were to 
identify them and our Governor, I think it was about 1.8 
million acres that he identified as insect and disease infested 
that needed treatment. What came out of that is we have got two 
projects, 3,500 acres, which is 0.19 percent which is really 
diminimus in the overall scheme of things. So I do not know how 
that gets ratcheted up. I know that dollars are involved in 
that.
    The other, of course, is to me, a better route and that is 
the collaborative process. Now you and I were involved in a 
collaborative process that, I think, everybody should probably 
take heart in. By the way, you have never been to this 
Committee testifying when I have been here, and so I want to 
publicly acknowledge your help on that and your agreement to 
stick with us through that. I have told that story over and 
over again that we worked on that collaborative when I was 
Governor. As you know, the states were asked to come up with a 
rule. We did for our roadless areas.
    We had over 9,000,000 acres, I have argued but actually I 
think outside of Alaska the biggest block of any state. We also 
had arguably the most diverse, and my argument has been if it 
can be done in Idaho it can be done anywhere. We were just like 
every other state. We had experienced 40 years of lawsuits that 
went absolutely nowhere, and we got a rule together that was 
only the result of the collaborative process. Without that that 
would have been absolutely impossible.
    We brought together, as you know, both the environmental 
community, the industry, the motorized, non-motorized users, 
and came up with a rule. Your part in that, of course, was the 
Administration changed right as we completed it and were in the 
process of litigation in the first round. And then you stuck 
with us, the ninth circuit.
    Idahoans will be forever in your debt and grateful for the 
decision you made to stick with us and not abandon ship, 
because there were a couple of groups that wanted to come to 
the table late, after they had been invited would be the 
kindest way to put it, to come to the table and try to do 
something, and they would not do it.
    So I am optimistic if the people will sit down and use the 
collaborative method. As you know, there are some secrets to it 
and some tricks to it, but that can be used to make it work. If 
they will do that, I think that is the best hope we have, 
really, of getting the numbers up.
    We have got some going on in Idaho right now. Some are 
doing okay, some not so much. I do not know whether you have a 
team within the Forest Service that can go out and coach these 
people when things are bogging down about how they can do 
better. I think that you guys really ought to focus on that 
because I think that is one of the ways that on a forest-by-
forest basis you can get the numbers up.
    So I would like to see you focus on that and get a team 
together that can actually go out and do some rah rah with 
these people, particularly when it starts to bog down to get 
them going again.
    Mr. Bonnie. Well, thank you on Idaho roadless. I appreciate 
the kudos. But, you know, you deserve the lion share for that.
    If we're going to support collaboratives we need to support 
collaboratives and that's the position the Administration took 
on that.
    With respect to the insect and disease language we've moved 
quickly to designate those acres. Our challenge is that you've 
got Forest Service staff working on other projects. This year 
you'll see some move out.
    I was in Idaho a couple weeks ago. I know there was an 
insect and disease project that was able to move from start to 
finish in four months. As we move forward we're going to see a 
lot more of those projects, so I'm very confident that we'll 
see more of those.
    And I think, you know, Idaho has been real leader in 
collaboration. As I said in my opening remarks it's not to say 
it's a silver bullet, but I do think it will advance the ball 
substantially. Not only get more work done, but also in 
ultimately winning in court.
    The other thing I would say about your point about, sort 
of, making sure that we're spreading the gospel, as it were, 
within the agency. We are trying to learn from whether it's how 
to do NEPA better or other process improvements that we can 
spread across the agency because we have to. We've got fewer 
people to get the work done.
    Senator Risch. Thank you, my time is up. Thank you, Mr. 
Bonnie, I appreciate it.
    The Chairman. Thank you, Senator Risch.
    Senator Hirono?
    Senator Hirono. Thank you, Madam Chair.
    Mr. Bonnie, as you know, despite Hawaii being one of only 
ten states that does not have a national forest, the Forest 
Service does have a significant presence in our state. Hawaii, 
as probably a lot of people are unaware, has a large and 
increasing wildfire problem. As a percentage of acreage burnt, 
Hawaii is actually on a par with Western States and there has 
been a dramatic increase in the number of fires burning over 
100 acres.
    Your testimony noted that the agency spends nearly half of 
its budget in fire management activities these days with that 
demand only expected to increase in coming years, and I 
appreciate the fact that Madam Chair has recognized that we 
should fix the fire borrowing situation.
    So I wanted to ask you do we need to tackle wildfire 
funding before any other management concerns can be adequately 
addressed? Secondly, can you expand on the strain that this 
lack of funding places on the Forest Service's other 
programmatic obligations?
    Mr. Bonnie. So what I said in my opening remarks I think is 
true. Not to suggest that there aren't other things to look at.
    Senator Hirono. Yes, I understand.
    Mr. Bonnie. But if there's one thing we can do to increase 
the pace and scale of restoration most quickly is to deal with 
the fire budget problem is having substantial impacts on the 
agency and on everything we do, forest management, restoration, 
recreation, research, all those things. And so the fire budget 
is critical.
    Senator Hirono. I know that we have some members from the 
private sector. Would you agree that we need to get a better 
handle on part of the Department's resources that goes for one 
thing, firefighting, and how can they adequately address some 
of the other issues that the rest of you have brought up 
without us making these changes?
    Anybody want to comment?
    Mr. Vaagen. Our state, the State of Washington, had a 
massive wildfire in the central part of the state and it got 
away from them and a lot of homes burned. I think one person 
died, so it's unfortunate, but the state recognized that we 
have to allow other people to participate.
    I think some good is going to come out of that that it 
can't be just rock solid we've got to wait for the Forest 
Service to show up because they might be a long ways away when 
you can have trained volunteer fire fighters that know the 
area. We're going to see that blossom so that takes place. We 
can't burn up 9,000,000 acres and say it's okay.
    Senator Hirono. So you are talking about ways that we can 
work collaboratively prevent these fires?
    Mr. Vaagen. This state.
    Senator Hirono. But it takes up half the Administration's 
budget, so----
    Mr. Vaagen. Yes.
    Senator Hirono. I would say that that is a priority.
    Regarding invasive species role in wildfires. Hawaii is 
fighting an endless battle in controlling invasive species, and 
it is estimated that 24 percent of Hawaii State land cover is 
non-native grass and shrub lands that contribute to wildfire 
ignitions. Our native forests are not fire adapted, and we are 
seeing conversion of our forested areas to fire adapted 
invasive species such as wildfire adapted grasses.
    For example if you go to the Big Island you will see 
everywhere on the Big Island these kinds of grasses that are 
very prone to go up in flames. So additionally we are battling 
Albizia, a non-native tree that is known to persist in fire-
disturbed environments. We had a tropical storm on the Big 
Island that brought down a lot of these Albizia trees, and they 
just come right back up.
    My question to our Under Secretary is can you discuss a 
little bit more in detail the Forest Service's research and 
development priorities, specifically whether there is any 
priority given to controlling invasive species that either 
contribute to the growing threat of wildfire or thrive in areas 
damaged by wildfire?
    Mr. Bonnie. So this is a critical issue, and obviously it's 
not just a critical issue in Hawaii. It's a critical issue 
across the United States whether it's Cogongrass in the South 
or Cheatgrass in the West. This is a huge issue for us, so 
Forest Service researchers are continuing to work on this.
    But it also has to be considered on the mainland as we deal 
with forest management plans, particularly post-fire 
restoration. This is a critical issue, and so both the research 
and knowledge about how to deal with that and then the ability 
to, kind of, adapt as we put management on the ground is going 
to be critically important for the agency.
    Senator Hirono. Thank you.
    Thank you, Madam Chair.
    The Chairman. Thank you, Senator Hirono.
    Senator Flake?
    Senator Flake. Thank you.
    Senator Heinrich and I toured the forest in Arizona, the 
White Mountains, and in New Mexico in April of last year to 
look at the private industry that have came up really as a 
result in Arizona of the stewardship contracting.
    Mr. Vaagen, can you talk about that? Talk about some of the 
private industry that really came out as a result of the 
changes to the law, stewardship contracting, that came in after 
the Rodeo-Chediski Fire and talk about your operation a little?
    I apologize I was not here for your testimony at the 
beginning. You can just recap in terms of the importance of 
private industry in that area.
    Mr. Vaagen. Yes, it's interesting. We're glad to be in 
Arizona. I've been going there for 30 plus years to industry 
association meetings and didn't realize it had the largest 
contingent pine forest in the United States.
    We've learned that the small logs do have value. There are 
markets. There is need. The Rodeo Fire was nearly 500,000 acres 
that brought about the White Mountain Stewardship.
    We were asked to come down. We put a portable mill in 
operation which cost a couple million dollars. It does about 20 
truckloads of logs a day which means about 20 acres will be 
thinned. A far cry from what's necessary, but we also thought 
there would be at least a 5-year supply.
    On August 10th of 2014 the White Mountain Stewardship was 
done. We wrapped up within the month and sat there. Now we're 
moving it to Snowflake because there is some timber up there 
available on some contracts.
    All the eggs were put into the 4FRI basket which is a good 
project. I commend the Forest Service on large landscape 
projects in Arizona or anywhere else, but you've got to make 
sure the collaborative process has the right people on board.
    The economics are important. That wasn't looked at so it's 
not even possible that's why we didn't bid. We had a mill that 
would treat 10,000 acres a year, and we thought that we could 
get up to 40,000 acres a year. But if it's a losing 
proposition, it can't be done. So the concept is right. 
Collaboration just threw so much into the biomass equation 
which is the lowest value in what we call the value tree, so I 
still have hope for that.
    But I wanted to answer the other lessons learned. The 
product is good. We ship a lot of it to Mexico. Byproducts are 
not, not a lot of value there. You've got to go to pellets or 
power plants, but you can't just build new power plants 
everywhere, so you've got to take these steps.
    Ten years is not long enough on a stewardship project if 
you're going to set up an operation. It's going to take 20 
years and you need affordable, valuable timber which they have, 
but where are you going to get the money? And without assurance 
of 20 years I don't know who is going to take that leap of 
faith, our leap was big enough.
    Senator Flake. That leads to my next question. How 
difficult will it be to convince private industry to come back 
if we can't get these acres prepped for treatment now? I mean, 
having been burned once, so to speak, is it likely that we can 
get that kind of investment again?
    Mr. Vaagen. We haven't given up on Arizona. We're going to 
try once more. We're going to work with a few of the locals 
there to lease the mill out and get it to run for the next 2 
years and see how this develops with 4FRI. We think that's a 
good concept, but bringing anybody else in with less than 20 
year contract and some kind of funding, I don't see where it's 
going to come from because just an assurance alone is not going 
to work. Your state is not unique but it is in need because of 
the fire situation. The Wallow Fire was over a half million 
acres, so it's one fire away from losing over a third of the 
big forest.
    Senator Flake. Right.
    Mr. Vaagen. So that's another concern.
    Senator Flake. Between the Wallow Fire and Rodeo-Chediski 
we lost about 20 percent of that Ponderosa Pine forest. Part of 
the problem is, you mentioned with the Wallow Fire, we had 
about 50,000 acres prepped to go and that burned up, so the 
Forest Service has gotten, kind of, behind the eight ball after 
that and it has been tough to catch up.
    I appreciate your testimony and the efforts here and we are 
trying to save the rest of the forest. We know that unless we 
get in and treat and manage on a large scale then 4FRI, I mean, 
that is the biggie, that is the big one, and if that does not 
work, then future stewardship contracting really is out the 
window. So we have got to make it work. I appreciate it.
    Thank you, Madam Chair.
    The Chairman. Thank you, Senator Flake.
    Senator Heinrich?
    Senator Heinrich. Thank you, Madam Chair.
    Mr. Vaagen, I will start and just say thank you for your 
comments, specifically on the timeframe issue in stewardship 
contracting.
    Senator Flake mentioned he and I have worked on stewardship 
contacting issues for a while now. We have toured some of these 
forests and some of the mills together, and the timeframe issue 
is something that I am sure we will be happy to look at as we 
continue this road toward more reform in terms of how we 
structure those contracts.
    I want to switch gears for a minute and ask a question of 
Under Secretary Bonnie. As we have heard, a lot of people have 
suggested doubling or even tripling timber sales in the next 
few years. My primary concern with that is that I do not want 
to see new funding and resources for the timber program come at 
the expense of existing programs that we are using in New 
Mexico to cut small diameter and fire prone trees.
    Unfortunately in this tight budget environment I think it 
is pretty safe to assume that the Forest Service will not be 
receiving extra appropriations to do this work so it is a bit 
of a zero sum game. So I wanted to ask you if the Forest 
Service budget is kept level what would the impact of those 
proposals be on programs that currently help us reduce 
catastrophic forest fires in places like New Mexico where we 
simply do not have a large timber program?
    Mr. Bonnie. Yes, so the challenge is, as I mentioned in my 
testimony, we're, the agency, in some respects is maxed out. We 
see challenges on the recreation side, servicing people in 
recreation or doing watershed enhancement and conservation. 
We're always making decisions about where best to put 
resources.
    And if there's, you know, a requirement to have us move/
shift resources toward one area and as you say, it's a zero sum 
game, that could create challenges for us in other parts of the 
organization. And even things like, you know, we heard about 
4FRI.
    We did have to sink substantial resources into 4FRI just as 
we did in the Rim Fire in California, and those forced us to 
not provide as much resources as we would for other projects. 
So it creates a real challenge for the Agency.
    Senator Heinrich. Well that, kind of, comes back to the 
whole fire borrowing issue. I think if we can come up with some 
proposals that actually seek to grow the pie as opposed to just 
take away from Peter, you know, rob Peter to pay Paul. I think 
we will see a lot more support for some of these changes on the 
Committee.
    I want to thank you, Mr. Owen, for your comments both on 
stewardship contracting which has been a really important tool 
for us in New Mexico but also water production. I say that 
because water is by far the most valuable forest product in New 
Mexico. 45 percent of New Mexico surface water starts in our 
National Forest, and without those watersheds our farm fields 
would be bare and biggest cities would be ghost towns.
    Next to water the most significant economic impact is what 
you just mentioned, Mr. Bonnie, that is recreational 
opportunities. Statewide 68,000 New Mexicans work in the 
outdoor recreation industry. Hunters and anglers alone spend 
$613 million a year in New Mexico, and outdoor recreation as a 
whole accounts for over $6 billion in spending in our state. 
When you compare that to current commercial timber contracts, 
we only sold $23,000 worth of timber contracts in New Mexico 
last year.
    So back to you, Mr. Bonnie. If Congress mandates minimum 
acreages of timber sales without increasing the overall budget 
and meeting those other needs, what would the impact be on 
watershed restoration projects and also recreational facilities 
and permit programs that jobs in New Mexico rely on?
    Mr. Bonnie. It would be no question they'll be a negative 
impact. If you read the Forest Service clips, which I do every 
day, you'll see there are places where we have law enforcement 
investigation positions open. There are places where we're 
closing campgrounds.
    Those are an indication of the stress that the agency is 
under just as we've shifted resources slowly over time from our 
broad mandate more and more into fire, and we're having to make 
optimus choices all the time.
    Senator Heinrich. So would you say it is fair to 
characterize the situation that unless we fix the fire 
borrowing program or the fire borrowing problem that we are 
going to be playing the zero sum game of chasing one program or 
another as opposed to bringing the necessary resources to 
manage forests overall?
    Mr. Bonnie. I think that's largely the case. I do think 
there are areas where we can continue to improve efficiency, 
but ultimately we can only wring so much efficiency out of the 
machine. We've got to fix the fire budget.
    Senator Heinrich. Thank you.
    The Chairman. Thank you, Senator Heinrich.
    I think that that is one area that we all are in agreement. 
We have got to deal with this reoccurring problem with the fire 
budget. Know that we are focused on that.
    Let me pick up where I left off.
    You had mentioned the CMAI waiver and what flexibility that 
might provide to you. I noted that given the rotation age in 
the Tongass of 92 to 100 years and given where the harvest has 
been historically since the early 60's along the beaches and 
along the streams that we are not there, even with the waiver 
of CMAI because the oldest of the young growth just is not 
ready. Given that and just from a practical perspective, how 
does this departure from CMAI actually increase the volume of 
economic second growth timber that is available for harvest out 
of the Tongass?
    Mr. Bonnie. So we've got a timber sale right now, Dargon 
Point, that you may be familiar with. It's a 70-year old stand 
that there's been a lot of interest in. We put it out for bid 
and there were a lot of folks that came forward.
    All of that to say that not every stand is a Dargon Point, 
but that there is interest if we can put good, young growth 
stands up that they will be younger than 90 years old or 100.
    One of the things we've asked the Tongass Advisory 
Committee to do is really to delve into the numbers here, to 
look at the available second growth, where it is, how fast it 
comes on board and the types of things that we can look at to 
potentially expand the land base where we can get second 
growth. I think that analysis of the Tongass Advisory Committee 
is important, and I think that's going to be a critical part of 
the work we do around the Tongass Land Management Plan 
Amendment as well.
    The Chairman. Let me ask you a question, Mr. Brown. In your 
view what would the timber industry in the Southeast need to 
make a successful transition to harvest to second growth and 
how long is it going to take?
    Mr. Brown. To answer that question I think I would focus 
less on the volume. I don't really agree with the CMAI making 
more volume available. But the bigger thing for me is there's 
only, we only have one sawmill left of any size, and it's an 
old growth mill. So basically what you're talking about when 
you transition to second growth is you have to retool.
    The Chairman. Right.
    Mr. Brown. That's going to take significant investment, and 
in my opinion nobody is going to make any significant 
investment of the size we're talking about and rely on the U.S. 
Forest Service to supply that timber based on their track 
record.
    The Chairman. I have had exactly those conversations with 
Kirk Dahlstrom about the investment that it would take. You 
simply cannot utilize what he has in place there at Viking with 
a younger than second growth timber. It does take retooling. 
The investment is considerable. There is this tradeoff here 
between, well it is a financial tradeoff, absolutely. The 
question is whether or not you can rely on them.
    You mentioned that you would be speaking to Mr. Dahlstrom's 
testimony. As I read through it, it is a pretty sad story. The 
owner of the only remaining midsized sawmill operating in the 
state has no other reliable sources of timber supply. He is 
supporting over 150 jobs within the state but our mill in 
Alaska is almost out of logs now. We currently have only about 
two months supply in the log yard.
    Then in the plating that was filed in the U.S. District 
Court he speaks to the issue of litigation and delay and says, 
``Even though the lawsuit was found to be without merit in four 
legal opinions, the litigation delayed operations on this sale, 
consumed Viking's financial resources and made planning mill 
operations and general conduct with business very difficult.'' 
That was as it related to the diesel sale. But it just speaks 
to what we see time and time again where it seems to be that 
delay caused by litigation goes on and on and on and the very 
lifeblood of these smaller operators is just being sucked dry.
    Let me ask very quickly a question of you, Mr. Brown. So 
many have come to the conclusion that the existing management 
structure does not work. The only solution is to remove some of 
the existing timber lands from Federal control. There have been 
a lot of different variations on this idea, but the Alaska 
Forest Association has a state forest concept. The Governor's 
Timber Task Force has recommendations, but you are looking to 
that alternative management model within the state of an Alaska 
State Forest. Can you speak very quickly to the benefits of 
that, the merits of that rather than hoping and praying you are 
going to get a source from the Federal side?
    Mr. Brown. Right. Well, real quickly, I would point to the 
State of Washington which has, I think, about a two and a half 
million acres under state control. And it's got to be the most 
successful state timber sale program in the whole nation. And 
when the Timber Task Force was a part of an AFA looked at that, 
that was kind of a model we looked at was the way the DNR in 
Washington manages our forest. It provides certainty for 
operations. All the timber is competitively bid, but it's a 
very good program and I would encourage anybody to look at that 
program as a model. There's good protection for fish and 
wildlife and everything, you know, that you would hope for, but 
it also provides sustainable timber for the timber operators in 
that state.
    The Chairman. I appreciate that.
    Mr. Bonnie, is the Administration willing to work with us 
on some alternative management models?
    Mr. Bonnie. Well, I think we work with a number of 
Governors in a number of states. Obviously, we are happy to 
followup and have conversations. Chris Maise, she's been a 
great partner of ours up there and we are happy to have 
conversations.
    The Chairman. We look forward to having that conversation.
    Senator Cantwell?
    Senator Cantwell. Thank you, Madam Chair.
    I know while I was gone a couple of people mentioned 
pellets again, including Mr. Vaagen, so thank you. I am proud 
that Colville is the home to one of these premier wood stove 
companies that has changed the way pellets can be burned. One 
of the things that we want to do is increase, as you were 
saying earlier, more 21st Century uses. Mr. Owen was also 
talking about that.
    But one of the things I wanted to ask about is the small 
business set aside. Because if the small mills are doing the 
restoration and that kind of restoration can lead to some of 
these projects that are the value add for the lower end value 
timber, then don't we need to make sure that the people have 
the set aside so that they can actually keep producing if they 
are playing that key role in the product stream?
    Mr. Vaagen. It's a delicate question to answer because I'm 
the chair of FFRC and AFRC, but I can tell you historically 
small business knew what that was about and that's how they 
projected their growth and their predictability and their 
stability of supply. So, yes, we think that still has to be 
recognized on the stewardship component. As a small business we 
really think that's equitable. I would add that what I'm 
hearing here, all the byproducts are important and we are 
looking at pellets. We just started bailing shavings and they 
all go to Colorado for some reason. And it's a very good 
product and high value. So markets are markets.
    But as an industry our groups agree that we don't need to 
be at $16 billion or $12 billion where we were in the 80's but 
somewhere in the neighborhood of $6.2 billion. As I look at 
this in a zero sum game I'm seeing a new way of doing business. 
In other words, if we burn 7,000,000 acres a year or more, 
we're not even going to salvage, restore, 10 percent of that.
    If you did 300,000 acres that would be 1.5 billion feet, if 
you aggressively went out in front of the fires and projected 
where you wanted to thin and treat that would be 1.5 billion on 
300,000 acres. That doesn't even keep us current with growth 
and mortality. So there's other ways to skin a cat is what I'm 
saying. So, thank you.
    Senator Cantwell. Yes, I appreciate that. I do think there 
are different ways to look at this in calculation and certainly 
on keeping the forest healthy in general is a very good idea.
    I appreciate Mr. Owen's testimony about these products and 
where they can go and what their use is. We have members of 
this Committee who have huge wood stove installations and are 
paying through the nose for home heating oil, so solutions like 
this would be winning solutions for them.
    I have to ask you, Mr. Bonnie, is the YWCA going to get a 
permit by the end of this year to be able to take people out on 
recreation land?
    Mr. Bonnie. So we've met with the folks from the YMCA. I 
know their frustration on this issue. I think we've also met 
with other folks on the Recreation Committee. This is an issue 
we want to resolve. I don't know whether it takes a change in 
our handbook or whatever, but I think we very much want to work 
with you and your staff to solve this problem.
    Senator Cantwell. Is that something you think we can solve 
by the end of this year?
    Mr. Bonnie. Depends on, sort of, what it requires us to do, 
but what I will say is we will try and move as quickly as we 
can.
    Senator Cantwell. Thank you. We are definitely going to 
stay on this.
    So, thank you.
    The Chairman. Thank you.
    Senator Daines, I know that we cut you off in mid-question, 
so have at it.
    Senator Daines. There is so much to talk about, Madam 
Chair, and I thank you for your comments too, about Alaska. 
What you share there sounds a lot like what is going on in 
Montana. There is a sense of urgency needed to change this 
process.
    When I was back home a couple weeks ago mills were telling 
me that they are running at two-thirds capacity. We only have 
11 left, we used to have 30, and they are running at two-thirds 
capacity. I asked them what are the constraints, and they said, 
``logs.'' We cannot get enough logs to keep running these 
mills. There is plenty of demand, so this nonsense that is out 
there that says the reason the mills are not running at full 
capacity is because of lower demand is absolutely false. The 
demand is there, but we do not have logs.
    We are importing logs in Montana from Canada right now to 
meet some of our mills requirements. And these students from 
Libby High School, there is a reason they are called the 
``Libby Loggers.'' We had four or five mills in Lincoln County 
once upon a time, and now there is not a major mill in Lincoln 
County and we are surrounded by, what is it, 78 percent of 
Federal lands there and we cannot access the logs to keep our 
mills going across the state. So we cannot accept the status 
quo. We have got to drive change here.
    Back to Secretary Bonnie and that line of questioning 
around reforms I think we need. I too, echo, I think, the 
support we have on both sides to reform the way we fund 
wildfires. That just seems to be common sense. I do not know 
how you can effectively manage your budget with the uncertainty 
with the wildfires, and I hope we can move something forward 
there that will help everybody involved.
    Back in terms of some of these ideas on reforms, Secretary 
Bonnie, simplifying the environmental review for timber sales 
in suitable timber lands that the National Forest has in their 
plans which have already gone through extensive public review, 
explicitly establishing harvest as the primary objective, is 
that something we can work on?
    Mr. Bonnie. So, I think we're very interested in looking at 
ways that we can streamline. Obviously the Farm Bill language 
will help us do that. I think we want to continue to work with 
these collaboratives and look at, you know, larger landscapes 
that both provide a suitable or a timber supply to local mills 
as well as satisfying other stewardship objectives.
    Senator Daines. I know when Chief Tidwell was up here he 
talked about the impact litigation is having on the Department. 
In fact he said that the litigation diverts staff. There is a 
lot of time and money being spent right now in fighting 
litigation. What about replacing litigation with a binding 
arbitration process?
    Mr. Bonnie. So I think we've tried to be as creative as we 
can on NEPA. We've used alternative arrangements in place, and 
I think we're interested in discussing pilots, those types of 
things, on NEPA and would appreciate a conversation around 
that.
    Senator Daines. We have had hearing after hearing when I 
was on the House side, and now in the Senate, that we keep 
circling the airport here, and that airport that we need to 
land the plane on is the issue of litigation seems to be core, 
the obstruction that is going on here, stopping our mills from 
having access to having a responsible harvest in the forests. 
How about requiring litigants to post a bond to pay for the 
Federal Governments legal expenses in the event the litigant 
loses in court?
    Mr. Bonnie. So, you know, there's a broader issue for the 
Administration. I think we've made a lot of progress in 
litigation. Your State of Montana has had real challenges. 
You're right with respect to impacts on Forest Service staff or 
just having to do more work to ensure that timber projects move 
forward.
    Senator Daines. But what is wrong with requiring the 
litigant to post a bond?
    Mr. Bonnie. So I don't want to--you know, the 
Administration doesn't have an opinion on that. I don't want to 
get out of in front of myself here. Just to say that I think we 
recognize there's a challenge here and think that the 
collaboratives are an important way to move forward on this 
issue. We're winning more cases now, but we've still got a ways 
to go.
    Senator Daines. Yes, well, we are going to keep working 
these forums. I would like to see us look at some of these 
changes because again, we are going to have the same outcomes. 
We will be in these same hearings five years from now probably 
looking at the same numbers unless we fundamentally change up 
the way the process is working or, should I say, is not working 
today.
    You mentioned the Farm Bill. What about billing on the 2014 
Farm Bill to give states a greater role, giving the states a 
greater role in determining timber projects on National Forests 
that should be given priority?
    Mr. Bonnie. So we're working with Governor Bullock in your 
state. We're working----
    Senator Daines. And we are tied up in court now by the way 
in the first--when we tried to put out of place we are now--it 
is now been objections filed on it.
    Mr. Bonnie. Yes----
    Senator Daines. In fact the litigation issue the bonding, 
the arbitration, if we do not change that, I am just 
pessimistic we will ever solve this problem.
    Mr. Bonnie. I do think, to your point about working with 
Governors, I think we're very interested in that. There are 
opportunities, not just through Good Neighbor Authority, but in 
other things as well.
    Senator Daines. Right, good and I appreciate it. I think 
that is definitely a step.
    Mr. Bonnie. Critical.
    Senator Daines. Forward we have here.
    How about also if given the flexibility in resource to do 
your job would you support establishing timber sale 
requirements that are based on National Forest plans similar to 
the concept Commissioner Peck said has proven valuable in 
Montana?
    Mr. Bonnie. So here's my caution here. What I think is 
working now are these large scale collaboratives. I worry if we 
start to impose top/down requirements on those. To me what's 
working is bottoms up.
    We need to think bigger and clearly get more work done. 
There's--absolutely acknowledge the need to do more work. And 
so that's my caution.
    Senator Daines. Yes, and our concern of course, is I think 
Commissioner Peck mentioned it. It is like having a football 
game without a scoreboard. We have got to keep score here and 
quantify this at the end of the day.
    Mr. Bonnie. You're right, and nationally we have said we've 
been very clear about wanting to north of 3,000,000,000 board 
feet nationally and to treat more acres nationally. We think 
the fire fix as it's laid out, and we appreciate your 
leadership on that, will get us above that. But you're right we 
need to get more work done.
    Senator Daines. Thanks, Secretary Bonnie, thank you for 
your thoughtful comments. I look forward to continuing to work 
on this problem and solve it.
    Thanks.
    The Chairman. Thank you, Senator Daines.
    We have got a lot in common between your state and the 
State of Alaska and the state of the timber industry which is 
really struggling, really struggling to the point where some 
wonder if it can hang on at all.
    Mr. Bonnie, I appreciate the very brief comments that you 
made at the end there about a willingness to work with us on an 
alternative management model based on national Forest System 
lands, maybe some demonstration pilots. But my perspective at 
this point is we have got to give the state and our forest 
professionals the ability to take the lead to see if we can 
responsibly get the timber harvest up in the Tongass. We have 
to figure out a way forward to address the concerns that Mr. 
Dahlstrom has made in his written testimony to address the 
concerns that Mr. Brown has presented here today.
    So I want to have further discussions with you specific to 
this point, and I appreciate the leadership that our new 
Governor is making with the proposals on the support that we 
have coming out of the state as well.
    A lot has been raised here today, but clearly I think we 
have agreed that we have got to deal with the fire borrowing 
problem. We must address that.
    I think we also recognize that we are dealing with a maze 
of laws and regulations that while perhaps taken individually 
might be workable, collectively it is very difficult in 
implementation. You have these layered effects. You have the 
environmental laws along with expansion of statutory 
requirements by regulation, by judicial decisions and the term 
that I used in my opening statement was ``analysis paralysis.'' 
It seems that so much of what we see happening here where 
there's a lot of talk.
    We are talking about collaboratives. We are talking about 
planning and assessment. But at the end of the day it seems 
that we still have just, kind of, a failure to be able to move. 
Again, it is not just about a process. It has to be about some 
results. This is where, I think, so much of the frustration is.
    I would like to also continue some discussions with you on 
the retooling and the assistance. I would just as soon that we 
do not need that assistance. I would prefer that we get to the 
point where we have the available timber so that our small 
operators can be working. But that is not where we are right 
now, and there have been a lot of promises made that, again, we 
really have not seen the backing behind that. So know that that 
also is an area that we need to be working with the 
Administration on.
    Senator Cantwell, any further comments?
    Senator Cantwell. I will just say thank you again to the 
witnesses for being here, and I look forward to working with 
them and you and our Committee on this legislation and the 
opportunities as we move forward.
    The Chairman. Good. Thank you.
    With that, gentlemen, thank you for coming before the 
Committee and safe travels back home.
    [Whereupon, at 11:58 a.m. the hearing was adjourned.]

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