[Audit Report on the Salvage Timber Program, Bureau of Land Management]
[From the U.S. Government Printing Office, www.gpo.gov]
Report No. 98-I-399
Title: Audit Report on the Salvage Timber Program, Bureau of Land
Management
Date: April 2, 1998
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U.S. Department of the Interior
Office of Inspector General
AUDIT REPORT
SALVAGE TIMBER PROGRAM,
BUREAU OF LAND MANAGEMENT
REPORT NO. 98-I-399
APRIL 1998
MEMORANDUM
TO: The Secretary
FROM: Robert J. Williams
Acting Inspector General
SUBJECT SUMMARY: Final Audit Report for Your Information -
"Salvage Timber Program,
Bureau of Land Management" (No. 98-I-399)
Attached for your information is a copy of the subject final
audit report. The objective of the audit was to determine
whether the Bureau of Land Management (1) conducted sales of
blown-down, diseased, or fire-damaged timber in an expedient
manner; (2) adequately pursued instances of timber theft; and
(3) used the Forest Ecosystem Health and Recovery Fund as the
Congress intended.
We concluded that the Bureau conducted timber sales in a timely
manner and effectively used the Forest Ecosystem Health and
Recovery Fund to eliminate the backlog of salvage timber
projects. Furthermore, our review disclosed that timber thefts
did not appear to be a significant problem on lands administered
by the Bureau. We also determined that the Bureau was depositing
both the county and Federal shares of salvage timber sale
proceeds into the Fund rather than just the Federal share
specified by the Congress in Public Law 102-381. However, the
Bureau requested and obtained an opinion from the Office of the
Solicitor that stated that the Bureau's treatment of these funds
was proper.
Based on the results of our review and the Solicitor's opinion,
we did not make any recommendations in the report.
If you have any questions concerning this matter, please contact
me at (202) 208-5745.
Attachment
AUDIT REPORT
Memorandum
To: Director, Bureau of Land Management
From: Robert J. Williams
Acting Inspector General
Subject: Audit Report on the Salvage Timber Program,
Bureau of Land Management (No. 98-I-399)
INTRODUCTION
This report presents the
results of our audit of the Bureau of Land Management's Salvage
Timber Program. The objective of the audit was to determine
whether the Bureau (1) conducted sales of blown-down, diseased,
or fire-damaged timber in an expedient manner; (2) adequately
pursued instances of timber theft; and (3) used the Forest
Ecosystem Health and Recovery Fund as the Congress intended.
BACKGROUND
The Bureau of Land Management is responsible for managing,
protecting, and improving 270 million acres of public land,
including about 45 million acres of forest land in 11 western
states and Alaska. The Bureau administers an additional 2.4
million acres of forest land in western Oregon, which include
public domain lands, the revested Oregon and California Railroad
grant lands, and the reconveyed Coos Bay Wagon Road grant lands.
The term "salvage timber sale" is defined by the Bureau as a
timber sale designed to remove diseased or insect-infested
trees; dead, damaged, or downed trees; or trees affected by fire
or imminently susceptible to disease or insect attack. Such
sales may also include removal of associated trees for purposes
of ecosystem rehabilitation. According to Bureau officials, it
is important that salvage timber is offered for sale as soon as
practicable to prevent additional damage to adjacent green
timber and also to prevent further deterioration of the damaged
timber. Additionally, drought conditions in the western states
over the past several years have significantly increased the
occurrences and effects of forest wildfires and the subsequent
death of trees. The drought conditions have also contributed to
the increased occurrences and severity of insect outbreaks and
resultant bug-killed timber, creating the need for more salvage
timber sales. As a result, damaged timber was placed as the
highest priority in the Bureau's annual timber sales plans.
However, the Bureau said that resources were not adequate to
expeditiously market these sales and that therefore a large
backlog of salvage timber projects was created.
In order to minimize the loss of merchantable volume and to
improve forest conditions, the Congress established the Forest
Ecosystem Health and Recovery Fund on October 5, 1992. The
Fiscal Year 1993 Department of the Interior and Related Agency
Appropriation Act (Public Law 102-381) created this special fund
in the U.S. Treasury, which was "to be derived hereafter from
the Federal share of moneys received from the disposal of
salvage timber prepared for sale from the lands under the
jurisdiction of the Bureau of Land Management, Department of the
Interior." This Act places requirements on the way the Bureau
may spend these funds and also states that the formulas for the
distribution of timber sales receipts specified by law are not
changed. Specifically, Public Law 102-381 states in part:
The money in this fund shall be immediately available to the
Bureau of Land Management without further appropriation, for the
purposes of planning and preparing salvage timber for disposal,
the administration of salvage timber sales, and subsequent site
preparation and reforestation. Nothing in this provision shall
alter the formulas currently in existence by law for the
distribution of receipts for the applicable lands and timber
resources.
In regard to existing laws, the formulas for distribution of
timber sales receipts (including salvage timber) from Oregon and
California Railroad grant lands were established by Title II of
the Oregon and California Grant Lands Act of 1937. Under the
Act, timber sales proceeds were to be divided as follows: 50
percent to the Federal Government and 50 percent to the 18
western Oregon counties that contain Oregon and California
Railroad grant lands. The proceeds from timber sales on Coos Bay
Wagon Road lands were to be divided as follows: 25 percent to
the Federal Government and 75 percent to Coos and Douglas
Counties. The Federal share of timber receipts from public
domain lands is 96 percent, with the remaining 4 percent going
to the state where the salvage sale occurred.
In response to environmental concerns, including old growth
forest issues and the presence of the Northern Spotted Owl,
restrictions on harvesting timber significantly decreased sales
on Government lands in western Oregon. As a result, the 18
counties' shares of proceeds from timber sales on the Oregon and
California Railroad grant lands and on the Coos Bay Wagon Road
lands were substantially decreased. In order to stabilize the
counties' revenues, appropriation language for fiscal years
1991, 1992, and 1993 included a provision for minimum payments
to the Oregon and California counties, which would ensure that a
county's payments would be equal to the annual average of the 5
-year period between 1986 and 1990 (the payment could not exceed
total receipts collected). In fiscal year 1993, the Congress
passed the Omnibus Budget Reconciliation Act of 1993 (Public Law
103-66), which established special county payments for fiscal
years 1994 through 2003 based on an annually decreasing
percentage of the 5-year average of 1986 through 1990. For
example, special payments to the Oregon and California counties
started at $78.6 million in fiscal year 1994 and are gradually
reduced to $53.6 million in fiscal year 2003. These "special
payments" temporarily replaced the counties' share of actual
timber receipts for the Oregon and California Railroad grant
lands and the Coos Bay Wagon Road lands. For fiscal years 1999
through 2003, the amount to be paid to the counties is the
greater of the special payment amount established in Public Law
103-66 or the counties' 50 percent share of timber sales
proceeds.
SCOPE OF AUDIT
To accomplish our objective, our audit of the Salvage Timber
Program included a review of data relative to the initiation and
final disposition of timber theft cases and a review of salvage
timber projects, including allocation of sales receipts and
project expenditures to the Forest Ecosystem Health and Recovery
Fund.
Our audit was conducted in accordance with the "Government
Auditing Standards," issued by the Comptroller General of the
United States. Accordingly, we included such tests of records
and other auditing procedures that were considered necessary
under the circumstances. We requested information from 24 Bureau
offices (Appendix 1) and discussed Forest Ecosystem Health and
Recovery Fund projects, expenditures, receipts, and/or policy
and procedures with personnel from these offices. Each field
office contacted had used the Fund to conduct salvage timber
projects and had eliminated its respective backlog of salvage
projects. We also reviewed law enforcement records and obtained
other information from the Bureau's Law Enforcement Office in
Boise, Idaho, and from Special Agents in the California and Utah
State Offices.
As a part of our audit, we evaluated the system of internal
controls related to salvage timber sales and the Forest
Ecosystem Health and Recovery Fund to the extent we considered
necessary.
We also reviewed the Department's Accountability Report for
fiscal year 1996, which includes information required by the
Federal Managers' Financial Integrity Act of 1982, and the
Bureau's annual assurance statement to determine whether any
reported weaknesses were within the objective and scope of our
review. Neither the Accountability Report nor the Bureau's
assurance statement addressed the Bureau's Salvage Timber
Program.
PRIOR AUDIT COVERAGE
Neither the Office of Inspector General nor the General
Accounting Office has issued any audit reports during the past 5
years on the Bureau's Salvage Timber Program or on the Forest
Ecosystem Health and Recovery Fund.
RESULTS OF AUDIT
We found that the Bureau of Land Management conducted salvage
timber sales in a timely manner and used the Forest Ecosystem
Health and Recovery Fund to eliminate the backlog of salvage
timber projects. Furthermore, our review disclosed that timber
thefts did not appear to be a significant problem on lands
administered by the Bureau. However, the Bureau may have been
inappropriately depositing both the counties' and Federal shares
of salvage timber sales proceeds into the Fund rather than just
the Federal share specified by the Congress in Public Law 102
-381. The counties' share of proceeds for Oregon and California
Grants Lands was established at 50 percent of the sales receipts
by the Oregon and California Grant Lands Act of 1937. Bureau
financial officials said that they believed that Public Law 103
-66, which provides for temporary special payments to the Oregon
and California Railroad grant lands counties except if the
counties' 50 percent share is greater than the special payment,
eliminated the counties' shares of receipts and thereby
authorized the Bureau to keep 100 percent of the proceeds from
salvage timber sales. Since the U.S. Treasury has been making
special payments to the counties in lieu of the counties' 50
percent share of actual receipts, we believe that the counties'
shares should be deposited into the U.S. Treasury General Fund
account to partially offset those special payments. As of August
31, 1997, the Bureau had deposited $5.2 million of the counties'
shares of salvage timber sales receipts from fiscal years 1994
through 1997 into the Forest Ecosystem Health and Recovery Fund.
Based on our review, the Bureau requested a Solicitor's opinion
on this matter on May 28, 1997, in which it stated that its
interpretation "of legislation [Public Law 103-66] is that the .
. . salvage timber receipts are entirely the Federal
Government's share during the special payment years."
The Forest Ecosystem Health and Recovery Fund has provided Bureau
field offices with the additional funding necessary to expedite
salvage timber sales and reduce the backlogged volume of salvage
timber. Sales of salvage timber have increased from 10.4 million
board feet in 1993 to nearly 39 million board feet in 1997.
During the 5 years since the implementation of the Fund, the
Bureau has sold over 141 million board feet of salvage timber
and collected receipts of about $23.5 million. We contacted 17
Bureau field offices, and none of those field offices reported a
backlog of salvage timber. Our
audit also disclosed that the number of timber thefts that
occurred during fiscal years 1994 through 1996 was minimal. Data
provided by the National Law Enforcement Office showed that an
average of 12 timber theft cases were opened per state per year.
The average loss per timber theft case was less than $1,400,
based on the law enforcement officers' estimates of the value of
the timber or other forest products removed. During this period,
timber sales fluctuated between about $75 million and $100
million per year, and the loss from timber theft was estimated
at about $100,000 per year. Furthermore, according to the
Bureau's Uniform Crime Reporting System, about 50 percent of the
timber theft cases reported were cleared by arrest or other
means. While law enforcement officials did not provide
statistics on the dollar value of cases cleared, they stated
that they had had greater success working and obtaining
prosecutions on the larger dollar cases. They also stated that
many of the smaller cases involved theft of firewood or
unauthorized tree cutting while roads were being constructed and
that it was often difficult to obtain prosecution on these
cases. Consequently, after reviewing all of the information
provided by the Bureau, we concluded that timber thefts did not
appear to be a significant problem on Bureau-managed lands.
The Bureau's accounting records showed that during fiscal years
1994 and 1995 (through June 1995), the Oregon and California
counties' shares of salvage timber receipts were deposited into
the U.S. Treasury General Fund. However, on June 16, 1995,
Bureau officials decided that the counties' share could be
deposited into the Bureau's Forest Ecosystem Health and Recovery
Fund rather than the U.S. Treasury General Fund.
We reviewed correspondence which indicated that during 1995 and
1996, Bureau officials discussed this matter with the
Department's Budget Office, which requested a Solicitor's
opinion as to whether the Bureau could transfer 100 percent of
salvage timber receipts into the Fund. The Solicitor did not
provide a written opinion. However, correspondence dated April
20, 1995, between the Department's Budget Office and the Bureau
stated:
The Solicitor's office thought that such an interpretation was
reasonable, but suggested that BLM/DOI [Bureau of Land
Management/Department of the Interior] consult with OMB [Office
of Management and Budget] and the relevant Congressional
committees before beginning to handle the receipts in that way.
Correspondence from the Department's Budget Office also stated
that the Bureau had not consulted with either the Office of
Management and Budget or the relevant Congressional committees.
Nevertheless, on June 16, 1995, the Bureau's Chief, Division of
Finance, authorized the transfer of 100 percent of salvage
timber receipts to the Fund for fiscal years 1994 through 2003.
The memorandum authorizing the transfers indicated that the
Solicitor had provided verbal assurance that the Bureau's
interpretation of the law was reasonable.
The Congress initially appropriated $1 million for the Forest
Ecosystem Health and Recovery Fund. For fiscal years 1993 to
1997 (through July 31, 1997), salvage timber sales receipts of
$23.5 million had been deposited into the Fund. The Oregon and
California and Coos Bay Wagon Road counties' shares of receipts
deposited into the Fund totaled about $5.2 million for fiscal
years 1993 to 1997 (through August 31, 1997). Because the
Bureau deposited all salvage timber sales receipts into the
Fund, the U.S. Treasury did not receive any revenue from the
sale of salvage timber, but it pays the counties a share of
those receipts (Public Law 103-66) through an appropriation
based on the average sales receipts from fiscal years 1986
through 1990.
Public Law 102-381 authorized the Bureau to transfer only the
Federal share of salvage timber receipts to the Forest Ecosystem
Health and Recovery Fund (which was 50 percent of the sales
receipts from Oregon and California lands and 25 percent from
Coos Bay Wagon Road lands). Without specific authorization to
deposit 100 percent of the salvage timber receipts into the
Fund, we believe that the $5.2 million counties' share, which is
50 percent of the salvage timber sales proceeds from Oregon and
California Railroad grant lands (about $5,150,000) and 75
percent of the salvage timber sales proceeds from Coos Bay Wagon
Road lands (about $50,000), should be deposited into the General
Fund of the U.S. Treasury.
During our exit conference, we recommended that the Bureau of
Land Management obtain a formal written opinion from the
Solicitor's Office as to whether the Bureau can retain 100
percent of the salvage timber sales receipts. The Bureau agreed,
and on May 28, 1997, the Director of the Bureau requested a
Solicitor's opinion on the issue of whether and/or how much of
the counties' share of salvage timber receipts should be
deposited into the Forest Ecosystem Health and Recovery Fund.
Conclusion
On January 29, 1998, the Deputy Associate Solicitor, Division of
Law, Office of the Solicitor, responded to the Bureau's request
for an opinion (see Appendix 2) on the Bureau's retention of 100
percent of the salvage timber receipts. The Solicitor's opinion
stated: Although there is clearly ambiguity about how "Federal
share" should be interpreted, we believe the structure for
payment of the "special payment amount" in OBRA 93 [the 1993
Omnibus Budget Reconciliation Act] creates a sound basis for
concluding that the BLM's [Bureau of Land Management's] practice
is correct. We conclude that through FY [fiscal year] 2003, in
any year when the payments to the counties are made from a
General Fund appropriation under OBRA 93 [1993 Omnibus Budget
Reconciliation Act), all salvage timber fee receipts will be
retained by the Federal government and deposited to the FEHRF
[Forest Ecosystem Health and Recovery Fund]. Between FY 1999 and
2003, if the payments are made from timber fee receipts under
the pre- OBRA 93 formula, only the portion of such receipts
retained by the Federal government should be deposited to the
FEHRF. Based on this opinion, we are not making any
recommendations on this matter.
Other Matters
During our survey, we noted inconsistencies in the way the
Bureau's forestry program managers interpreted guidance relative
to Forest Ecosystem Health and Recovery Fund expenditures and
deposits. Although these instances were not systemic, we believe
that they should be corrected.
Forest Ecosystem Health and Recovery Fund Expenditures.
Regarding expenditures of the Forest Ecosystem Health and
Recovery Fund (Subactivity 5900), the Bureau's fiscal year 1996
Fund Coding Handbook states:
[The Forest Ecosystem Health and Recovery Fund] includes all
costs associated with the salvage of dead and dying timber on
forest and woodland ecosystems on Public Domain Lands and on
Oregon and California Railroad grant lands and Coos Bay Wagon
Road lands in western Oregon. [It] includes maintenance and
enhancement of the forest and woodlands ecosystems effected by
fire, disease, insects etc. It includes only activities related
to the sale of salvage timber and the subsequent site
preparation, reforestation and maintenance of these sites. No
program oversight or administrative costs should be coded to
this account. [Emphasis added.]
We believe that some expenditures which were charged to the Fund
should have been charged to the Bureau's appropriated funds
budgeted for the forestry program as follows:
- In 1996, the Oregon, Idaho, and California State Offices
charged $191,405, $78,645, and $78, respectively, to the Fund
for allocation of state office overhead, while the Alaska,
Arizona, Montana, New Mexico, and Wyoming State Offices did not
charge the Fund for overhead. In our opinion, charging overhead
costs to the Fund directly conflicts with the Handbook
instructions that state, "No program oversight or administrative
costs should be coded to this account."
- The Arizona Strip District Office is spending an estimated
$3.5 million of Fund money on a research project to restore a
ponderosa pine ecosystem to pre-European settlement conditions.
The project is being designed by a university and basically
involves the following: removing young trees, leaving the old
growth trees, burning the underbrush, and seeding grasses. In
our opinion, the use of the Fund for this project is not
consistent with provisions of the Fund Coding Handbook because
the area has not been affected by fire, disease, or insects. In
addition, this project does not appear to meet the definition of
salvage timber provided in Bureau Instruction Memorandum No. 95
-132. Specifically, the memorandum states:
The term "salvage timber sale" is defined as a timber sale
designed to remove diseased or insect-infested trees; dead,
damaged or downed trees; or trees affected by fire or imminently
susceptible to disease or insect attack. Such sales may also
include removal of associated trees for purposes of ecosystem
rehabilitation.
Since this project does not appear to meet Bureau requirements,
we believe that it should be subject to the Bureau's budget
process and funded with appropriated forestry funds.
Forest Ecosystem Health and Recovery Fund Deposits. Our review
of deposits made to the Fund (Subactivity 5900) during fiscal
years 1995, 1996, and 1997 disclosed that the Craig, Colorado,
and the Worland and Rawlins, Wyoming, field offices posted
firewood and fencepost sales receipts to the Fund. During the
Bureau's 1996 Alternative Management Control Review of the Fund,
officials of the Prineville District Office stated that they
would like the authority to deposit firewood permit receipts
into the Fund. We believe that the Bureau should establish a
policy as to whether the estimated $200,000 per year in firewood
and fencepost receipts from the public domain lands should be
retained by the Bureau in the Forest Ecosystem Health and
Recovery Fund or deposited into the U.S. Treasury General Fund.
During the summer of 1996, an interagency review team concluded
that considerable variation existed in the types of timber sales
identified by field offices as meeting the definition of salvage
timber sales, ranging from sales of mostly dead trees to sales
of mostly live trees. The team, in its final report, stated that
the broad definition of salvage timber was a significant factor
contributing to this situation. On October 8, 1996, the
interagency team issued a report which recommended that the
Bureau and the U.S. Forest Service develop a common definition
of salvage timber which is within the limits of their underlying
legislative authorities. A March 4,1997, followup action plan
developed by the interagency team recommended a legislative
proposal to address this issue. This proposal had not been
submitted to the Congress as of September 1, 1997. We believe
that the Bureau of Land Management should review these matters
to ensure that the Forest Ecosystem Health and Recovery Fund is
administered effectively and efficiently.
Although the report did not contain any recommendations, the
Director, Bureau of Land Management, in a March 31, 1998,
response to the preliminary final report (Appendix 3), stated
that because of our report, "Several items were brought to BLM's
[Bureau of Land Management's] attention which will strengthen
the integrity of the program."
The legislation, as amended, creating the Office of Inspector
General requires semiannual reporting to the Congress on all
audit reports issued, actions taken to implement audit
recommendations, and identification of each significant
recommendation on which corrective action has not been taken.
We appreciate the assistance of Bureau personnel in the conduct
of our audit.
APPENDIX 1 OFFICES
CONTACTED OR VISITED
OFFICES CONTACTED OR VISITED LOCATION
National Offices Bureau of Land Management Budget Office
Washington D.C. Bureau of Land Management Finance Office
Washington D.C. Forest Ecosystem Health and Recovery Fund
Program Coordinator Boise, Idaho Forestry Program Office
Washington, D.C. National Business Center* Lakewood,
Colorado National Law Enforcement Office Boise, Idaho Office
of the Solicitor Washington, D.C. Arizona Arizona State
Office Phoenix, Arizona Arizona Strip District*
St. George, Utah California Eagle Lake Resource Area Office
Susanville, California Folsom Resource Area Folsom,
California Colorado Kremmling Resource Area Kremmling,
Colorado Royal Gorge Resource Area Office Canon City, Colorado
Idaho Idaho State Office Boise, Idaho Upper
Columbia/Salmon Clearwater Districts Coeur d'Alene, Idaho
Montana Butte District Office Butte, Montana Oregon
Oregon State Office Portland, Oregon Coos Bay District
Office North Bend, Oregon Eugene District Office
Eugene, Oregon Klamath Falls Resource Area Klamath Falls,
Oregon Medford District Office Medford, Oregon Roseburg
District Office Roseburg, Oregon Wyoming Worland District
Office Worland, Wyoming Rawlins District office
Rawlins, Wyoming
* Offices visited.
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