Hearings and Business Meetings

SD-366 Energy Committee Hearing Room 10:00 AM

Hon. Mark Rey

Undersecretary of Natural Resources and the Environment, Department of Agriculture

Statement of
Under Secretary Mark Rey
Natural Resources and Environment
United States Department of Agriculture

Before the
United States Senate
Energy and Natural Resources Committee

Concerning the
Forest Service Fiscal Year 2007 Budget

February 28, 2006


Mr. Chairman, members of the Committee, thank you for the opportunity to discuss the President’s Fiscal Year 2007 Budget for the Forest Service.  I am pleased to join Dale Bosworth, Chief of the Forest Service, at this hearing today.   

In my testimony, I will discuss two main issues.  First, I will focus on the proposal in the President’s Budget to continue funding for an amended Secure Rural Schools and Community Self-Determination Act.  Second, I will discuss the increased funding for the Northwest Forest Plan that is requested in the Fiscal Year (FY) 2007 budget, which will promote improved forest health and more robust forest products economies in the Pacific Northwest. 

Continuing Transitional Support to Rural Communities through the Secure Rural Schools Act

The Secure Rural Schools and Community Self-Determination Act of 2000 (PL 106-393) was enacted to provide transitional assistance to rural counties that had been affected by the decline in revenue from timber harvests on Federal lands.  These counties traditionally relied on a share of receipts from timber harvests to fund their school systems and roads.  The funding provided by the Act has been used to provide over 4,400 rural schools with critical funding and has addressed severe maintenance backlogs for county roads.  Resource Advisory Committees (RACs) established under the act have developed and proposed forest health improvement projects.  A recent study by the Sierra Institute for Community and Environment, Assessment of the Secure Rural Schools and Community Self-Determination Act – Dr. Jonathan Kusel (January 2006), on the effectiveness of RACs under title II and community programs under title III of the Act was encouraging.
Each year the level of interaction between RACs, local governments, and citizens has increased, resulting in broader support and understanding of our mission.  Additionally, funding for title III has also been used to complete community wildfire protection plans which are necessary to efficiently plan protection strategies for our rural communities.

The last payment authorized under the Act would be made in Fiscal Year 2007 based on timber and other receipt levels for Fiscal Year 2006.  The Administration is committed to provide transitional assistance to counties and States covered under the Secure Rural Schools Act.  The Department of Agriculture has worked hard to find the offsets needed to temporarily, while targeting and gradually phasing out, this assistance. 

Our legislative proposal described in the President’s fiscal year 2007 Budget for the Forest Service would amend the Act.  The legislation would provide a source of funding for payments under the Secure Rural Schools Act by authorizing the sale of certain National Forest System lands.  These parcels meet criteria identified in existing Forest Land Management plans as potentially suitable for conveyance.  Many of these lands are isolated from other contiguous National Forest System lands, and because of their location, size or configuration are not efficient to manage as a component of the National Forest system.  Isolated tracts can be expensive to manage because of boundary management and encroachment resolution costs.  The sale of these lands will not compromise the health or integrity of the National Forest System; instead, it will allow the agency to consolidate federal ownership and reduce management costs.

The legislation would authorize to the Secretary of Agriculture to sell an adequate amount of National Forest land to fund an $800 million dollar account that would be used to make Secure Rural Schools Act payments over a five year period.  For each fiscal year, the legislation identifies a specific amount from the account that may be used to make the payments.  Payments from the land sales fund will be adjusted downwards and eventually phased out.  This adjustment recognizes that the Secure Rural Schools Act provided transitional assistance to rural communities adapting to a changing timber economy and a changing federal role in resource extraction.

Funds from the land sales account would be in addition to payments to the States from annual timber and other receipts on National Forests and BLM lands.  For administrative purposes, the Secretary of Agriculture would also make the supplemental payments from this account for Bureau of Land Management O&C lands. Payments will continue to be targeted to the most affected areas.  Timber receipts are expected to rise over the next five years, which should further help in reducing the impact of the payment phase-out.
Since payments under the Secure Rural Schools Act began in 2001, the affected economies have made important strides in economic diversification and are now less dependent on federal timber receipts.  In addition, the Forest Service has reestablished itself as a catalyst for economic development by conducting hazardous fuels treatments that can result in a market in forest biomass.  Timber receipts are also on the rise as the “timber wars” have transitioned into a new era of cooperative conservation.  By selling isolated federal lands, we will further contribute to diversified rural government funding. 
When the federal lands are sold and become private property, they will be added to the county tax rolls, providing a sustainable funding source for local governments.  All of these factors combine into a unified plan to promote robust local economies and reduce the dependence of county governments on direct federal assistance.

The Administration remains committed to acquiring environmentally sensitive lands and protecting them from development.  This commitment is reflected in the President’s request for a $5 million increase in funding for the Forest Legacy program, which will protect an estimated 130,000 priority acres in FY2007 through the purchase of conservation easements or fee simple title.  In addition, our land acquisition program and land exchange program has been adding about 100,000 acres per year to the National Forest System for the last several years.  By selling lands that are inefficient to manage or are isolated with limited ecological values and purchasing critical, environmentally sensitive lands, the Forest Service will maintain the integrity of the National Forest System while funding payments under the Act in a fiscally responsible manner.

Increased Funding of the Northwest Forest Plan

The 2007 Budget also reflects the President’s commitment to sustainable forestry in the Pacific Northwest through increased funding for the 1994 Northwest Forest Plan Amendments.  The Northwest Forest Plan affects the management and administration of 24.5 million acres of Federal land, of which 19.4 million are managed by the Forest Service within 19 national forests in western Oregon, western Washington, and northern California.  The Northwest Forest Plan was designed to produce a predictable and sustainable level of timber sales while protecting the long-term health of forests, wildlife and waterways of the region.  The Plan has succeeded in meeting its environmental goals.  A 2004 Forest Service review of the first 10 years of the Northwest Forest Plan found that the net gain in older forests since 1994 was between 1.25 and 1.5 million acres, over twice the 600,000 acres expected during the first decade of the plan. 

The 2004 review found that the Plan has not been successful at providing a predictable level of timber and nontimber resources.  In order to recognize the needs of all parties affected by the Northwest Forest Plan, the President’s budget increases funding for the Plan by $66 million, with $41 million for forest products, $6 million for hazardous fuels treatment, and the remaining $19 million for assorted ecosystem management programs.  This level of funding allows the Forest Service to offer in 2007 the Plan’s goal of 800 million board feet of timber per year. 

The economies of the Pacific Northwest have experienced marked change over the past 15-20 years.  The region went from harvesting 10 billion board feet of timber in 1990 to 136 million board feet in 2000, and the forest economies of the region have suffered from the lack of a predictable timber supply.  The goal of the Administration is not to return to the peak levels of timber production; instead, the FY 2007 budget provides for a sustainable, predictable level of timber harvest that also protects forest health.  The current forest products economy offers great opportunities for businesses able to use new technologies and tap into expanding markets for new products.
With a predictable timber supply established, the Pacific Northwest will be better equipped to adapt and succeed in the changing forest products market. 

One of the best examples of new opportunities in forest products is the rapidly expanding market for wood pellets as a fuel source.  The demand for wood pellets for commercial and home heating has boomed as Americans face higher heating costs from traditional sources.  Wood pellets suppliers have reported shortages from New Mexico to Rhode Island.  Pellet producers, such as Forest Energy Corporation in Show Low, Arizona, are running their processing mills 24 hours a day and seven days a week to try and meet demand.  In making the wood pellets, Forest Energy Corporation uses the small-diameter wood produced from hazardous fuels treatments in Arizona’s national forests.  Expanded funding for the Northwest Forest Plan will create similar win/win situations in which both sustainably harvested timber and the byproducts from hazardous fuels treatments are used to meet the growing demand for forest products. 

In addition to meeting the Northwest Forest Plan’s timber targets, the Forest Service will improve over 3900 acres of terrestrial wildlife habitat and 120 miles of fisheries habitat in FY 2007.  The Forest Service has developed a comprehensive strategy for aquatic restoration within the Northwest Plan area to restore priority watersheds. 

The President’s Budget also enables the Forest Service to continue to emphasize the treatment of hazardous fuels in the wildland-urban interface and address the reforestation needs of recent large forest fires.  With the expanded NWFP funding, the agency will continue to emphasize partnerships and integrated projects to protect municipal watersheds, recover habitat for endangered and sensitive species, and control the spread of invasive species.

The 2007 President’s Budget provides $610 million to continue implementation of the Healthy Forests Initiative, to reduce hazardous fuels and restore forest health. The budget proposal, more than a $12 million increase over 2006, takes an integrated approach to reducing hazardous fuels and restoring forest and rangeland health. Along with $301 million to the Department of Interior (DOI), the FY2007 budget provides a total of $913 million to implement the Healthy Forest Initiative and the Healthy Forest Restoration Act.

Through the continuation of the Secure Rural Schools Act and through expanded funding of the Northwest Forest Plan, the President’s Budget promotes sustainable rural communities and the expansion of a forest products economy that is compatible with improved forest health.  These efforts, in combination with the President’s continued support of the Healthy Forest Initiative, highlight the Forest Service’s commitment to managing the nation’s forests and grasslands with greater innovation and renewed efficiency.  I look forward to working with Congress to enact the President’s FY 2007 budget.


Finally, today I would also like to announce our plan for establishing a number of advisory committees and councils throughout the country to afford communities and citizens the opportunity to provide input into the recreation fee program as prescribed in the Federal Lands Recreation Enhancement Act (REA) which was enacted into law as part of the 2005 Consolidated Appropriations bill.

In conjunction with the Department of the Interior’s Bureau of Land Management (BLM) we will work with existing BLM Advisory Councils in seven western states (Idaho, Montana, Utah, Nevada, Colorado, Arizona, and New Mexico) to jointly use the seventeen existing councils in those states to provide a forum for public involvement in the recreation fee program for both agencies.

In addition, we will establish six new Recreation Resource Advisory Committees (RRACs) covering the Northeastern US, Southeastern US, the States of Oregon and Washington, California, Alaska and Nebraska.  With the exception of the State of Alaska, these new committees will be established in association with the BLM.

We look forward to working jointly with the BLM to provide ample opportunities for citizens, communities and local governments to have an opportunity to present input on how the recreation fee program is administered in our respective agencies.  We see this as a great opportunity to build support and understanding for the recreation fee program as well as provide an important communication link between government and the public.  Thank you for your continued support of this program.

At this time I would be pleased to answer any questions.