**Statement of**

**Under Secretary Mark Rey**

**United States Department of Agriculture**

**Before**

**SENATE COMMITTEE on ENERGY and NATURAL RESOURCES**

**Concerning**

**FOREST SERVICE**

**FISCAL YEAR 2008 BUDGET**

**February 28, 2007**

**Overview**

Mr. Chairman and members of the Committee, I appreciate the opportunity
to discuss the President's fiscal year 2008 Budget for the Forest
Service during today's hearing. I am pleased to join Gail Kimbell, newly
appointed Chief of the Forest Service, at this hearing today.

I will discuss two issues that relate to the 2008 Budget. First, I will
address changes in the Wildland Fire account and associated issues. I
will next address the need to provide further transitional assistance to
rural counties through the proposed National Forest Land Adjustment for
Rural Communities Act.

**Wildland Fire**

The 2008 Budget proposes a total of \$1.9 billion for activities
associated with Wildland Fire Management, including a new appropriation
for Wildland Fire Fighters. The events of the 2006 fire season make a
compelling case for these strategic changes.

On the heels of Hurricane Katrina, the 2005 fire season flowed
seamlessly into that of 2006---without the respite normally provided by
winter precipitation. From November through April, extreme low humidity,
persistent drought conditions, and winds contributed to the ignition of
fires through Texas, Oklahoma, Colorado, Missouri, and New Mexico. By
late July, the wildland fire fighting community had entered Preparedness
Level 5---the highest level of fire activity, during which several
geographic areas are experiencing simultaneous major incidents. During
2006 the Forest Service was at Preparedness Level 5 from late July
through late September, without intermission. Although the 2006 fire
season had one of the highest number of fire starts in a single day
(548), an extraordinary number of lightning-caused fires (over 16,000),
and a record number of simultaneous large fires (affecting nearly every
region in the country); it also resulted in significantly fewer
dwellings and other structures destroyed---750 homes lost in 2006 as
compared to more than 4,500 lost in 2003.

Despite many positive accomplishments, fire suppression expenditures
topped \$1.5 billion in 2006. Moreover, the agency has spent over \$1
billion on fire suppression in 4 of the last 7 years. The increasing
frequency of "billion dollar" fire-fighting years is driving up the 10
year average suppression cost figure, which is used to determine
suppression funding levels. Congress has repeatedly expressed concerns
about rising fire suppression costs. Large fire costs are a persistent
challenge for the agency and threaten to compromise the achievement
levels of other critical mission areas. In response, a number of key
actions are underway in fiscal year 2007, and the 2008 Budget request
makes additional significant proposals.

The most significant actions underway in 2007 include:

1.  **[From Appropriate Management Response to Risk-Informed
    Response]{.underline}**

The Appropriate Management Response (AMR) was articulated in the 2001
update of the Federal Wildland Fire Management Policy. Further, the 2008
Budget reflects refinement of the concept of AMR toward a risk-informed
fire suppression approach. This approach provides risk-informed fire
protection by introducing the concept of managing wildland fire in
relationship to the risk that the incident poses. If a wildland fire has
potential benefits to natural resources and poses a relatively low risk
to impact other valued assets, the fire would receive a lower intensity
suppression effort. Conversely, if a fire incident is determined to pose
high risk to property or community, high suppression efforts would be
applied. The approach utilizes risk management and tools such as
probability analysis and actuarial data to inform rigorous and
systematic ways to reach decisions that allocate resources on the basis
of risk posed by the wildfire and the strategy used by managers to
address it. The Forest Service has developed a draft guidebook that
presents a coherent strategy to implement this approach. DOI is
reviewing this guidebook and will work with Forest Service on
interagency implementation.

2.  **[Forest Service Chief's Principal Representative]{.underline}**

The Forest Service Chief will designate an individual with access to a
support team to provide oversight on fires of national significance and
assistance to local units and will collaborate with the DOI on DOI
lands. The individual will be highly experienced in wildfire management,
and the team will have knowledge and capability with decision-support
tools. These changes will immediately provide for experienced
decision-making that should reduce costs on large fires.

3.  **[National Shared Resources]{.underline}**

National resources such as smoke jumpers, hot shot crews and helicopters
will be moved to areas and incidents based on Predictive Services and on
Planning Levels. This will create a more centralized and flexible
management of these response resources. Funding and decision-making from
the national level will ensure consistency across regions, flexibility
in the assignment of resources and eliminate geographic concentration of
resources that impose costs in both time and money.

4.  **[Aviation Resource Cost Management]{.underline}**

Aviation resources will be managed more effectively to reduce their high
cost. A full-time National helicopter coordinator will be selected to
provide oversight for the assignment and positioning of helicopters.
Helicopter management will be centralized as a national resource. The
Forest Service will attempt to shift more to "exclusive use" versus
"call when needed" contracts for helicopters. This will increase
preparedness costs initially, but is expected to greatly reduce large
fire suppression cost with potential saving of tens of millions of
dollars per year. We will pursue longer term aviation contracts for all
aviation resources with increased performance-based contracting. DOI
also is pursuing strategies to reduce its costs.

**5. [Initial Attack and Severity Funding]{.underline}**

Efforts will be made to maintain our initial attack success while
reducing the dependence on severity funding. The Forest Service will
require lower thresholds for the approval of severity funding to be
elevated for approval by the Chief. National Shared Resources will be
pre-positioned whenever possible in geographic areas where fire risk is
the greatest during the fire season. The Forest Service and DOI agencies
will continue to submit a coordinated severity request so as to not
duplicate effort or expense.

In addition to the changes for 2007, the 2008 Budget proposes a separate
appropriation for Wildland Firefighters. The Budget proposal moves
funding for firefighters out of the Preparedness budget within Wildland
Fire, and into a separate appropriation. There is no net program change
as a result of this move. Importantly, this adds a higher degree of
visibility and transparency to fire suppression activities and provides
\$220 million for hiring and training the 10,000 firefighters necessary
to ensure a successful fire season.

The Wildland Fire account's Suppression line is funded at \$911 million,
reflecting the updated 10-year average for total suppression costs as
adjusted for inflation and includes indirect costs not charged to fire
suppression in previous years---but now required by Congress to be
included in the account.

The Budget funds Fire Preparedness at \$349 million, which is a
reduction of \$87 million as compared to the fiscal year 2007 estimate
when considering the strategic shifts and creation of the new Wildland
Firefighter account.

We expect that the management improvements implemented and underway will
enable managers to be better prepared for wildfires; help managers to
make better decisions during firefighting operations; and provide
managers with the tools necessary to analyze, understand and manage fire
suppression costs. While the factors of drought, fuels build-up in our
forests and increasing development in fire prone areas have the
potential to keep the number of incidents and total cost of wildfire
suppression high for some time to come, we are confident in our strategy
to address wildland fire suppression costs and are committed to action.
We believe that the measures discussed today promise to expand
efficiency and reduce suppression costs. We look forward to continued
collaboration with our Federal, State, local, Tribal, and other
non-Federal partners to address our shared goal of effectively managing
wildfire suppression costs.

**Continuing Transitional Support to Rural Communities through the
National Forest Land Adjustment for Rural Communities Act**

The Secure Rural Schools and Community Self-Determination act of 2000
(SRS) (PL 106-393) was enacted to provide transitional assistance to
rural counties affected by the decline in revenue from timber harvests
in federal lands. Traditionally, these counties relied on a share of
receipts from timber harvests to supplement local funding for school
systems and roads. Funding from SRS has been used to support more than
4,400 rural schools and to help maintain county road systems. In
addition SRS has authorized the establishment of over 55 Resource
Advisory Committees (RAC) in 13 States, which has increased the level of
interaction between the Forest Service, local governments, and
citizens---resulting in greater support and understanding of the
agency's mission. RACs have implemented more than 4500 resource projects
on National Forests, Grasslands, and adjacent non-federal lands with a
value from SRS funds and leveraged funds of more than \$292 million.

On September 30, 2006 the SRS authorization ended. The last payment
under this authorization was made in December of 2006. The
Administration continues to support a 1-year extension of the SRS Act
with agreed-upon full offsets as an interim step. The Budget underscores
the President's continuing commitment to states and counties impacted by
the ongoing loss of receipts associated with lower timber harvests on
Federal lands. The National Forest Land Adjustment for Rural communities
Act is included in the FY 2008 President's Budget to fund transition
payments targeted to the areas of greatest need, and to provide counties
additional time before payments are phased-out. Under the proposal, half
of land sales proceeds will be available to offset county payments and
half will be available for national forest acquisition or habitat
improvement in the states in which lands are sold. Counties benefit from
four additional years of payments, and states receive an environmental
benefit from exchanging land with low environmental values for lands
with high environmental value.

The National Forest Land Adjustment for Rural Communities Act would
authorize a four-year extension of the funding formerly provided by SRS.
The legislation would also provide conservation funding for National
Forests and Grasslands. Sale of identified National Forest System
lands---similar those lands described in the fiscal year 2007 budget
proposal---would provide funding to replace that which SRS had provided.
Our new legislation differs from our previous proposal by including
additional provisions which allow for land sale receipts to also be used
for the acquisition of land for the National Forest System, conservation
education, improved access to public lands, wildlife and fish habitat
improvement, and coverage of administrative costs of land sales and
acquisition activities.

This year's proposal addresses the concern that affected states would
not receive financial benefit from the sale of federal lands within
their borders. It does so by including a requirement that 50% of all
land sale receipts be retained for conservation purposes within the
State from which the receipts were derived.

The legislation would authorize the Secretary to sell excess national
forest land or interests in land that the Secretary determines to be
both eligible for disposal and in the public interest. 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 efficiently managed as
components of the National Forest System.

Isolated tracts can be expensive to manage because of boundary
management and encroachment resolution costs. The sales of these lands
will not compromise the integrity of the National Forest System;
instead, it will allow the agency to consolidate federal ownership and
reduce management costs. Land sales would be limited to a list of lands
identified by the Secretary. By selling lands that are inefficient to
manage or have limited ecological value, and subsequently 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.

Our proposal would authorize the Secretary to sell sufficient National
Forest land to fund an \$800 million dollar account. Under the
legislation, 50 percent of receipts obtained from land sales would be
used as a funding source to make SRS payments over a four year period
with a gradual phase-out. The remaining 50 percent of receipts from land
sales within a State would be used for conservation purposes.

Funds from the land sales account would supplement payments to the
states from National Forest and BLM timber receipts. For administrative
purposes, the Secretary of Agriculture would also make the supplemental
payments from this account for the Bureau of Land Management. Timber
receipts are expected to rise over the next five years, which will help
offset the payment phase-out.

Finally, the legislation would authorize the establishment of a National
Advisory Board to advise the Secretary on the land sales and the use of
their proceeds. State governments will be encouraged to participate in
formulating recommendations to the National Advisory Board for habitat
improvement projects and land acquisition needs. By selling lands that
are inefficient, isolated, or of limited-value and purchasing critical,
environmentally sensitive lands, the Forest Service will maintain the
integrity of the National Forest System while funding payments formerly
provided by SRS.

This concludes my statement, I would be happy to answer any questions
that you may have.