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94-954 PDF 2004

S. HRG. 108–566

THE ROLE SMALL BUSINESS SHOULD PLAY IN

MAINTAINING FOREST HEALTH

FIELD HEARING

BEFORE THE

COMMITTEE ON SMALL BUSINESS AND

ENTREPRENEURSHIP

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

FEBRUARY 19, 2004

Printed for the Committee on Small Business and Entrepreneurship

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/senate

(II)

COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

ONE HUNDRED EIGHTH CONGRESS

OLYMPIA J. SNOWE, Maine, Chair

CHRISTOPHER S. BOND, Missouri

CONRAD BURNS, Montana

ROBERT F. BENNETT, Utah

MICHAEL ENZI, Wyoming

PETER G. FITZGERALD, Illinois

MIKE CRAPO, Idaho

GEORGE ALLEN, Virginia

JOHN ENSIGN, Nevada

NORMAN COLEMAN, Minnesota

JOHN F. KERRY, Massachusetts

CARL LEVIN, Michigan

TOM HARKIN, Iowa

JOSEPH I. LIEBERMAN, Connecticut

MARY LANDRIEU, Louisiana

JOHN EDWARDS, North Carolina

MARIA CANTWELL, Washington

EVAN BAYH, Indiana

MARK PRYOR, Arkansas

WESTON J. COULAM, Staff Director

PATRICIA R. FORBES, Democratic Staff Director and Chief Counsel

(III)

CONTENTS

OPENING STATEMENTS

Page

Enzi, The Honorable Mike, a United States Senator from Wyoming ................. 1

WITNESS TESTIMONY

Cables, Rick D., Regional Director, U.S. Forest Service, Rocky Mountain

Region 2, Lakewood, Colorado ............................................................................ 7

Bennett, Bob, State Director, Wyoming Bureau of Land Management, Cheyenne, Wyoming ..................................................................................................... 13

Neiman, Jim D., Neiman Enterprises, Inc.; Neiman Timber Company, LLC,

Hulett, Wyoming .................................................................................................. 25

Jachowski, Kathleen P., Public Relations, Cody Lumber, Inc., Cody, Wyoming 30

Schmidt, Ernie, President, Wyoming Sawmills, Inc., Sheridan, Wyoming ......... 35

Erickson, Gary M., Manager, Bighorn Lumber Company, Inc., Laramie, Wyoming ...................................................................................................................... 39

Model, Robert, Owner, Mooncrest Ranch, Cody, Wyoming .................................. 46

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Bennett, Bob

Opening statement ........................................................................................... 13

Prepared opening statement ............................................................................ 16

Cables, Rick D.

Opening statement ........................................................................................... 7

Prepared opening statement ............................................................................ 10

Enzi, The Honorable Mike

Opening statement ........................................................................................... 1

Prepared opening statement ............................................................................ 4

Erickson, Gary M.

Opening statement ........................................................................................... 39

Prepared opening statement ............................................................................ 42

Jachowski, Kathleen P.

Opening statement ........................................................................................... 30

Prepared opening statement ............................................................................ 33

Additional comments ........................................................................................ 66

Model, Robert

Opening statement ........................................................................................... 46

Prepared opening statement ............................................................................ 49

Neiman, Jim

Opening statement ........................................................................................... 25

Prepared opening statement ............................................................................ 28

Schmidt, Ernie

Opening statement ........................................................................................... 35

Prepared opening statement ............................................................................ 37

(1)

THE ROLE SMALL BUSINESS SHOULD PLAY

IN MAINTAINING FOREST HEALTH

THURSDAY, FEBRUARY 19, 2004

UNITED STATES SENATE,

COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

Washington, D.C.

The Committee met, pursuant to notice, at 10:00 a.m., in the

Taggart Room, Holiday Inn, 1701 Sheridan Avenue, Cody, Wyoming, the Honorable Mike Enzi presiding.

OPENING STATEMENT OF THE HONORABLE MIKE ENZI,

A UNITED STATES SENATOR FROM WYOMING

Senator ENZI. I will call to order this hearing of the Senate Small

Business and Entrepreneurship Committee on the Role of Small

Business in Maintaining Forest Health.

I appreciate the nice turn out today. I want to welcome the students from Cody High School. I want you to know this is approximately what a hearing would be like in Washington, D.C. The room

would be a little bit different, the tables would be a little bit different, but the attendance would be about the same.

I will be the only Senator at this hearing. Except for the little

bit of press time that we have at the beginning of a hearing, that

would be about the same as well.

The purpose of a hearing is to gather information to build a

record in a specific way, so the Committee Chair approves hearing

witnesses along the guideline of building a record.

The way we build a record is the testimony from the witnesses,

questions of the witnesses, and then if there is time, questions from

the people in the audience. We have some blank question forms for

you to fill out. If you fill out a question, even if we don’t have time,

there will be an answer to that question in the record.

That is the way we get the information. It is then reviewed by

other Senators and their staff, and is shared on the floor of the

United States Senate and in the Committees when we are doing

the markup.

I am really excited about today’s hearing. There hasn’t been any

record built on the affect of small business on maintaining a

healthy forest and this will be our opportunity to do that.

We have some very highly qualified panelists. We have two panels today. The first one is a panel from the Federal Government

and the second one is called a panel from the community.

Of course, as all of you know, the community in Wyoming is the

whole state. We are one community with very long streets. I think

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Governor Sullivan first used that line and it really turns out to be

true.

Any time you meet somebody from Wyoming, you are probably

only about two people removed from somebody that they also know,

whereas in the rest of the United States, you have to go through

probably an infinite list before you run into somebody that the two

of you know. I have had a lot of opportunity across the United

States to try that out.

I will begin this morning with a few other brief comments. I

should mention that while the participants, including myself, will

be limited to 5 minutes on statements, that is a rather loose limit.

We would appreciate it if you would try and condense the information down into 5 minutes and stay within the 5 minutes.

But anything that you have that you want to be a part of the

record, will be made a part of the record, so you can have a full

statement that is considerably more extensive.

I will mention again at the end of the hearing, we will keep the

record open for 10 days for additional items that any of the panelists want to include, and also to provide an opportunity to get answers to the questions that may not have been asked during the

hearing.

My goal in holding this hearing is to take a deeper look at the

influence that Federal land management agency decisions have on

the success of Wyoming’s small business community—particularly

as those decisions apply to management of our State’s forest lands.

I also want to establish that we need more partnerships between

Federal agencies and local small businesses to restore our forests

to a point where all the many uses of our forest lands can exist free

of the significant threat of destruction by catastrophic wildfire.

I also want to put to rest the notion that using our forest products industry to restore our forests to a state of health creates a

conflict with any other use. The reality is that our forest products

industry is not in conflict, but is in fact one of our best tools, to

maintain and preserve the entire forest ecosystem.

There is no question in my mind that small businesses and small

communities can and should play an important role in maintaining

forest health on our Federal public lands. Unfortunately, both our

forests and our forest communities are dying of neglect and underutilization.

There are more than 100 million acres of Federal forest lands

that now exist under an unnaturally high risk of catastrophic

wildfires and large scale insect and disease outbreaks because of

unhealthy forest conditions.

I have had an opportunity to tour forests in the State, particularly in this area. I had a great tour that was conducted by some

of the folks near the boundaries of Yellowstone.

I was up there when the forest fires were raging near the east

entrance a couple summers ago. The fire fighters up there explained to me what would happen if the fire jumped out of the park

and into the beetle killed forest that was adjacent.

Of course, they had already had meetings with people from the

Boy Scout Camp and every lodge down the valley so they had evacuation plans.

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There is no question that fire is a part of the natural world. No

one knows this better than the men and women of Wyoming who

risk their lives each year to protect and save homes, lives, property

and the environment from the terrible threat of catastrophic wildfire.

Catastrophic wildfires not only cause damage to the forests and

other lands, but place the lives of firefighters at risk, pose threats

to human health, personal property, sustainable ecosystems, and

air and water quality, and burns good lumber.

So far Wyoming has been lucky in that some of our most dangerous areas have not yet caught fire. I am deeply concerned that

our efforts may be too little too late and that we will have missed

our window of opportunity to form the kind of small business/Federal agency partnership that could have saved our forests from destruction.

I want to say the reason I am placing the emphasis on small

business is we know that small businesses are the most flexible,

the most able to revise their business plan, so that it will fit with

the situation. Also their business is limited to the area where they

live and they are as interested in protecting that as anyone else.

I think I will condense my remarks to that point and put the rest

of my information in the record and move on to the witnesses.

[The prepared statement of Senator Enzi follows:]

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Senator ENZI. Our first witness today is Mr. Rick Cables, Regional Forester for the U.S. Department of Agriculture, U.S. Forest

Service, Rocky Mountain Region.

He has been serving as the Regional Forester since January

2001. He is responsible for the administration of more than 22 million acres in 17 National Forests and 7 National Grasslands. His

agency also works on a number of cooperative efforts with State

and private landowners in Colorado, Kansas, Nebraska, South Dakota and eastern Wyoming.

He is a native of Pueblo, Colorado, and graduated from Northern

Arizona University Forestry School in 1976. He has served in a

number of forests, the Kaibab National Forest in Northern Arizona,

the White Mountain National Forest in New Hampshire and

Maine, and the Pike and San Isabel National Forests and Comanche and Cimarron National Grasslands in Colorado and Kansas.

He has also served as Regional Forester of the Alaska Region, covering the Tongass and Chugach National Forests.

Mr. Cables.

STATEMENT OF RICK D. CABLES, REGIONAL DIRECTOR,

U.S. FOREST SERVICE, ROCKY MOUNTAIN REGION 2

Mr. CABLES. Thank you, Senator Enzi, for the invitation today

and good morning to everyone. I would really like to thank the

Committee for inviting us here and for holding this hearing. I am

delighted to be here.

I think that the U.S. Forest Service, in this whole issue of forest

health, needs to get in front of more Committees like this.

Traditionally, we speak to Committees—such as Agriculture and

Natural Resources—and those are important, but this problem is

larger than the purview of those kind of Committees just by themselves, and it is certainly larger than the U.S. Forest Service.

We need to talk about the state of our National Forests, and we

have to solidify a partnership with communities and business.

It will take all of us working together to insure healthy forests

for all Americans today and for those that follow us.

When I look at the problem that is in front of us today, and I

think you outlined it very well, Senator Enzi, forests and grasslands in the Rocky Mountain Region are in vital need of efforts to

restore their ecological health and reduce the effects of catastrophic

wildfire which, unfortunately, we have experienced on a very large

scale in the past few years in Wyoming, Colorado, and the Black

Hills of South Dakota.

We, all of us, depend on forests in a variety of ways; for our

water, for our recreation, and for our livelihoods.

Many of our forests are at risk. They are threatened by fire, disease and insects. They are threatened by invasive species, by the

loss of open space on the edges of those forests which threatens the

livelihood of ranchers and other members of the community, and by

unmanaged recreation. As a result, people, communities and businesses are at risk too.

That is why being here today is so important. This is the first

step, I think, in acknowledging and recognizing that we need much

more help from a broader spectrum of society and the economic

base to help us do this work.

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Restoring the forest will take all of us working together. Critical

to the success of our restoration efforts is the need for sufficient infrastructure—industry infrastructure to handle the biomass that is

generated from these restoration treatments.

We need the help of the forest products industry to provide the

means for restoring our forests. It is that simple.

To restore healthy forests we often need to remove smallerdiameter, low-value trees in addition to harvesting larger saw-log

size trees.

In many areas of the Rocky Mountain Region, the forest industry

infrastructure needed to help us accomplish this work does not

exist to the extent it once did or does not exist at all.

This, of course, makes it much more difficult for us to accomplish

our objectives.

In areas where a viable forest industry remains, I want to provide opportunities for the industry to expand its capabilities to utilize small-diameter, low-value trees as well as maintaining historic

use of the larger trees.

I realize the importance of building on the existing forest industry infrastructure as much as possible because it will be a much

tougher road for us to ever entice brand new companies to make

investments in brand new facilities, so we have to hang onto what

we’ve got.

Business, small business in particular, has a critical role to play.

Businesses are part of the balance in our new approach to healthy

forests. It is going to take promotion and discussion and whatever

incentives are appropriate for business to fully join this long-term

effort and I think Committees like this can really help us in that.

Fortunately, we have some new tools that will make it easier to

expand and develop ongoing partnerships. End results—or so-called

‘‘stewardship’’ contracting, which began as a pilot program in 1999,

was formalized in legislation late last year.

As a result, the Forest Service can enter into contracts for up to

10 years with companies. Contractors obtain forest and range land

products in return for tree and brush thinning, removing dead

wood, or a wide range of other services.

It is goods for services, and the end result is contracting that focuses on what’s on the land when we are finished, not what we

take from the land.

These longer contracting periods give business the means to buy

and amortize equipment and infrastructure. We haven’t had that

tool in the past. It gives us 10 years, which is a huge advantage.

We have six stewardship projects underway or in the planning

stages in Wyoming right now and there are more to come.

A second major tool that is going to help us is the Healthy Forest

Restoration Act which the President signed in December. It is designed to reduce hazardous fuels and restore the health of the forest and range land.

The Healthy Forest Restoration Act is not a program. It does not

provide more funding. It instead gives the Forest Service and the

Bureau of Land Management, the Interior agencies, the authority

to work in new ways to leverage tax dollars to accomplish our goals

by working with the private sector. It offers opportunities for small

businesses and entrepreneurs.

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There are opportunities for consultants to work with communities in developing community wildfire protection as well, which

is an element of this law. The law also streamlines the review process for projects that meet defined criteria.

In other words, the Healthy Forest Restoration Act enables us to

respond quickly to situations and to our partners working toward

shared goals.

The President and Congress have shown they recognize the problems in our forests. They have given us tools to help us tackle those

problems.

I can’t think of a time in my career where we have had more

alignment around identifying the problem and having the tools to

work on it.

We can’t afford to treat all the land that needs it and we certainly can’t depend on taxpayer dollars only to treat these lands.

We need infrastructure, we need a healthy forest products industry, and we need balance.

This hearing and the discussions we have today could be a major

step toward the goals we all seek—an ongoing cooperative effort

that benefits everyone involved.

Thank you for the opportunity to comment. I look forward to the

questions.

[The prepared statement of Mr. Cables follows:]

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Senator ENZI. We will proceed to the second witness then, who

today is Mr. Robert A. Bennett, Wyoming State Director of the U.S.

Bureau of Land Management.

Bob has the fine distinction of being born in 1943 in Bremerton,

Washington, about the same time I was born there. I noted though

that you also have chosen to come to Wyoming to live and work.

Before moving to Cheyenne to become Wyoming State Director in

2002, Bob spent 16 years in Wyoming with the BLM as a Branch

Chief for Environmental Coordination, Special Assistant to the

State Director, Branch Chief for Solid Minerals, and Assistant to

the Deputy State Director for Minerals.

In 1989 he became the Deputy State Director for Minerals. Bob

served in this capacity from 1989 with the exception of a 10-month

break when he served as the Acting State Director. In January of

2000, Bob was appointed to the position of Associate State Director

for BLM.

Mr. Bennett.

STATEMENT OF BOB BENNETT, STATE DIRECTOR,

WYOMING BUREAU OF LAND MANAGEMENT

Mr. BENNETT. I appreciate it, Senator. I also have to point out

that my blood is still a forester. I was a graduate from the University of Montana in Forestry and I got my advanced degree in

Silvaculture. So this is a fun hearing for me.

I would like to thank you for inviting me to participate in today’s

hearing on opportunities for small businesses in forest health activities on public lands. I am Bob Bennett, State Director for the

Bureau of Land Management in Wyoming.

The Bureau of Land Management manages the public lands in

Wyoming, some 18 million surface acres comprising approximately

30 percent of the State’s land base.

It manages for multi use, not only forest management but also

includes energy development, wildlife habitat, recreational opportunities, scenic vistas, wild horses, minerals, paleontological and cultural resources, and, of course, livestock grazing.

Because of revenues from mineral leases, royalties, bonuses,

shared revenues from grazing fees, and economic opportunities

from public land-based commodity development, Wyoming remains

one of the few states in the country without a state income tax.

A couple of highlights: Wyoming leads the nation in coal production with approximately 29 states using coal from public lands in

the Powder River Basin to generate electricity.

Trona, that is soda ash, mined from Federal and private land in

the Green River Basin provides 90 percent of the nation’s supply

and 30 percent of the world’s supply.

Coalbed natural gas development for electricity generation will

increase dramatically as operators expect to drill more and more

wells in the next decade.

Revenue sharing from energy activities on public lands in Wyoming brought $467 million to the State in fiscal year 2003. Hunting

trips and recreation-related activities on Bureau-administered

lands in Wyoming generate more than $126 million annually.

Scattered across the public lands in Wyoming managed by the

Bureau are approximately 1 million acres of woodlands and forestVerDate 03-FEB-2003 12:04 Aug 19, 2004 Jkt 094954 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 D:\SBA\94954.TXT SSC2 PsN: SSC2
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lands. These serve as, for the most part, transition zones between

rangelands and National Forest System lands. Many are isolated

and, in some cases, difficult to access.

In Wyoming, as in other western states, there is an urgent need

for action to restore the health of the public forests and rangelands.

To reduce the risk of catastrophic wildfire on our public lands,

President Bush, in the summer of 2002, established the Healthy

Forests Initiative.

The Healthy Forests Initiative focuses on reducing the risk of

catastrophic fire by establishing a framework for protecting communities and the environment through local collaboration on

thinning, planned burns and other forest restoration projects.

The initiative builds on a 10-year comprehensive strategy for a

collaborative approach for reducing wildfire risks to communities

and the environment, adopted in May 2002 by Federal agencies in

cooperation with western and southern governors, county commissioners, state foresters and tribal officials. On December 3, 2003,

President Bush signed the Healthy Forests Restoration Act, Public

Law 108–148, vital legislation that supports the Healthy Forests

Initiative.

The President’s proposed budget for fiscal year 2005 includes $760 million to be used by the Department of the Interior and the

Department of Agriculture to continue implementation of the

Healthy Forests Initiative.

The budget proposal takes an integrated approach to reducing

hazardous fuels and restoring forest and rangeland health. The

fuels reduction program will be integrated with programs that support wildlife habitat improvements, watershed enhancements, vegetation management, and stewardship contracting to achieve more

comprehensive and effective results on the ground.

Activities on the public lands to promote and restore forest and

rangeland health present opportunities to small business and local

communities. Recently enacted legislation, Public Law 108–7, Consolidated Appropriations Resolution, 2003, authorizes Federal

agencies to contract with small businesses to perform forest health

activities.

This stewardship contracting authority allows Federal agencies

to enter into long term, up to 10 years, contracts with small businesses, communities, and nonprofit organizations to reduce wildfire

risk and improve forest and rangeland health.

This authority allows contractors, community groups, and others

to trade the value of forest and woodland materials as payment or

partial payment for their service, while improving environmental

conditions and adhering to applicable environmental regulations.

Long term contracts foster a public/private partnership to restore

forest and rangeland health by giving contractors the incentive to

invest in equipment and facilities needed to productively use material from forest thinning to make useful wood products or to

produce biomass energy.

The Bureau has already begun to use this authority. On the

BLM managed lands in Wyoming, three stewardship contracts are

expected to be offered in 2004.

Among the expected benefits of stewardship contracting is production of biomass energy. The White House announced that the

15

authorities in the Healthy Forests Restoration Act of 2003 will,

among other priorities, encourage biomass energy production

through grants and assistance to local communities creating market incentives for removal of otherwise valueless forest material.

The President’s Healthy Forests Initiative, the National Fire

Plan and the 10-year Comprehensive Strategy all call for biomass

and wood fiber use.

One problem has been that markets for biomass and small wood

are sporadic and marginally economic in most western states. Long

term stewardship contracting presents opportunities for a steady

supply, new markets and product uses.

Just last month, the Departments of the Interior, Agriculture,

and Energy joined the Western Governors’ Association and National Association of Counties in sponsoring a conference to address

the use of woody biomass as an effective restoration and hazardous

fuel reduction tool that delivers economic and environmental benefits.

In conclusion, the Bureau of Land Management in Wyoming is

moving ahead with activities to restore forest and rangeland

health. In 2004, we expect to offer contracts for forest health treatments and hazardous fuels reduction, and to develop opportunities

for using the by-products of such land and resource treatments. We

are interested in working in partnership with other Federal, State,

local, and tribal agencies as we continue to implement the President’s Healthy Forests Initiative.

This concludes my comments and I will be happy to attempt to

answer any questions.

[The prepared statement of Mr. Bennett follows:]

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Senator ENZI. I thank both of you for your testimony. It has been

very helpful. I do have a few questions.

The first question is for both of you. In order to utilize Wyoming’s small business community, it is very important to know

what resources are available. I am interested in how many small

businesses in Wyoming your agencies are using to conduct forest

health restoration work. Do your agencies conduct regular surveys

to ascertain what the available resources are in the communities

particularly of small business and, if not, when will a survey be

done?

Mr. CABLES. The answer is, I don’t believe we do surveys. I am

not aware of surveys that we do in any kind of comprehensive way

that assess the number of small businesses we work with.

We have, in our organization, Senator Enzi, the National Forest

System lands where we are managing the lands themselves, and

then we have another whole branch of the agency—called State

and Private Forestry—which funnels money through the States,

and primarily the State Forester, to help with economic action

plans and economic development and those sorts of things.

I believe we have some data from that part of our organization

that can help do an assessment of the number of small businesses

we work with.

I am not aware that we actually have a survey along the lines

of the question you were asking.

Senator ENZI. How about the BLM?

Mr. BENNETT. I understand that the question actually is a compound question, and as with Rick, I am unaware that the Bureau

has an inventory of small businesses that would contribute to the

Forest Health Initiative that is, an identification or location for

those.

However, I believe that virtually all of the contracts that we

would offer or are offering, qualify as small business—that is that

they meet the criteria for small business.

Those activities that we would fund, such as thinning or timber

stand improvement or fire hazard reduction, those for the most

part, would be offered and I think for the most part available and

certainly encourage small business to take part.

I think most of those contractors would be classified as small

business. I know there were a couple other aspects to that Senator

Enzi. Do we have the listing, are we using them, and I apologize

that I missed part of it.

Senator ENZI. That is okay. I think from your answers I have a

feel for it. I, of course, am hoping the agencies will survey to see

what small businesses are available to work on any of the forest

projects that there are.

I just finished doing a procurement conference in Gillette and the

purpose of that conference was to bring in Federal agencies to meet

with small businessmen from the State of Wyoming to see what

contracts they might be able to get.

In every Federal agency there is a requirement that there has to

be a priority for small business, and I am just trying to do something to pull the small business communities into the discussion so

they participate.

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As I mentioned before, they are usually more flexible so they can

shift to different ideas more quickly than others. They also live in

the communities where the work is being done. They have to live

with the community and with the forest and are often very good

at working between the two.

I am expecting the individual National Forests in addition to the

district offices to meet with local forest products companies to substantially discuss long range objectives, the industry’s capabilities,

their logging capabilities and strategies to help both the agencies

and the forest products industry.

Mr. Cables, you mentioned in your testimony that The Healthy

Forest Restoration Act does provide for consultants to help develop

plans for communities. Could you give me a little more information

on how that might work and would it work in conjunction with

small businesses?

I am a little leery of a consultant coming in and being paid by

the hour from some other part of the country and leaving small

business out of the mix.

Mr. CABLES. Well, first of all, the Healthy Forest Restoration Act

has a provision in there where we consult and work closely with

communities to develop community wildfire protection plans.

That process actually helps define the area in and around those

communities that we can treat to put the forest in a healthier condition.

It is unique and it allows the communities to help define the

area that gets treated. Instead of just us, the Federal agencies are

defining it, the community gets to define it.

Those plans have to be developed within the authorities described in the new legislation. I see an opportunity there for some

consultants or other folks working with the State, a State Forester,

and others to build those plans with the communities.

Now, I share your concern about who might do that. There is an

example down in Albany County where a local volunteer fire department chief, a fellow by the name of Scott Davis, recently started his consulting business to write what we call ‘‘Fire wise’’ plans,

which are stewardship plans for private landowners within the

county and state.

The Wyoming State Forestry Division requires that landowners

have an approved plan in order to get cost share funding through

us.

There are examples in Wyoming where we do have local folks

who have stepped into this role and are helping do some of these

plans.

That is another dimension of small businesses that I think can

benefit from some of these things.

Mr. BENNETT. Similarly, we also have examples where that has

been the case and actually, I think that your point about the flexibility of a small business to change direction and to respond is actually well taken on what Rick said because in this case we have

an example of an individual who had the expertise, could do the

job, knew the local situation, knew the hazards, and knew the people. If we can, the Forest Service in this case, could capture all of

those benefits and fortunately, in bidding the job, because he was

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local, and because of his expenses, was probably a very competitive

bid.

It seems to me like those kinds of examples, we ought to be able

to capture. I know also, our fire control people had talked about

similar examples.

It is out there and I think your point about local is actually one

of the strengths of small business doing this kind of work in the

local area.

Senator ENZI. Thank you. I guess what kind of brought all of this

to my attention was finding out about a little project over in another state, Rapid City, South Dakota.

They have a forest that comes down, evidently, almost to the city

and they decided they needed to kind of clean that up and prevent

some fires. Great idea.

They hired one company to come in and take out the timber,

which was the logging company, and then they hired another company to come in and take out the under brush.

Of course, the company that took out the timber explained to me

that, had they known there were the two contracts available, they

would have been able to do that much cheaper than having two

separate contracts and having two different set ups.

I think that better coordination and a little better understanding

sometimes helps to save some costs.

Mr. CABLES. Senator, can I just comment on that? That is why

this end result/stewardship contract is written the way it is, because it defines the end result that you want on the land and then

you can get a contract to produce that end result; instead of having

multiple contractors come in at different points in time, the expenses of that, move in move out costs, and so on and so forth. This

new authority really gives us the ability to do that.

Senator ENZI. I appreciate your saying that. I helped draft that

part of it, specifically with that problem in mind.

Mr. Cables, last week at the Wyoming Legislature you said the

biggest challenge was to engage the private sector to accomplish

the needed management work on the National Forest.

The speakers on the second panel will explain their viewpoint on

the Forest Service and the lack of a predictable and consistent supply of timber from the National Forests. That is their biggest problem.

With this apparent direct self-interest, that both parties have in

coming together to make something happen, can you give me any

insight on what the hold up might be? Why haven’t the two positions come together more to form more partnerships?

You did mention the six partnerships in your opening statement

and I am pleased at that, but is there something more the industry

ought to be doing, or is there something more that Congress needs

to do, or is there something more that your agency needs to do? Do

you have any suggestions for us to bring people together?

Mr. CABLES. You bet, Senator. I think the industry is doing a lot

already. I mentioned at that hearing you just referenced down in

Cheyenne that I had the opportunity to tour one of Jim Neiman’s

mills in Hill City. I was so impressed with the investment he has

made and their ability to utilize smaller material with laser guided

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saws to get the most utilization out of a log, even if it is crooked

and not very useable in our old technology.

He has also developed the ability to use the mill in Hill City for

small diameter material and then the mill in Hulett for larger diameter material, which in turn subsidizes the small diameter material, and he needs both.

I think that illustrates one of the issues that we have and that

we have to really help. We can’t expect industry to only take material that is not economically viable, because that is not going to

work.

I was talking to Ernie Schmidt earlier and he is going to speak

on his operation there in Sheridan. He has a lot of new technology

to use smaller diameter material and new technologies to create Ibeams and floor joists and that sort of thing. I know Ernie’s going

to talk about that.

I think industry has done a lot. The Forest Service, we can do

more. I would point out that we are trying already, and if you look

at this graph over here on the right, this is the trend, in the 3

years I have been in this region, of the number of acres we are

treating.

The volume that we have offered, for example, in the State of

Wyoming has increased to 17 million this year and it is going to

be 54 million next year. We are talking about a significant increase

of wood available on the market. Some of it is small diameter and

some is large diameter.

I think the real effect of stewardship contracting, which only

passed a year ago, and the Healthy Forest Restoration Act, which

is only 2 months old—we haven’t felt that yet.

We have to have a little bit of time to really fully utilize those

new authorities. We are working as fast as we can to make those

reality, because there is a high sense of urgency on our part to get

the land treated.

I know there is a high sense of urgency on the industry’s part

to stay viable because we need each other. I think part of our, the

agency’s, issue is the lag time to implement these new tools.

What can Congress do, the third part of that? This hearing is a

very positive step here. As I said to you before the hearing, we

need to spend time with Committees that aren’t the traditional

Committees we get in front of.

We have to talk about the effect of international trade on the

wood products industry in this country. It is significant.

I think where Congress can really help us is by holding hearings

like this and giving us an opportunity to have this dialog so there

is a higher degree of understanding of just what the issues are.

Senator ENZI. I appreciate that. I also serve on the Foreign Relations Committee so maybe we can have some international trade

discussions as well that deal with our forests. Mr. Bennett, did you

want to make a comment on that?

Mr. BENNETT. I think I would echo much of what Rick says. I

think there are some things that, at least from my position and not

because of the acreage involved, you know, the Bureau is not a

heavy player in the forest products industry certainly here in Wyoming.

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I also think that we need to be thinking about a redefinition of

forest products too. As a young forester, I was also looking at what

was merchantable and comparing that to what the site could

produce.

I think that we have to redefine that to total biomass as opposed

to merchantability so we not only are measuring and planning for

what is merchantable, but also what the total capacity and productivity of the land is so that we are thinking about biomass in terms

of what new products and what new things can come out of that,

certainly fuel itself.

I think we need to be somewhat more creative in terms of what

products and it takes time to do that. Certainly, small business,

they have a real role to play in that because they are creative.

They do think outside the box and they seize opportunities and

they can do it much more quickly.

I know that the Forest Service does have research facilities and

I think that maybe emphasis should be placed on the development

of more merchantable or more valuable products on what has traditionally been non-merchantable and then certainly outreach to the

industry with the results. Those kinds of things. What are those

products and what can business play in terms of using those products.

Again, I would certainly echo Rick’s statements about the international aspect of this. It is my understanding, of what the United

States could produce in terms of timber products, we are simply

not getting everything out of it that we should be.

We are importing when in a large respect I think we could be

relying on our own local industries and capacity.

Senator ENZI. Thank you. In our legislation we placed a rather

limited number of acres in the category of needing to be cleaned

up and it is not nearly all of what should be done.

Does the Forest Service have any estimates of the number of dollars that it will take to clean up the forest? Also is there a comparison between the number of dollars it will take if the Forest Service

does it as compared to using the normal businesses that work in

that area? Have there been any estimates on that?

Mr. CABLES. We certainly have not, at the regional level, estimated the total amount of dollars required to treat the lands we

think need to be treated.

We do have one example on the Black Hills in South Dakota and

northeast Wyoming where we have a 10-year plan. They have an

advisory committee on the Black Hills, made up of a cross section

of interested people, and there was a presentation to them about

treating roughly 400,000 acres, at the cost of roughly $300 million

over a 10-year period..

Now, the more of that that can be done through using contractors, and either trading goods for services or having the contractors

make a viable economic go of it, the less expensive it is for the taxpayer, clearly. I think that is part of what you are getting at.

In my mind, there is just not going to be enough money for us,

with just appropriated tax dollars and all the other priorities in

this country to treat the number of acres we need to treat, unless

we can get the private sector engaged.

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Look at a $500-an-acre cost, for example, to do a fuel treatment project to reduce the risk of catastrophic fire. If it costs $500 an

acre of appropriated funds and you can sell a couple merchantable

trees on that acre and subsidize that, we ought to be able to take

that $500 and treat two or three acres instead of one.

So, that kind of leverage I think we need to be thinking about

and need to implement. In my mind it is clear because the scale

of this problem is such that we are not going to be able to do it

at the speed we need to do it unless we have the support and the

leverage of those dollars with the private sector.

Senator ENZI. Thank you. At this time, my staff will collect any

questions the audience has. Again, I will mention that there are

slips of paper out there on which you can write questions for either

panel.

We won’t have time to ask all of them at this hearing, but we

will get answers on them as a part of the record.

One of the questions from the audience, the BLM appears to be

desperately understaffed in foresters and techs. Are there any

plans to offer internships, temporary positions, using any kind of

funding to reduce the backlog and bring the BLM and the Forest

Service into a more effective time line for addressing the forest

health problems?

Mr. BENNETT. Being a forester, I like that kind of question. You

know, in reality that is a fairly accurate portrayal of what has happened in the Bureau in the last 20 years.

The number of staff foresters has diminished. I think for the

State here in Wyoming, you know, we have a forester that actually

does a number of jobs in the State office then and we have several

out in the field.

That really isn’t an adequate number to do the job correctly, in

my estimation, in terms of working with the local people and offering forest products and simply even providing input into many of

our land use plans relative to a forest program. So I would agree

with that statement.

We have, in fact, a number of programs in place that we think

we can, in fact, bring people of that discipline on. Certainly we

have a step by step personnel process where we assist young people

going through their education trying to develop them in those disciplines and then we offer them entry level jobs as they come on.

There are programs in place certainly. Now I am talking about

Wyoming specifically.

I think out in western Oregon and northern California some of

the more heavily forested states, they are probably doing a lot more

and I must admit that I can’t speak directly to those.

Specifically, we do have a number of programs for bringing people on. Funding those people and getting them on board is part of

the issue, of course, but generally, I would also agree that here in

Wyoming particularly, it would be nice to have additional forest

staff.

Senator ENZI. I will expand that and ask if the Forest Service is

using interns.

Mr. CABLES. We are using interns but the only intern program

we have formally is the Presidential Management Interns, and that

is a pretty small, select group at a high level.

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We do though, typically, bring folks on through seasonal jobs,

trail crews, firefighters, and that sort of thing and then, hopefully,

we are able to keep the ones that are really doing well and ultimately convert them into permanent positions with the agency.

I would like nothing more than to be able to bring on a whole

bunch more folks, and a lot of young people, because the demographic in our agency (and I know it is true in the Bureau of Land

Management) is such that about 70 percent of our workforce is 50

years or older.

There is a huge bubble of employees like myself—Bob’s a lot

younger—who are going to be retiring before too long.

These kids back here in the back of the room, I hope they are

paying attention because there are going to be some opportunities

in 5 or 6 years and we are going to be hiring a lot of folks.

The only formal intern program is that one. We usually get it

done, Senator Enzi, through seasonal employees that we bring on

to work summer jobs and if they have got the right education requirements, we are hopefully able to convert some of those to permanent positions.

Senator ENZI. I think the question was along the lines of bringing in some college student expertise to help out some of the professionals and also have the students learn something at that time.

We might have to look at getting some additional coordination out

there.

This is an interesting question from the audience. How do you

plan to clear forests that are inaccessible by roads but are probably

still at risk to catastrophic fires?

Mr. CABLES. Well, this is where the economics of the project really come into play. First of all, if the area is designated in the land

management plan as an area where we can build roads, then we

have the capability to build roads according to the zoning of the

forest.

Assuming that is the case, then it gets into an economic question. Is it economically wise to build a road, which can be expensive, or a road system into an area that will enable us to clear the

forest through tractor logging or some other mechanical means?

The other option is to do it through helicopter work, but that requires extremely high value wood and large trees, because you

can’t afford to pay for that kind of operation when the trees aren’t

high value.

The forest plan allows us to either harvest timber, thin, or build

roads, we just have to figure out if it is a wise use of the taxpayers’

dollars to go in and do that, or if we are just going to lose so much

money it would be better to put our money in acres where we can

do the work in a more economically feasible way.

Senator ENZI. Thank you. I definitely had to ask that one and

I think there might be some other potential ideas out there. One

of the things I have discovered is that if you turn a problem over

to the young people of this State, they can usually invent something that will provide a solution with a small foot print and allow

continued accessibility. Since we have all those students here, I

had to make that point.

The day before yesterday I held an inventor’s conference in the

State. I am encouraging young people to come up with ideas that

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they can market around the world from Wyoming. We had a great

turn out for that, although we didn’t have as many young people

as I had hoped we would.

As you outline your problems with the forest, I think you can

trust the young people of this state to come up with some ideas for

keeping it the kind of state we have always anticipated, and we

have always enjoyed, and still be able to solve some of the problems like the one we just mentioned.

We do have more questions, but I do want to have some time for

the other panel. I really appreciate your participation in this. We

appreciate the work of all of the people in the Forest Service and

in the Bureau of Land Management and know that their efforts

can be expanded dramatically by making use of the innovation and

ingenuity of the small business folks of Wyoming.

I really appreciate your testimony and will be providing you with

some additional questions and would appreciate the answers to

those.

Mr. CABLES. Thank you, Senator.

Senator ENZI. If I could have the other panel move up to the

table, please? Again, we will have the testimony from all of the witnesses and then have questions of the panel all at the same time.

Again, those of you in the audience, if you have questions, write

them down. I will have my staff pick them up as soon as we get

to the question period. If you would direct the question to a specific

person on the panel that would be helpful as well.

Our first witness on the second panel is Jim Neiman, Vice President and Manager of Devil’s Tower Forest Products in Hulett, Wyoming.

The Neiman family owns three wood products companies that operate in the Black Hills area. They employ more than 300 direct

employees and 150 indirectly through contracts.

The company produces industrial items for windows and door

companies and lumber for wholesale and retail markets throughout

the United States.

The Neiman family has been in the forest products business for

three generations and in the ranching business for five.

Mr. Neiman graduated from the University of Wyoming in 1974

and currently serves as a Trustee for the University. He is also on

the Hulett National Bank Board, the Hulett Airport Board, and is

a member of other organizations.

Mr. Neiman.

STATEMENT OF JIM D. NEIMAN, NEIMAN ENTERPRISES, INC.;

NEIMAN TIMBER COMPANY, LLC, HULETT, WYOMING

Mr. NEIMAN. Thank you Senator Enzi. Good morning, everyone.

As the Senator stated, my name is Jim Neiman. We own three operations in the Black Hills—Devil’s Tower Forest Products, Rushmore Forest Products, and Mountain West Mill Works.

My duties today were to talk about the state of the forest products industry, and land some perspective on how existing and prospective business ventures may fit into the maintenance of forest

health in Wyoming.

26

Lucky for you, I can sum up this thorny subject with one yarn

from Mark Twain who said: ‘‘All good things arrive unto them that

wait—and don’t die in the meantime.’’

Last December, President Bush signed the most significant piece

of environmental legislation since the National Environmental Policy Act, the Endangered Species Act, and the National Forest Management Act.

Many of the honorable members of the United States Senate, our

own Senator Enzi, many of us on this panel and many others in

this room had a hand in the passage of the Healthy Forests Restoration Act.

For those of us who haven’t ‘‘died in the meantime’’ and for the

agencies who will administer it, the Healthy Forest Restoration Act

represents a whole new horizon. This new horizon is a welcome

shift for those of us who, against the odds, have managed to endure

the hardships of diminishing resource supply for public lands over

the past decades.

We who remain, the good business people sitting at this table,

consider ourselves the best vehicle to transport our National Forests from their currently unhealthy and at-risk condition, into the

healthier, safer condition we all desire.

There is a good degree of consensus among the agencies, scientists, foresters, and the industry on what exactly characterizes

that healthier, safer condition and on how to get there from where

we are.

From the perspective of industry, implementing these goals must

begin by ensuring that our existing infrastructure shrinks no further than it already has. Furthermore, industry must be able to

maintain itself in an economic condition which allows us to make

the investments and technological innovations that will expand our

operations to encompass forest health and wildfire management

goals.

This means broadening our horizons to include new kinds of forest products for which markets do not currently exist. The horse

that must pull this cart, however, is the consistent accomplishment

of Forest Plan program commitments by National Forests in the

State, which in turn imparts business people and their investors

with the certainty the need to push the envelope.

Now I just said what I consider the three most important words:

Consistency, Commitment and Certainty. These are the greatest

challenges to building the necessary partnership between communities, governments and industries that will bring our new horizon

of forest health and wildfire management objectives to fruition.

Consistence, Commitment, Certainty.

In other words, we must integrate the objectives of wildfire resistance, forest health, community protection, and local collaboration along with meeting existing management programs and caring

for our natural resources over the long term. I mean the long term.

I could not in good conscience tell you the outlook for success on

our new horizon is anything but bleak without these three words.

Consistency, Commitment, and Certainty.

Let me reiterate that we live in a time of opportunity and excitement, and I mean true excitement. I feel it myself and I see it

around the room this morning. We are all blessed to be players on

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this stage who will help act out the course of public lands management for the next generation. I am please to see another generation

sit behind us.

To be successful, we need to build on what we know best. We

need to have consistency, commitment and certainty from the Forest Service. We need to push the envelope into new and unexplored

waters.

We have identified the problem and the desired condition. We

know what our goals are. Now it is time for action. Time is of the

essence.

Reflecting to the younger generation, my dad many times when

I was young, reflected on this statement—do something even if it

is wrong. To do nothing is failure and learn from your mistakes.

I look forward today and in the future to sit down and work progressively in very candid discussions with Congress and the Forest

Service to create not discussions and just planning, but action so

we can move ahead.

Senator I am honored to be a part of this operation and process.

Again, thank you very much.

[The prepared statement of Mr. Neiman follows:]

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Senator ENZI. Thank you. Our second witness on this panel is

Ms. Kathleen Jachowski, Public Relations/Government liaison for

Cody Lumber located here in Cody.

Kathleen represents Cody Lumber as a member of the Wyoming

Timber Industry Association and I can tell you from experience

that she lobbies effectively in Washington, D.C. on forestry issues.

She lobbies with the Federated Women in Timber, a capacity in

which she and I have met and discussed these issues many times,

but I am even more impressed with the networking she has done

around Washington and the diverse group of people that she has

been able to meet there.

She is an excellent spokesperson for the many uses of our Federal public lands. She has addressed the United Nation’s Heritage

Committee delegation in Yellowstone National Park regarding mining issues and the UN’s North American Conference on World Forests in Vancouver, British Columbia. She has testified before the

U.S. House Resource Committee on the socio-economic effects of

UN Heritage Sites on surrounding communities, and has participated in the contentious issues of grizzly bear, wolf reintroduction

and other endangered species.

She is the Past Chair of the Business Retention and Expansion

Committee for Cody’s Economic Development Council and also

works as a writer for statewide and local papers on a wide variety

of topics.

She is also on the radio weekly and we thank her for graciously

preempting that radio appearance to be with us here today.

STATEMENT OF KATHLEEN P. JACHOWSKI, REPRESENTING

CODY LUMBER, INC.

Ms. JACHOWSKI. Thank you. Senator Enzi, I wish to extend my

company’s thanks to you for conducting this field hearing on the

role small businesses should play in maintaining forest health.

Please extend our genuine appreciation to Chair Senator Olympia

Snowe and your fellow Committee colleagues for making this effort

to have the voice of small businesses heard through this more effective and unfiltered mechanism.

I have served in the capacity of Public Relations and Government

Liaison for Cody Lumber for the past 101⁄2 years. My previous and

direct involvement in economic development and in access issues

on public lands laid the foundation for this work. I am a graduate

geographer whose special interest is in how public policy affects

large regional landscapes.

Getting right to the heart of the question posed by this hearing,

which is what role should small businesses play in maintaining forest health, is not difficult and the answer is applicable in many private, State and Federal forest situations.

The collective and results-oriented answer is that small businesses should be harvesting sold timber and manipulating those

same landscapes by sound silviculture prescription methods intended to create a continuously vigorous growing environment

which will slow the ravages of insect and disease, mitigate the effects of adverse climate conditions and produce quality lumber for

the American consumer.

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Small forestry-related businesses can play a significant role in

achieving forest health objectives by using the latest and best

equipment possible. Advances in technology can be brought to bear

on a landscape if a company has the financial wherewithal to buy

or lease such equipment.

You can’t, however, buy or lease equipment with words and

promises of timber sales on the horizon. Consequently, when a

company’s cash reserves are depleted and borrowing power is

marginalized by delay after delay, the role that company can play

in enhancing forest health is drastically minimized and not infrequently literally shutdown.

The geographic distribution of small forestry-related businesses

plays a significant but often overlooked role in maintaining forest

health. How so? Such businesses located throughout large landscape areas enhance flexibility to deal with many problem areas at

the same time.

Having sawmills and forestry service enterprises go out of business drastically reduces response time and the cost effectiveness in

dealing with forest health problems.

Rapid response time is as important to maintaining healthy forest resources as it is in preventing and addressing many other

types of crisis. Rapid response time is also equally important in

having timber worth bidding on for business enterprises.

Make no mistake—millions and millions of acres of dead forests

with little or no business capacity to match the magnitude of the

problem is not a windfall for anyone. It is a deadfall, a downfall

of devastation with poor quality wood and health and safety problems almost beyond imagination.

It is neither the goal nor the role of small forestry business enterprises to produce poor quality wood.

These simply stated words contain both the problems and the solutions to the agonizing debates that swirl around forest discussions.

Small businesses in the Federal forestry context should be helping to maintain a high standard of forest health on the designated

suitable timber lands in as vigorous a state of health as is possible

to control: (1) desired species composition; and (2) density of trees

on the designated suitable timber landscapes.

Small forestry-related business can and should achieve this

through harvesting, thinning overcrowded timber stands and reforesting where needed. These manipulations working in concert with

nature repeatedly produce high quality trees and forest landscapes

that protect watersheds, provide wildlife habitat, and a safe and

viable environment for the public to enjoy.

Small forestry-related businesses serve the role of actually implementing all the talking and all the planning that precede timber

sales on Federal landscapes. Theirs is the role of making the words

come alive for the long-term benefit of the natural resources and

the attainment of many values which communities hold dear.

Through their investments in equipment, experienced manpower,

and their purchasing capacity to buy timber sales, they are the key

element in turning all the talking and planning into actual and

beneficial results. The role of small businesses is not a whole lot

more complicated than that.

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Complications to that role set in, however, when talking and

planning and more planning are all that are brought to bear on forest health. Trees can, in fact, be talked to death.

Small businesses can also be talked to death or so economically

marginalized by delay after delay that their bankers become very

skiddish—to use a logging phrase—about the future and the soundness of lending money to a business enterprise that produces words

but not much in the way of product nor profit.

I look forward to answering any questions you might have regarding specific examples of how my company has endeavored to

fulfill these roles and the significant problems we have repeatedly

encountered. Thank you.

[The prepared statement of Ms. Jachowski follows:]

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Senator ENZI. Thank you, very much. Our next witness is Mr.

Ernie Schmidt, President and General Manager of Wyoming Sawmills, Inc., in Sheridan, Wyoming.

He began his career with Wyoming Sawmills as chief forester

and has been with the company for 26 years.

Wyoming Sawmills has been a locally managed lumber facility in

Sheridan, Wyoming, since 1964. Today, it is Sheridan’s largest

manufacturing firm and produces construction grade lumber to

help meet the needs of our nation’s home building industry. By operating a stud mill and a finger jointer, Wyoming Sawmills has developed a number of ways to use the low quality as well as high

quality logs in a tree.

I look forward to Mr. Schmidt’s testimony. We have met a number of times to discuss the need his company has to gain access to

Federal lands in order to both restore our forests to a state of

health and to allow his company to continue developing its innovative processes.

Mr. Schmidt.

STATEMENT OF ERNIE SCHMIDT, PRESIDENT,

WYOMING SAWMILLS, INC., SHERIDAN, WYOMING

Mr. SCHMIDT. Thank you, Senator. I appreciate the opportunity

to testify before the Subcommittee. Our approach to the forest

health problem has been to focus on new and better lumber products that can better utilize our forest resources.

We have been very successful in this effort. In fact, we have been

successful in competing and winning several small business innovative research grants from both the U.S. Department of Agriculture

and the National Science Foundation.

Let me tell you about some of the successes we have had in developing new products. The lam-stud was our first product that we

developed. It involved taking low-grade lumber and creating highstrength structural lumber.

This product has evolved into other related products using the

same technology. Examples of that are lam-lumber and lam-headers, all of which are presently on the market.

Probably the most exciting research that we are working on right

now is one funded through the National Science Foundation where

we have developed the technology to take wood waste material that

presently goes into chips and creating an innovative new wood

product we call Structural Strand Lumber that can be made into

an I-joist like this—

The implications of this technology is that 22 percent more of

every log coming into a sawmill can be produced into a useable

structural lumber.

This technology will create a major paradigm shift that will revolutionize the lumber industry. This was developed by a small business working with a large equipment manufacturing company,

COE Manufacturing.

This joist is stronger than comparable joists that are presently

on the market as it is made from low strength wood by-products

from a sawmill. It is revolutionary and a great idea.

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The next step in the development is to build a pilot plant to

prove out the production process. This is where we as a small business are having some problems.

You see, our main timber source closest to our sawmill is the Big

Horn National Forest. The timber program has been so undependable in the last 10 to 15 years that no investor will invest the $7

million needed to build a pilot plant in Sheridan.

The results could be that an idea developed by a small business

being implemented by large businesses where private timber supplies can be guaranteed. I believe that would be tragic to all of us.

This is where small businesses like ours need the help of the

Forest Service to forward this technology and ultimately benefit

Federal lands and forest health.

We need a secure long-term timber supply to guarantee private

investors an opportunity for their investment to mature.

The Forest Service has talked about 10-year guarantees for new

technology. I say now is the time. We need something like a large

scale stewardship contract, say 20,000 acres, that is in suitable

timberland that would guarantee a 10-year timber supply to move

this technology ahead.

The results would be that new technology available for us all to

use to help the industry can help the Forest Service maintain forest health.

Once fully developed, the SSL technology will enable existing

sawmills to utilize more fiber and expand into smaller diameter

trees in the future. The up side is our Federal forests will be worth

22 percent more.

I see this kind of activity that I am proposing at this scale being

done on other vegetative management projects.

Just recently, an 18,000-acre vegetation management project was

approved on the Big Horn National Forest. What I am proposing

is something very similar only on suitable land and with harvestable timber.

I believe it is time for the Forest Service to think outside the box

and become more of a partner with industry to solve our national

forest health problems.

I hope my ideas can help this Committee accomplish this goal.

Thank you, Senator.

[The prepared statement of Mr. Schmidt follows:]

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Senator ENZI. Thank you, very much. Our next witness is Gary

Erickson, Manager of Bighorn Lumber in Laramie, Wyoming.

Mr. Erickson has more than 25 years experience in the forest

products industry and has a degree in forest management and forest products from the University of Minnesota, College of Forestry.

For most of his career, Mr. Erickson has managed small, familyowned sawmills in the Western United States.

The Bighorn Lumber Sawmill site was first occupied in the early

1940’s by a planer mill that used the lumber produced at the portable sawmills that were sawing railroad ties for the Union Pacific

Railroad.

In the early 1960s, a sawmill was located on site where the logs

were sawn, the lumber dried, planed, graded and shipped.

In 1971, Frank Cook, a lumberman with a sawmill in Ft. Collins,

Colorado, purchased Bighorn Lumber. Today, Frank’s son, Finley

Cook, owns Bighorn Lumber.

The modern sawmill employs more than 60 people at the mill

who produce more than 20 million board feet of lumber per year.

They specialize in producing high quality boards that are used

throughout the country for paneling and interior trim.

Mr. Erickson.

STATEMENT OF GARY M. ERICKSON, MANAGER,

BIGHORN LUMBER COMPANY, INC.

Mr. ERICKSON. Thank you, Senator. Bighorn Lumber is a familyowned sawmill. We provide management activities on about 3,000

acres of forest land every year.

For the last several years, our company has been working primarily on private ground. One of the reasons has been that Forest

Service land, that we are working on private ground rather than

Forest Service land is that the private landowners are responding

very quickly to a mountain pine beetle epidemic in northern Colorado.

The gist of my message is that the Forest Service is not responding nearly as quickly. It is taking much longer. One of the things

I want to get through today is that the Forest Service needs to respond much more quickly to forest health problems.

The second reason Bighorn Lumber has been working on private

ground is because of the quality and price of the timber sales the

Forest Service is preparing. The Forest Service continues to try to

push up timber sales that are loaded with small diameter, poor

quality wood, restrictive operative requirements, and onerous financial burdens.

This is exemplified by the no bid timber sales that have been occurring in this state. Mr. Cables very carefully stated that the Forest Service offered 17 million feet of timber last year in Wyoming.

I believe the facts would show that the industry only purchased

a little over 4 million feet of that timber. The balance was no bid

because of a variety of issues.

I believe the Forest Service line officers, the District Rangers,

Forest Supervisors, and Regional Foresters must provide stronger

leadership and demand better performance and better quality

projects from their staff.

40

As Mr. Cables noted, the Forest Service has tried some stewardship contracts that have been very expensive. I am aware of several that have cost at least $800 an acre to treat and it is primarily

because those lands produced very little merchantable timber.

I think as Mr. Cables also stated, there is not enough money in

the Treasury or the Forest Service budget to deal with the number

of acres they want to treat. To get these forested acres treated,

they must produce viable timber sales with products that we can

use.

The Forest Service is asking industry to develop new markets

and invest in new infrastructure. We have done that. It is important that you understand that companies like ours have invested

lots of money in the past based on Forest Service commitments and

we have lost lots of money when the Forest Service failed to perform.

In the mid-1990s, the owner of Bighorn Lumber invested millions

of dollars in a sawmill in Escalante, Utah based on Forest Service

commitments to provide the timber needed to run the mill and because the Forest Service also experienced a major spruce beetle

outbreak in southern Utah that they failed to respond to in a timely way.

Based on those failures, the owner of our company was forced to

sell the mill in Escalante, Utah, and lost over $1,500,000. We can’t

afford more problems like that. We will be very cautious about investing money when the repayment depends on the Forest Service

to perform.

Forest health problems are best addressed before the problems

occur, before the bugs and fires show up. In testimony last week

in front of the Wyoming Legislature, Forest Service entomologists

said that once bugs get there, there is little managers can do to

solve the problems but that the key is to be proactive and manage

healthy stands to maintain green healthy forests.

As Ernie noted, the Forest Service has already demonstrated

that they can think about projects at a much larger scale. There

are several examples down in Colorado where they have looked at

an EIS’s management areas of 75,000 acres plus.

One is the Green Ridge analysis area on the Routt National Forest and the other is the South Platte project on the South Platte

water shed above Denver. They looked at several hundred thousand acres.

We think that the Forest Service must move quickly on landscape scale projects. I propose that the Forest Service in Wyoming

prepare at least four large landscape scale projects, 50,000 to

100,000 acres each. One on the Big Horn, the Black Hills, the Medicine Bow, and the Shoshone.

The NEPA analysis and a signed decision must be completed by

the end of this year. They have already shown that they can accomplish that on the Green Ridge analysis that they prepared in a little over a year with the old rules. With the new Healthy Forest

Restoration Act rules, they should be able to act much quicker than

that.

The objectives of those projects should be to enhance the forest

health of water sheds. The desired future condition of the project

41

should be to maintain healthy green forests and important water

sheds in Wyoming.

The projects should produce long-term contracts for small business, a minimum of 10 years. The Forest Service should use the

new stewardship contracting authority that will give them the

flexibility to use new contract terms and new financial requirements.

That will give industry the incentive to safely invest in new

equipment, processes, and products, and it will maintain important

manufacturing jobs in our communities. Thank you.

[The prepared statement of Mr. Erickson follows:]

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Senator ENZI. Thank you, very much. I think everyone will notice

the difference in the biography of the next person who will be testifying. I met him on a tour that I had of his ranch and of some demonstration projects that were being done there on the forest. I appreciate him being here today.

Our final witness today is Mr. Robert Model, President and

owner of Mooncrest Ranch which is located here in Cody, Wyoming.

In addition to the ranch, Bob works as a leading conservationist

in the community. He is the Chairman of the American Wildlife

Conservation Partners and the Director of the Theodore Roosevelt

Conservation Partners. He is also a member of the Clove Valley

Rod & Gun Club of America, the Philadelphia Gun Club, and the

Camp Fire Club of America. He is also currently President of the

Boone & Crockett Club, as well as a member of the following organizations: The Rocky Mountain Elk Foundation, Izaak Walton

league, Safari Club International, Foundation for the North American Wild Sheep and also Quail Unlimited.

He is a native of Greenwich, Connecticut. Mr. Model attended

the Browning School and Elon College. He is currently the Vice

President of Stillrock Management and Vice President of Elmrock

Capital, both based in New York. He previously served as a Director on the board of CapMAC, Overhills, Inc., and Piggly Wiggly.

Mr. Model.

STATEMENT OF ROBERT MODEL, OWNER,

MOONCREST RANCH

Mr. MODEL. Thank you, Senator. I am please to be here today

and I thank you and your Committee members for this opportunity.

I am pleased to have this opportunity to speak before you regarding the vital role citizens and business owners in Cody, Wyoming,

play and must play in developing and maintaining healthy forests.

We are privileged to live next to several national forests, primarily the Shoshone. I own and maintain approximately 20,000

deeded acres in northwest Wyoming. At many areas, I am adjacent

to a national forest on many of these deeded acres that we own.

Over the last several decades, I have witnessed the decline in

forest management either by lack of funding, lack of direction, or

both.

Our area is infested with pine bark beetles. We have overgrown

conifers taking over the deciduous ecology in the area. We have severe fire fuels which are the remnant of past wildfires over the

past decades.

Anyone taking a drive into our forest lands can see the dead and

dying trees and the catastrophic conflagration waiting to happen

because we do not effectively manage this precious natural resource.

When President Bush signed the Healthy Forest Restoration Act

into law in December, and I was privileged to be at that signing

at the USDA, we finally had, at the agency levels, the mechanism

needed for management of the lands through sustainable and scientific stewardship which has the very important benefit of helping

create an economy that flourishes when we work to achieve forest

health.

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I was pleased to see our government at the highest level take action on this issue which is key to our way of life in the West not

only for the livestock ranches but for the local timber industry, the

outfitting industry, and most importantly, the jobs that will be created through the new mechanisms created by the legislature in the

Forest Health Restoration Act.

Senator Enzi, I would like to mention that the Forest Service has

the wonderful attribute and good people working at the Forest

Products Lab in Madison, Wisconsin, and nobody has recognized

the work that they have done over the last almost 100 years, creatively finding new ways to use timber products.

The present Director, who is a Boone and Crockett member and

a friend, Chris Ristburg, is, I think, doing a wonderful job finding

ways for the timber industry to—in partnership with the timber

folks as well as the academic community—in finding new products

that hopefully will create a breath of fresh air for that industry.

In addition, creating a healthy forest system provides the forage

and habitat for our wildlife populations as well as sustaining a viable livestock industry.

Those of us who live and ranch and work in these areas adjacent

to the national forest, we can’t wait for decades any longer to take

care of the deteriorating health of our forests.

I would just like to interject at this time that the delays that the

litigation bring upon us are devastating and we have a timber sale

going on on Rattlesnake Creek right now and had that timber sale

taken place 10 years ago, had they got the timber out, it would

have been a better lumber, better product, we would have had

healthier land sooner.

I hope that we can find ways to build common ground and take

care of the land because if you have healthy land you are going to

have healthy wildlife populations, you are going to have excess forage for livestock.

If you don’t have livestock on these mountain ranches, you have

subdivision and land fragmentation and that defeats what we all

appreciate and love about Wyoming.

We are now living with the devastating result of that policy and

the price tag will be significant if we hope to reverse the damage

done by inaction.

It is critical that our District Ranger Offices work with the citizens and businesses in their local area to establish a strategic plan

that is viable within the communities. I am talking about stewardship contracting here and the opportunities that it presents.

By thinking outside the box, there are going to be creative ways

in which we can find ways to make these contracts economically

viable, at least I hope that we have people smart enough to figure

that out.

We have a wealth of experience in our local communities which

includes an overlooked resource and that is our Forest Service and

BLM retirees who live and work in their second careers in the

towns and cities that they retired in after years of dedicated service

to our great treasure, the public lands of the United States.

I believe that by utilizing the significant brain power with impressive experience on the ground, we can establish a workable

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plan that encompasses mechanically treating the timber resource

as well as effective use of fire.

Senator Enzi, I would just like to close by saying, as I grow older

and the horizon out there is getting shorter, I would sure like to

see work done, so that when I am on a cane and old and tired, I

will see that something has been done for the land.

We were blessed with the tradition of our public lands and we

need to take care of them and that is our responsibility for the future generations of Americans.

Thank you for giving me this opportunity to testify for you and

your Committee. I am very grateful.

[The prepared statement of Mr. Model follows:]

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Senator ENZI. Thank you. I appreciate also you introducing me

to the National Forest Foundation. It was interesting to find out

that most of the money they take in is put into demonstration

products to show how the forest could work. I got to see some demonstration projects that had been done on your property.

Could you tell me a little bit about how easy or difficult it was

for the Foundation to be able to do those projects and if you have

noticed any results?

Mr. MODEL. Well, thank you, Senator Enzi. First of all, I want

to thank the folks back in the early 1990’s that had the foresight

to put together a Forest Foundation.

I think that Senator Domenici was largely responsible working

in concert with folks at the agency in writing that legislation which

is very broad.

I guess what I would like to say at that point is that the Foundation is probably not doing as much as it could do and, hopefully,

that can be corrected.

Senator we do have projects that are pinpointed in different

parts of the forest, the National Forest system and it is on a competitive basis.

I would also like to say that the matching funds, the private

funds that are raised by the Foundation are matched by agency

funds and then projects are picked as demonstrations.

While I have the opportunity to speak to this, Senator, I would

hope that as the Foundation matures and some changes are contemplated in how they could become more effective not only raising

private money but also using the challenge cost share money from

the agency, that we would again use the expertise of retirees.

I think with the pending centennial celebration in 2005 of the

agency, we have an opportunity to connect through the Foundation

the communities that are changing in the West with the influx of

people moving in here to have celebrations that really point out the

significance of the agency and how it ties back to the community.

That is something that I have seen over the last 40 years slowly

breakdown. As you get more people in the West and newer people

in the communities, the agency has not been as in the spot light,

if you will, or as well recognized as I think it should be.

This is a real opportunity for the Foundation to do some interesting and, hopefully, creative work to bring the general public to

understand more about our management of public lands.

Sorry I rambled there, Senator, but it is a complex question and

I hope I answered part of it anyway.

Senator ENZI. I appreciate that and I particularly appreciate

your mention of the expertise of retirees too. They are a part of the

community of Wyoming that could lend a very valuable hand to us.

A question for both Mr. Neiman and Mr. Schmidt. I want to congratulate you on your innovation in being able to use small diameter trees. I was astounded to hear the price of $7 million for one

of the machines to do the projects.

My question is—Mr. Cables described the Forest Service’s need

to harvest the small diameter trees—How long do you think it

would take the forest product companies to gear up to handle the

number of small diameter trees that the Forest Service would be

likely to cut?

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Mr. SCHMIDT. That is a good question. One of the things that Mr.

Cables and Mr. Bennett talked about was that small businesses

can act fast and I think that is true.

Small businesses have to be successful too. If they are not successful, as Gary pointed out, they die. I think we need to learn to

walk before we can run and that is why we have tried to design

a product that will utilize more fiber from very low cost sawmill

waste. We can get that up and going and then we can move into

thinnings.

It is important that we take these things a step at a time. We

all want to head down the road of being able to use a real small

diameter timber. As small business we need to make sure that we

don’t fail and we need to make sure that we are successful.

We have this perfected now ready for the investment. You give

us a 10-year supply, by the end of that 10-year supply, we will give

you the tools to treat the rest of the forest.

Senator ENZI. Mr. Neiman.

Mr. NEIMAN. Thank you again, Senator Enzi. We are in a little

different situation in the Black Hills. We have only lost about half

of our industry there so we have been able to at least maintain.

It is really important for industry to look out and create innovative ideas, like Wyoming Sawmills has, to make sure that we focus

on first making sure that our ASQ is achieved so the mills can stay

healthy or get healthy again and then proceed in developing towards innovative ideas to reach down below into the smaller sizes

from 2 to 6 inches which we do not have ways to process those

right now.

It is kind of a two-pronged fork here. We have to make sure our

existing industries are healthy by making sure that we get them

back up to production.

There are a lot of operations around the West that are running

single shifts that have the ability to go back to two shifts and really cut their costs and get healthy again.

In turn then, they can bring a small amount of the small wood

into their operation and blend it in—raising their costs, but balanced out by the cost reductions they have created by new efficiencies.

Then there is money available to start doing the research like

Ernie has done and some of the projects we are working on right

now.

We are in the middle of a project. It is very unique, but we are

taking all of our saw dust and testing to see, we are grinding it

into wood flour and mixing it with plastics to extrude and we have

designed some playground equipment. It is in the very preliminary

stages but we are testing it.

We are just looking at someplace to start. We have already invested somewhere in the neighborhood of $300,000. The estimates

in our initial studies, which will be done in the next 6 months,

show that a full blown plant to handle just the saw dust off our

two mills would cost somewhere in the neighborhood of $10 to $12

million investment.

The marketing side of it alone, the initial estimates, particularly

if we decide to brand it, costs $2 to $4 million additional dollars.

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There is a lot of neat ideas out there, but we are nervous. We

don’t know whether to plunge or not until we know there is a stable, consistent supply and Ernie’s suggestion of 10- to 15-year contracts would be very much of a foundation.

You know, you will relate to this a little bit. One of the big concerns we have had is our bankers used to ask questions about how

much money did you make, what are your projections for profitability next year, how much money are you going to invest next

year? Our average is $2 to $3 million a year between the two mills.

We cut that over half.

Now their questions are how much do you have under contract?

Our bankers are now educated on what ASQ is. That is surprising

and it shocks me.

Senator ENZI. I am going to stop you right there and have you

explain what ASQ is. This is a Small Business hearing, so most of

these people have not had any contact with the forest terminology

or numbers. If we could get that in the record as well and your experience with that?

Mr. NEIMAN. In the forest plan, to also help the students understand the question also, in the forest plan when the study to find

out what is the productivity of the forest, there is a major plan that

comes together to determine how much that forest is growing and

then they determine what is the allowable sale quantity in saw

logs and POL. It is how much they have determined that they are

willing to sell off of that forest.

Senator ENZI. POL?

Mr. NEIMAN. Some of that product other than log. Sorry I keep

coming up with all these acronyms.

Senator ENZI. It is a real thing in Washington. They will adopt

these very quickly and use them but, first, they have to have a

basic understanding of them.

Mr. NEIMAN. You thought you were dealing with the Army,

didn’t you?

Senator ENZI. Well, the Federal Government is very good at it

too. I think maybe that is where the Army got the idea.

Mr. NEIMAN. I apologize for diverting the question, but it all fits

together there and it is interesting. It is a very complex issue when

you start looking at small business, how are they going to finance

it, how are they going to find the money, and the first thing they

are going to look at is stability and consistency.

The Forest Service and the BLM have to take some risk and step

forward and help understand that they either have to share the

risk or provide the opportunities so the financial world will step

forward with small business and be able to move ahead.

Senator ENZI. Thank you. Could each of you also comment on the

affect that the allowable versus the actual, how close that comes

in and what the affect has been?

Mr. NEIMAN. Are you talking about the allowable sale quantity

issues?

Senator ENZI. Yes.

Mr. NEIMAN. Okay. I will refer to the Black Hills first. The Black

Hills is the oldest mountain range in Wyoming and I think it has

a chance, I have heard once it was really geologically the oldest

mountain range in the United States.

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We have a very prolific forest. It has much higher growth than

a lot of forests. There are billions of board feet under inventory.

They have just re-evaluated the growth of the Black Hills National

Forest. It used to be approximately 155 million board feet of

growth per year.

The new numbers of what I am hearing could be up as high as

170 to 190. That is of saw timber.

We went through a battle over the last 15 years trying to get our

forest plan done and we finally agreed on an ASQ of 83.6.

Unfortunately we have been selling less than about 50 or 60 over

the last 5 years. Fortunately, the Forest Service is stepping forward and has an interim plan until the new forest plan comes out.

We are in Phase 2 of that right now.

We hope to get back up to the full ASQ or something higher. 83.6

or higher. Reflecting on that number, recognize that is only half of

what is growing out there in saw timber.

Senator ENZI. Thank you.

Ms. JACHOWSKI. On the Shoshone, it has been very interesting

and very disappointing. Around 10 years ago, the short version is,

we had around 11 million board feet as the allowable sale quantity.

After the Yellowstone fires, there was a major amendment done

to the forest plan because the fire burned into our suitable base

and for the public, that is the area designated as areas that you

can harvest for commercial timber legally. That amendment reduced it to 4.5.

The short version, Senator Enzi, is that, at this time, the Shoshone does not keep track of an ASQ. When we ask them about

that, charging their saw timber against their ASQ, their commercial-sized timber, they said they don’t harvest enough to make it

worthwhile now and it is folded into other numbers.

This is a very disconcerting thing for us in terms of being able

to assess saw timber from products other than logs and so forth,

but it does reflect the lack of timber sales and the composition of

the few timber sales that there have been.

As Ernie said and some of the other speakers, it is more of a

janitorial service in terms of quality of product right now. That is

unfortunate for us.

Mr. SCHMIDT. We have a rather unique story that I think could

tie in how this ASQ plays into a small business and investments.

The Big Horn National Forest had a forest plan that was formulated in 1985. It just so happened that our sawmill burned to the

ground in 1984.

Our owners said, ‘‘Why don’t we wait and see what the forest

plan is going to say and see what the ASQ is and that will tell us

whether we are going to have a future timber supply.’’

The forest plan in 1985 came out at 16.5 million board feet a

year that they were going to harvest. Our owner said, ‘‘Okay, that

is adequate. We will rebuild the mill.’’

I would say to you that within the last 10 years they haven’t

even averaged 2 million board feet per year. Had they known that,

they wouldn’t have invested into rebuilding the mill and there

would be no sawmill in Sheridan.

It is interesting that we are at the same crossroads right now.

We are trying to find investors to put in $7 million to forward this

54

new technology and it just so happens the Big Horn National Forest is revising their forest plan right now.

We are not sure how to look at ASQ. If they come up with 16

million, does that mean that they will actually sell 2? I don’t know.

It is a real quandary that we have right now and that is probably

why we are saying to you that rather than having a forest plan

that says an ASQ, what we need is some assurance, we need some

timber sales, stewardship contracts, something that will give us a

fixed volume, at least for a period of time, that we can put a return

to the investor on invested money.

Senator ENZI. What is the rejuvenation of the Big Horn Forest?

Do you have some numbers on it?

Mr. SCHMIDT. Well, it is interesting. When you look at the acres

that the Big Horn says that is suitable for timber management

that will grow timber, they could actually harvest 20 million board

feet a year for ever and ever and ever on a sustainable basis.

It is not the land. The land is there. The land will grow timber.

It is actually getting it done.

Senator ENZI. Mr. Erickson.

Mr. ERICKSON. On the Medicine Bow, the Medicine Bow is approximately 1 million acres. The revised forest plan says that

323,000 acres is suited for timber production.

They set the allowable sale quantity at 23 million feet. On the

325,000 acres of suited land, they are growing about 80 million feet

a year on just the suited lands.

Their projections in the forest plan based on some of their constraining items are that they might only sell 12 million feet a year

for the next 5 years. In fact, since 1995, they have actually averaged less than 5 million a year.

Bighorn Lumber did not purchase a Forest Service timber sale

contract last year and the majority of the timber that the Medicine

Bow/Routt sold last year was sold on the Routt side, I believe.

The Medicine Bow/Routt combined forest had a budgeted target

of approximately 16.5 million board feet last year. They claim that

they exceeded that because they offered more than that. In fact,

they sold less than 7 million feet of timber.

Senator ENZI. You mentioned in your testimony this difference

between what is offered and what’s sold. What are some of the reasons for the difference in the numbers? They are not economically

feasible?

Mr. ERICKSON. That is the primary reason. The price, the quality, the restrictions, the bonding requirements, there’s all sorts of

reasons why.

Senator ENZI. Okay.

Mr. Schmidt.

Mr. SCHMIDT. Senator Enzi, I could comment on a sale that just

happened last week that we did not bid on and one of the main

reasons we didn’t bid on it was that the sale was laid out to prohibit any mechanical equipment.

Not only are our sawmills modern, but our loggers have been

modernized and they all have very sophisticated mechanical equipment. For the Forest Service now to come up and say, you can’t

even use that, was totally prohibited, I would say it’s very much

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like telling the Forest Service, you need to do your EIS’s using

manual typewriters.

People just don’t do that any more, and I would say it’s some of

those kinds of restrictions that keep us from being able to bid on

some of the sales that are offered.

Senator ENZI. Ms. Jachowski.

Ms. JACHOWSKI. Senator Enzi, this pattern has been repeated

and it was repeated. An example on the Shoshone would be on

Carter Mountain which is only about 25 miles from here and, of

course, it has heavy beetle infestation.

If the Forest Service had been able to put up a timber sale 3 to

5 years earlier, that wood would really be, perhaps, worth something.

We, as an experienced mill right here, did not bid on that sale.

However, when we see a timber sale coming up, we are interested.

Our owner and our Forester, Mike Hanson, the owner, and Gene

Hall put pen to paper many times on the Carter Mountain sale and

we could not make it cost effective for us 25 miles away when we

looked at the quality of the timber that comprised the sale, the mix

of the timber, and the time constraints on it, and what value the

end product would have.

Now we are as close as any mill can be, shall we say, 25 miles.

There was a bidder on that sale from Montana who did do it. We

don’t know, more power to them if they can make it. They are a

larger operation but they have huge traveling times.

We also experienced, that is an example that where if the timber

had been put up at an earlier time, more rapid response, the composition of the sale, and we did talk to them about this ahead of

time that try to put the right mechanism on the sale.

By that I mean specifically, if the timber is of such poor quality,

use a service contract, which, in fact, we would still have to bid on.

It wouldn’t be handing us a contract.

That is a legal mechanism in the Forest Service where if the timber is so bad and they need to get rid of it, they can have a company come in, they actually pay that company to do it.

They could approach it out of the box so that you could put a

timber sale on the better quality stuff and a service contract on the

other and not put a $225,000 road package in it that blew it out

of the water. It is a serious problem on how they are constructing

the sales.

I do want to put into the record that it is my company’s contention that one of the reasons the Forest Service is so reluctant to

perhaps use the proper mechanism, be it a service contract in this

case, it looks better if they are putting up a timber sale.

I think they feel that it looks bad on them, it reflects badly, we

don’t. If they wait so late that the only thing to really do is get rid

of the junk, which is what they have on the North Fork.

Now a lot of stuff is getting folded into stewardship contracts but

there will be problems with those in terms of cost effectiveness.

We also ran into the same problem that Wyoming Sawmills did.

We had made investments in machinery, we had a $168,000 filler

buncher and skidder that we were involved in and then on the Big

Horn they turned around and told us, we want to have chain saws.

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They know as well as we do the caliber of the chain saw operators today. It’s extremely hard to find good ones. You don’t just go

buy a chain saw at the Home Depot and come back and be a chain

saw operator.

They seem to be having trouble understanding that young people

are not coming into the industry to get really good quality saw

chain operators. What you don’t do is encourage a company to put

out $68,000 on a processor and another $168,000 on a filler buncher and then turn around and tell us, now, you all get after it with

arts and crafts forestry. It doesn’t work.

Senator ENZI. Besides the equipment costs, you spoke about bond

difficulties for small businesses before.

Ms. JACHOWSKI. Indeed.

Senator ENZI. Could you tell me a little bit about some of the

timber sale financial requirements and payments of the bonds and

maybe how that is changed since September 11th?

Ms. JACHOWSKI. It used to be that you use could bonding insurance. Since 9/11 life has changed for many of us and in this regard,

it is more harder now for a timber company to get a bond on a timber sale.

Then you could use that as a down payment so you weren’t dipping into your cash, and that was basically so we would perform.

When we try to explain to the Forest Service now that it is far

more difficult to get a bond to carry forward—a bond might cost us

$1,500, that is just an example—but it guarantees we are going to

fulfill our obligation.

When we tell them that the insurance companies are really shutting down on the length of bonds and the extent of bonds, the response that we have been getting is, well, go get a letter of credit,

irrevocable letter of credit.

It does not seem to compute with them that when you do that,

for a banker, that is put up against your debt. That kind of a mechanism, a financial document is totally different for a banker than

we bring a bond to it.

We are having trouble doing that so that makes it a little harder

for us to bid also on a sale if we know we have to go out and try

to do that. Then we are trying to make investments in equipment

which has a thread to it because you want to keep your equipment

up to date and if you have got a debt load sitting there on a bonding requirement and you couldn’t get the bond so you had to go get

that letter, you are in serious trouble then when you turn around

and say, ‘‘I need X hundred thousand dollars for either equipment

or I want to buy this timber sale.’’

What the general public doesn’t understand is a company, even

a small one, and we are considered a small mill, 5 million board

feet a year, you can have hundreds of thousands of dollars tied up

in a timber sale before you ever harvest a tree.

That kind of complication and us not being able to get the bonding like we used to be able to which didn’t dip into our cash flow

is really quite a problem for us.

Senator ENZI. Does anybody else want to comment on that or

other small business problems that we might not be aware of?

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Mr. ERICKSON. Since 9/11 Enron, K-Mart, bonds are not available

to companies our size. Bonds are required for or are a very important option in Forest Service contracts.

There’s a performance bond that guarantees performance of the

contract that is for the life of the contract. There are payment

bonds that when we want to begin to harvest timber, the Forest

Service wants to be guaranteed that they are going to be paid.

Without a payment bond, we have to just, essentially, put cash

on the timber sale to pre-pay for whatever timber we are going to

use.

Now those logs might not be delivered to our mill to be sawn and

moved out in the market place for several months at the shortest

time and longer than that. I mean, we have to build a log deck to

get through our break up season and we have to carry inventory.

We might not recapture that cash for 6 months.

It is, essentially, a cash flow problem and it’s going to limit our

ability to purchase Forest Service sales unless there’s a change in

that particular problem.

Senator ENZI. About 3 weeks ago, I guess, I got an article that

came out of Canada and they recognized their pine beetle problem

up there and, apparently, they are allowing companies to have the

timber, the pine beetle timber for approximately $100 a truck. How

would that compare with average prices in this part of the country

on one of these contracts? I don’t have any relationship as to what

a truck load of lumber is worth.

Mr. SCHMIDT. That is very interesting and we know that is going

on. The Canadian government owns all the timber up there and

they are very concerned not only to get the timber harvested and

utilized but they are also concerned about the jobs of the industry

that is up there. They are, basically, giving that timber to the industry to get in there and salvage it. $100 a truck load is comparable to—a current timber sale right now is probably $500 to

$1000 a truck load.

Senator ENZI. Okay. How frequently does the Forest Service

meet with your company to discuss the plans and proposed timber

sales and requirements and your capabilities?

Mr. NEIMAN. We do have an opportunity to meet once a year

with the Regional, sometimes twice a year with the Regional Supervisor in Denver under a coordinated effort.

We have occasional meetings with the Forest Supervisor of the

Black Hills National Forest. Most of the time, those are generated

and initiated by us. More comes from our end.

There is a degree of cooperation to go ahead and have those

meetings, but we would like to see a mutual effort under the new

horizon, that I talked about in my speech, recognizing that we need

each other and it is a partnership that we are hoping we are going

forward with.

It should be a 50/50 deal in trying to contact and get together.

Ours, a lot of times, are out of necessity, need and desperation. We

hope to get through that and get to a point where we are having

business partnership meetings on a regular basis to design and

move ahead. Thank you.

Ms. JACHOWSKI. It’s a very interesting question, Senator Enzi.

It’s a delicate question too. On the Shoshone, the policy meeting

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that Mr. Neiman referred to, I am sad to tell you that we traveled

down to Denver for that meeting last year, well we do it every

year.

This year there was zero representation from the Shoshone. Last

year there was minimal, and the year before that there was zero

representation from the Shoshone.

Our own personal opinion of that is that it does reflect, whether

or not they agree with it, our perception is that it reflects a lack

of relevancy to the role of industry in the management of the forest.

Indeed, we are one mill up at this end but we are the tool that

has the experience to work on this. We have in the past ourselves

initiated a number of meetings with the Shoshone and we have

met with them.

We have had the unfortunate experience of going into a timber

meeting for that purpose to talk about ASQ’s and we were shocked

when we got there and the timber numbers weren’t even brought

to the meeting.

Here we were having a meeting on timber and the people at the

meeting did not have the timber numbers with them. That was a

very unfortunate thing for us. It was another indicator that as timber sales have declined on the Shoshone, the importance of really

profiling those kinds of numbers and caring about it seems to have

faded. Thank you.

Mr. SCHMIDT. I think we probably have similar experiences on

meetings, but I would say to you that some of the no bid problems

that Gary referred to that are prevalent in the region and some

that are especially particular, as Kathleen has mentioned, to small

businesses where small businesses have not been able to bid, where

maybe a large business has come in from out of state, some of

those things are symptomatic of the problem that the Forest Service is not talking to us.

If that talking would be happening, I don’t think we’d see the

symptoms. That has to change.

Mr. ERICKSON. The last timber program meeting on the Medicine

Bow, I believe, was in 1997. I have personally met with the Forest

Supervisor at my request on the ground to look at sales.

I have invited the Forest Supervisor and staff to tour my mill.

Their office is approximately 2 miles from my mill. They’ve never

toured my mill.

Senator ENZI. One of the things that I think everybody considers

to be part of a healthy forest is getting rid of dead and dying trees.

When I was living in Sheridan there was a huge blow down up

there and there’s been a blow down over in South Dakota. There

still have been difficulties in getting in to do anything with those

trees in a timely manner while they are still good.

Have you encountered problems with being able to, and do you

have any suggestions for ways that we can, get some of those problems taken care of—fires, blow downs?

Mr. ERICKSON. Senator, based on my experience with the Forest

Service over a long period of time trying to promote salvage which

I believe, if it’s done promptly, is good forestry and if you salvage

a valuable product then you help the forest green up more quickly

and I can show you examples on the ground in the Black Hills in

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Wyoming and in Colorado to exemplify that you want to go out on

the ground.

However, it takes too long in today’s Forest Service to produce

a salvage sale that is of much value to the industry. One of the

things that we are facing on the Medicine Bow is that the majority

of the sales coming up are dealing with timber after it’s dead.

The product value is much less, and I would contend that after

2 or 3 years they are not salvaging to prevent a beetle problem because the beetles have already flown into the adjacent green

stands.

I think that we could all show you examples of why that is not

good forestry to take that long of a time period to get the salvage

done.

If the Forest Service cannot move more quickly in salvaging, I

believe we are much better off, both the forest and the industry,

to thin and try to maintain healthy green stands adjacent to either

where the fires or the bugs are.

That is what’s going to help solve and prevent the problem of

continued bug and/or fire problems. Otherwise, what we are going

to do is exactly what happened in Utah. All they are doing is continuing to salvage timber after it dies and they just keep chasing

dead timber.

Mr. SCHMIDT. I can give you a good example of some comparison

of how different things can happen. Today, over in Sheridan we are

cutting burned timber that was burned last summer up on the

Northern Cheyenne Indian Reservation.

It was burned last summer and they put it for sale in the fall.

We are out there logging it and we are cutting it today.

Adjacent to that, back in I believe 2000, the 2000 fires on the

Custer National Forest, which is just adjacent to the reservation,

the same terrain, the same timber, they had a huge fire up there.

They actually burned up 80 million board feet in that one fire

that one summer. That was enough timber to run us for 4 years.

We couldn’t harvest it all before it would go bad but they never

salvaged one stick of that timber. It’s just amazing to contrast to

somebody, the Bureau of Indian Aaffairs, who saw the problem,

wanted to get their land back into production and got it done.

Very much like Canada got it going and it happened. Some of the

bureaucracy of the Custer National Forest never even let it happen. They never salvaged anything, it’s sad to say. Once that stuff

is dead and if it decays too far, you can’t use it.

Ms. JACHOWSKI. I think it would be timely to mention something

that is very more relative to this. I was encouraged today to hear

Regional Forester Cables refer to saw timber in his remarks as

part of what one should harvest.

On this small stuff and on the dead stuff, Senator Enzi, what is

absolutely critical is that we not lead the young people, like the

ones in the back of the room, to think that forestry is about the

harvesting of just small and dead and dying stuff.

There is that role for thinning, but what I am sensing in the Forest Service is they are taking on too much because it’s a comfortable arena politically to talk only about small diameter wood as

though that will sell with the public.

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The part of the message that they are not incorporating, and

they do have an opportunity to do, is why should large forests with

large trees be cut down.

In the values product for small businesses, yes, we can get busy

and do the small business stuff, but one of the realities of the forest

industry is that your better lumber comes off the larger trees.

Especially in our situation where you have trees drop their limbs

normally as they age as they are putting on wood. That is where

they lose the knots. As the tree is older, it’s a more valuable tree.

We can have plenty of the small stuff, but mills need to have big

trees because those big trees produce fine quality lumber which for

us would make a better product in the end.

We do need for the Forest Service to message consistently, that

good forestry is about harvesting large trees as well as janitorial.

Senator ENZI. Thank you.

Mr. NEIMAN. In defense of the Forest Service, they’ve had a very

touchy situation with the Endangered Species Act and you used to

have an agency that was based on science and their decisions were

based on science.

Our whole process here is the Forest Service has become politicized and their decisions are so political instead of scientific, and

there’s some new actions and tools that you gave them last year,

but you have got to seek and look and figure out ways so the Forest

Service can get out of the political arena and get back to a bigger

percentage of scientific decisionmaking.

When you have factions out there that just basically want a hand

rail around the forest and zero cut, and they have to listen to everybody in all avenues and everybody in the country, it becomes a

very political decision instead of a scientific-based decision.

When you have a sale they are trying to put up from fire or from

wind damage, they’ve got to go through the process and it’s devastating.

No way can any business survive under the restrictions they’ve

got. We have got to figure out a way to get them back to a sciencebased decision.

When that happens, they know, we know, and most of the public

knows, that we need to get it and remove it. If there’s only one

other faction I would look at is we have misinformed or have an

uneducated public on why we are doing things.

You go back to the way the Forest Service used to do a very good

job with the Smoky Bear education program. We need to support

some kind of an educational program so they can help educate the

public and understand why we are doing some things and understand that cutting a forest is kind of like a difference between a

good hair cut and a bad hair cut.

It’s only 2 weeks between a good hair cut and a bad hair cut. Be

patient with the forest. It’s going to look a little ugly for a while

and then let nature take it’s course and it’s going to look beautiful

in a year or two. Thank you.

Senator ENZI. Thank you. That fits in a little bit with the next

question from the audience. What measures are being taken considering legal appeals to agency decisions? The current environment is one where Federal Judges are setting policy even after collaboration and study. Is that your experience?

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Ms. JACHOWSKI. Would you read that again, Senator?

Senator ENZI. What measures are being taken concerning legal

appeals to agency decisions? That may well be a question more for

me than for you.

Ms. JACHOWSKI. Right, that is true. I would cite, I think Jimmie

referred to it in terms of the categorical exclusions, Senator Enzi,

and that has been an absolute crucifixion for the Forest Service in

terms of trying to make a faster decision.

They did get new standards last year, criteria I should say, for

categorical exclusions under the Endangered Species Act. I see that

as a very positive effort. I really do.

Senator ENZI. Let’s switch to a different question. How much

damage will this removal cost the forest as a whole? Will it do

more damage than it’s worth? Why even bother with removing

dead timber if it’s never been a problem?

Ms. JACHOWSKI. Well, I am not the forester on this panel, but I

will tell you since I have spent 10 years beside a professional forester, and I will let the other guys say it, if sound silviculture is

applied, and silviculture, for the general public, is really just a step

above general forestry.

It is where the prescription—just like a doctor, they go out, the

forester or silviculturist goes out into the forest and determines scientifically, and this is a field that has over 100 years of science behind it, what type of cut will bring that timber stand back to full

regeneration.

That is the whole purpose of the harvest. The damage, if it is

done wrong, if any cut is done wrong and for the wrong reasons,

you can damage water sheds, you can damage habitat, if you do it

right, there is not long-term damage and the worse damage comes

from your catastrophic fires that seal off those soils and do not

allow moisture to penetrate when it’s left like that. It destroys the

entire wildlife habitat.

Forestry is like putting braces on children. You do what is right

now for the long term. As Mr. Neiman said, you might not necessarily like how it looks but it is for those future generations and

those ones sitting in the back of the room and applied forestry is

a science that you can’t beat.

If you do it right and you worry about the resource and not about

whether or not you like looking at a stump, just like I might not

like looking at braces on children. I love what it’s going to do for

them in the future and that is where forestry is.

Mr. NEIMAN. I will take a little different turn and there’s a lot

of people that don’t accept or understand what healthy forest is or

what we can provide from a forestry standpoint.

If you just focus on one area and look at water shed and the demands for water in this state, I can give you some examples in the

Black Hills—where one very simple one—where when my

granddad first had the ranch and the stream from the Black Hills

dried up, we cut a timber sale and all of a sudden the stream starts

running all summer long, we establish a trout stream, and plant

some trout. Then all of a sudden the forest starts growing back up

again and it dries up for another 10 years.

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We cut three or four sales and we established a live stream

again. You don’t find this in the bigger mountains. It’s a little

unique in the Black Hills. We have done that three times now.

There’s a direct correlation of water consumption, water production. The city of Cheyenne had this huge opportunity to get involved in this act, and what this act provides because the water for

Cheyenne comes off a national forest. It’s very important. Probably

the biggest impact to any city in this state is on Cheyenne itself

to make sure they have a healthy forest.

Look what happened in Denver, Colorado. They destroyed—had

huge water issues. I look at a healthy forest and you look at fisheries and recreation. Water comes into mind again.

If there’s a huge forest fire, the water shed is destroyed sufficient

population for a number of years. If it’s unhealthy, you can destroy

the fish population to by over growth. But, as Kathleen said, ‘‘the

snow doesn’t get to the ground. It dissipates.’’

It doesn’t get down into the underground. Part of it doesn’t run

off and go underneath. I am very concerned about the water tables

and the effect.

You go down—one of the most historical areas I go to is when

I come down through to Laramie I will sometimes go through Medicine Bow. They used to float logs by Medicine Bow. It’s unheard of

now. The stream does not even come close to flowing logs like it

used to.

There’s some history there. We can learn from the way it used

to be and the way it is now.

People need to look and understand what influence, not only on

a healthy forest, but help and protect communities and fires in the

forest but, focus on water. That is a huge issue that we are overlooking here.

The Forest Service has focused on it, but as communities really

need to understand, the ranchers need to look and see. The water

shed that can come off and provide for other reasons for irrigation.

The North Platte, what comes down out of the Medicine Bow clear

to Torrington, there’s influences here that are far reaching beyond

just what we are talking as an industry here. Thank you.

Senator ENZI. Anyone else? We do have a few more questions.

They are related to questions that I have asked and we will ask

you to answer those as well. We will then get those answers back

to the people that asked them.

I want to thank all of you on both panels today for the testimony

that you have given. I think the biggest job I have in Washington

is teaching the East about the West.

There is no concept at all of the space that we have out here, the

forests that we have out here, grasslands, energy, particularly people. They can’t conceive of a state as large as this with less than

half a million people.

It’s worked out pretty well for us. We keep trying to figure out

ways that we can have a better economic base and you are a part

of that. You have provided some ideas. I appreciate the cooperation

we have had from the Forest Service and the ideas they gave us

that we have been able to put into law. Those may speed up the

process a little bit and provide for healthy forests.

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My hope, of course, is that we can have discussions even

throughout Wyoming about what a healthy forest is and how to get

there and what the impacts of doing that are.

I can tell from my visits around the State that there are a lot

of misconceptions on that and there’s very little agreement. Of

course, if we can’t get agreement in Wyoming what chance is there

for the East?

Their forests are completely different. You can’t see the forest for

the trees out there. They are the hardwood forests. In fact, look at

the fall leaves, which everybody says are beautiful. You actually

have to find someplace where you can look down on them to get

the perspective.

Mr. NEIMAN. Senator Enzi, can I make one closing comment real

quick?

Senator ENZI. Sure.

Mr. NEIMAN. Just one additional comment. We are really—all of

us here—here on earth for a very short time and we are really here

for the children. I very much appreciate your coordination in having the high school and the students here to join up with us.

I would just offer, if they’ve got questions on my testimony, I put

my e-mail and phone number and stuff, please don’t inundate me

too much, but if you have got questions, I would love to help if you

have got questions that we can help further their process because

they are the next generation that is going to take the State a further step. Thank you.

Senator ENZI. Thank you. I do appreciate the participation of the

students earlier today and each of the people here. In Wyoming we

are a land of opinions and some of those are pretty strong opinions.

Hopefully, through some hearings and having everybody work together, we can work these issues out. I have found that if people

talk to each other, there’s only about 20 percent disagreement and

usually we can make a lot of progress with the 80 percent of agreement. Hopefully, we will be able to do that.

We will allow for additional testimony and also additional questions so the record will remain open for 10 days. The hearing is adjourned.

[Whereupon, at 11:25 a.m., the Committee was adjourned.]

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APPENDIX MATERIAL SUBMITTED

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