U.S. GOVERNMENT PRINTING OFFICE

68–297 u WASHINGTON : 2000

FUNDING OF ENVIRONMENTAL INITIATIVES AND

THEIR INFLUENCE ON FEDERAL PUBLIC LANDS

OVERSIGHT HEARING

BEFORE THE

COMMITTEE ON RESOURCES

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

TUESDAY, MAY 23, 2000, WASHINGTON, DC

Serial No. 106–97

Printed for the use of the Committee on Resources

(

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

or

Committee address: http://www.house.gov/resources

(II)

COMMITTEE ON RESOURCES

DON YOUNG, Alaska, Chairman

W.J. (BILLY) TAUZIN, Louisiana

JAMES V. HANSEN, Utah

JIM SAXTON, New Jersey

ELTON GALLEGLY, California

JOHN J. DUNCAN, JR., Tennessee

JOEL HEFLEY, Colorado

JOHN T. DOOLITTLE, California

WAYNE T. GILCHREST, Maryland

KEN CALVERT, California

RICHARD W. POMBO, California

BARBARA CUBIN, Wyoming

HELEN CHENOWETH-HAGE, Idaho

GEORGE P. RADANOVICH, California

WALTER B. JONES, JR., North Carolina

WILLIAM M. (MAC) THORNBERRY, Texas

CHRIS CANNON, Utah

KEVIN BRADY, Texas

JOHN PETERSON, Pennsylvania

RICK HILL, Montana

BOB SCHAFFER, Colorado

JIM GIBBONS, Nevada

MARK E. SOUDER, Indiana

GREG WALDEN, Oregon

DON SHERWOOD, Pennsylvania

ROBIN HAYES, North Carolina

MIKE SIMPSON, Idaho

THOMAS G. TANCREDO, Colorado

GEORGE MILLER, California

NICK J. RAHALL, II, West Virginia

EDWARD J. MARKEY, Massachusetts

BRUCE F. VENTO, Minnesota

DALE E. KILDEE, Michigan

PETER A. DEFAZIO, Oregon

ENI F.H. FALEOMAVAEGA, American

Samoa

NEIL ABERCROMBIE, Hawaii

SOLOMON P. ORTIZ, Texas

OWEN B. PICKETT, Virginia

FRANK PALLONE, JR., New Jersey

CALVIN M. DOOLEY, California

CARLOS A. ROMERO-BARCELO ́, Puerto

Rico

ROBERT A. UNDERWOOD, Guam

PATRICK J. KENNEDY, Rhode Island

ADAM SMITH, Washington

CHRIS JOHN, Louisiana

DONNA MC CHRISTESEN, Virgin Islands

RON KIND, Wisconsin

JAY INSLEE, Washington

GRACE F. NAPOLITANO, California

TOM UDALL, New Mexico

MARK UDALL, Colorado

JOSEPH CROWLEY, New York

RUSH D. HOLT, New Jersey

LLOYD A. JONES, Chief of Staff

ELIZABETH MEGGINSON, Chief Counsel

CHRISTINE KENNEDY, Chief Clerk/Administrator

JOHN LAWRENCE, Democratic Staff Director

(III)

C O N T E N T S

Page

Hearing held May 23, 2000 ..................................................................................... 1

Statement of Members:

Chenoweth-Hage, Hon. Helen, a Representative in Congress from the

State of Idaho ................................................................................................ 1

Prepared Statement of .............................................................................. 4

Kildee, Hon. Dale, a Representative in Congress from the State of Michigan .................................................................................................................. 6

Young, Hon. Don, a Representative in Congress from the State of Alaska,

prepared statement of ................................................................................... 7

Statement of Witnesses:

Bennett, Matt, Vice President/Sales, Emmet Vaughn Lumber Company,

Maryville, Tennessee .................................................................................... 107

Prepared Statement of .............................................................................. 109

Chandler, Terence E., President/CEO and Director, Redfern Resources,

Limited, Vancouver, Canada ........................................................................ 82

Prepared Statement of .............................................................................. 84

Huberty, Robert, Executive Vice President, Capital Research Center,

Washington, DC. ........................................................................................... 8

Prepared Statement of .............................................................................. 11

Miller, Ted, Chairman, Pulp and Paperworkers Resource Council, Gorham, New Hampshire ................................................................................... 36

Prepared Statement of .............................................................................. 38

Phelps, Jack, Executive Director, Alaska Forest Association, Inc., Ketchikan, Alaska ................................................................................................... 19

Prepared Statement of .............................................................................. 22

Williams, Eric, Environomics, Cheney, Washington ..................................... 68

Prepared Statement of .............................................................................. 70

(1)

OVERSIGHT HEARING ON: FUNDING OF ENVIRONMENTAL INITIATIVES AND THEIR INFLUENCE ON FEDERAL PUBLIC LANDS

TUESDAY, MAY 23, 2000

HOUSE OF REPRESENTATIVES

COMMITTEE ON RESOURCES

Washington, DC

The committee met, pursuant to notice, at 2 p.m., in room 1324

Longworth House Office Building, Hon. Helen Chenoweth-Hage

(acting chairman of the committee) presiding.

STATEMENT OF THE HON. HELEN CHENOWETH-HAGE, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF IDAHO

Ms. CHENOWETH-HAGE. The Committee on Resources will come

to order.

The committee is meeting today to hear testimony on the funding

of environmental initiatives and their influence on Federal public

land policies.

Recently, one of the lead stories in Philanthropy magazine was

about foundation funding of environmental organizations. Now, the

article said that today foundations have much of the public agenda,

and nowhere more so than in the area of environmentalism, where

foundations collectively spend upwards of $500 million per year

that we know of.

Today we are here to analyze the relationship among large foundations, environmental groups, and the Federal Government in

Federal public land management policy, in regards to recreation,

timber harvests, mining, and other public lands issues. We will

also explore the impacts of these policies on local communities. Environmental groups are relying more and more on a core of

wealthy, nonprofit foundations to fund their operations. The largest environmental grantmaker—the $4.9 billion Pew Charitable Trusts—gives more than $35 million annually to environmental groups. Other large wealthy foundations such as the

Turner Foundation, W. Alton Jones, and Lucile and David Packard

Foundations, are not far behind Pew in their grantmaking to environmental groups.

Foundations have funded environmental advocacy campaigns for

more wilderness, curtailing timber harvests, and mining, breaching

dams, and Federal control of ecosystem planning. An example of

this type of activity is the Heritage Forest Campaign, the subject

of an oversight hearing on February 15, 2000, by the Subcommittee

on Forests and Forest Health.

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The Heritage Forest Campaign, a coalition whose sole purpose

appears to be lobbying the Clinton-Gore administration to implement the Roadless Initiative, which would withdraw up to 60 million acres of national forest lands from multiple use. This campaign

is largely organized and funded by tax-free grants from charitable

foundations such as the Philadelphia based Pew Charitable Trusts,

with $4.9 billion in assets—the fifth largest U.S. charitable foundation.

Now, since September 1998, Pew has given the National Audu- bon Society more than $3.5 million in tax-free grants to organize

the Heritage Forest Campaign, a coalition of about a dozen environmental groups. The sole objective of the campaign appears to be

the creation of widespread public support for the Clinton-Gore administration’s initiative to restrict access on 60 million acres of national forest lands.

The Heritage Forest Campaign illustrates several potential problems with foundation-financed environmental political advocacy,

namely the lack of fair, broad-based representation, and the absence of accountability. Particularly disturbing is this administration’s acquiescence to the campaign in the setting of policy.

At a recent hearing on the Roadless Initiative, I asked George

Frampton, Director of the Council on Environmental Quality, for

the names of all those attending any meetings he had held regarding the development of the Roadless Initiative. The list he sent in

response is a who is who in the environmental community. Even

more telling is that not one individual representing recreation, industry, academia, county commissioners, or local schools were in

attendance. Only representatives of the national environmental

groups participated.

Not only was the public excluded during these meetings, but so

was Congress. The administration’s Roadless Initiative appears to

be an attempt to bypass the role of Congress. Under Article IV,

Section 3, of the United States Constitution, Congress possesses

the ultimate power over management and use of lands belonging

to the United States.

If the Roadless Initiative is universally popular, why can’t the

Heritage Forest Campaign get it enacted by Congress through the

normal legislative process? Administrative directives, such as the

Roadless Initiative, bypass Congress and centralize policymaking

authority within the hands of unelected bureaucrats in the executive branch.

Foundation-funded advocacy groups make backroom deals, thus

denying the average citizen a voice and input into the policy

through their elected representatives in Congress. As a result, our

Government becomes more remote and unresponsive to the needs

of the average citizen.

To whom is the Heritage Forest Campaign accountable? This

campaign is put together by foundations, not the participants. The

grantees are accountable to the foundations that fund them, not

their own members. Foundations have no voters, no customers, and

no investors. The people who run big foundations are part of an

elite and insulated group. They are typically located hundreds or

even thousands of miles from the communities affected by policies

they advocate.

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They receive little or no feedback from those affected by their decisions, nor are they accountable to anyone for promoting policies

which adversely affect the well-being of rural people and local

economies. Today’s witnesses will tell us how their communities

are being crushed by an inaccessible and faceless movement, wielding great power and influence.

The role of large foundations in funding environmental advocacy

raises some fundamental questions. Foundation wealth shapes public policy at the expense of all counter views. Even worse, those

skeptical of foundation-supported policies are often smeared by

foundation-funded media campaigns in an attempt to marginalize

them in the debate. Even alternative environmental solutions are

rejected out of hand as environmental groups mold their programs

and their agenda to please the large grantmakers.

Does foundation-financed advocacy prevent full and fair public

debate on public lands issues? Is the average citizen’s voice and

input in the government decisionmaking process drowned out by

foundation-funded advocacy groups?

The most fundamental question of all is, what happens to the

towns and communities affected by policies resulting from foundation-funded advocacy? The people living in these communities are

left with a ruined local economy. Their towns lack the income to

provide even basic services. Their schools have no revenue to teach

their children.

The important issue here is whether the foundation strategies

used to fund the environmental movement are buying undue influence for those groups on public lands policy. I believe it will become

very clear during this hearing that this isn’t an issue concerning

the environment, but rather one concerning power and its use for

political ends, with rural communities being trampled in the process.

[The prepared statement of Ms. Chenoweth-Hage follows:]

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Ms. CHENOWETH-HAGE. I look forward to listening to today’s witnesses. I want the record to show that representatives from the following foundations were invited to testify before us today, and all

declined to appear. Those organizations are the Pew Charitable

Trust, W. Alton Jones Foundation, and the Turner Foundation.

Some of our witnesses came several thousand miles to testify, yet

foundations in Philadelphia and Charlottesville just couldn’t make

it.

So now I will recognize and introduce our first panel as we begin

the—since the ranking member isn’t here, I would like to defer to

the gentleman from Michigan for any opening statements he may

have.

STATEMENT OF THE HON. DALE KILDEE, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. KILDEE. Thank you, Madam Chair. I shall be very brief.

We have a wide range of foundations in the country. They represent every part of the political and ideological spectrum. And I

think you and I would basically agree, even with your conservative

point of view and my liberal point of view, that Government should

have a natural reluctance to limit their advocacy and their areas

of interest and support.

But I do appreciate the fact that you are having the hearing

today because knowledge is power.

Ms. CHENOWETH-HAGE. I thank the gentleman from Michigan.

[Prepared statement of Hon. Don Young follows:]

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And now I will introduce the first panel—Mr. Robert Huberty,

Executive Vice President of Capital Research Center in Washington, DC.; Mr. Jack Phelps, Executive Director of the Alaska Forest Association in Ketchikan, Alaska; Mr. Ted Miller, Chairman,

Pulp and Paperworkers Resource Council in Gorham, New Hampshire.

As has been explained to you, it is the intention of the Chairman

to place all of our outside witnesses under oath. It is a formality

of the committee, when I chair the committee, that is meant to assure open and honest discussion and shouldn’t affect the testimony

given by the witnesses.

I believe that all of the witnesses were informed of this before

appearing here today, and that they have each been provided a

copy of the committee rules. So if you will please stand and raise

your hand to the square.

[Witnesses sworn.]

And now the Chairman recognizes Mr. Huberty for his testimony.

STATEMENT OF ROBERT HUBERTY, EXECUTIVE VICE PRESIDENT, CAPITAL RESEARCH CENTER, WASHINGTON, DC.;

JACK PHELPS, EXECUTIVE DIRECTOR, ALASKA FOREST ASSOCIATION, INC., KETCHIKAN, ALASKA; AND TED MILLER,

CHAIRMAN, PULP AND PAPERWORKERS RESOURCE COUNCIL, GORHAM, NEW HAMPSHIRE

STATEMENT OF ROBERT HUBERTY

Mr. HUBERTY. I will summarize my comments, if I might, from

my written testimony.

Thank you for inviting Capital Research Center to testify on how

environmental initiatives are funded. My name is Robert Huberty,

and I am Executive Vice President of Capital Research Center,

which is based in Washington, DC.

Capital Research Center studies charity, philanthropy, and the

nonprofit sector. We take a particular interest in the role of public

interest organizations and their impact on American politics and

society. We do not solicit or accept any government contracts or

grants.

Capital Research Center has published a number of recent studies about the groups that comprise today’s environmental movement. We think there is inadequate public understanding about the

underlying philosophy of these groups, the ties and linkages among

their leaders, and, most particularly, their access to funders and to

public policymakers.

Specifically, today I would like to talk about the role of the

grantmaking foundations that provided financial support for the

Heritage Forests Campaign. These foundations have orchestrated a

major public relations campaign to advocate for changes in Government regulatory policies.

Last October 13th President Clinton directed the Forest Service

to prepare a study that would ban road building on parts of the national forest system that are currently roadless, but that Congress

has not agreed to designate as permanent wilderness areas. The

President’s speech was anticipated by the Pew Charitable Trusts,

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which acknowledges that it organized the campaign to promote the

Roadless Initiative.

On September 24, 1998, the Pew Trusts made a grant of $1,415,000 to the National Audubon Society, as you indicated. One

year later, September 23, 1999, it gave an additional grant of

$2,150,000, for 15 months ‘‘to complete a public education effort for

permanent administrative protection of the largest remaining

tracts of pristine old growth remaining in the U.S. national forests.’’

The purpose of the Pew grant money was to assemble organizations working under Audubon’s supervision to orchestrate the

Roadless Campaign. The campaign has 24 organizations as campaign partners, and its web site indicates that it also receives financial support from the W. Alton Jones Foundation and the Turner Foundation. And my written testimony contains a chart with additional information compiled from public sources on foundation

funding for the initiative.

The Pew Trusts are major funders of the campaign, but besides the Audubon grants, in 1998, it gave $800,000 to the Earthjustice

Legal Defense Fund. Just this March 16th, it gave the Alaska Conservation Foundation $500,000. Pew also gave the National Environmental Trusts $3 million in grants in 1999 and in 2000 for general operating support. The Heritage Forests are one of their four

target areas.

The Pew Trust is not the only foundation promoting the Roadless

Initiative. As you know, the World Wildlife Fund and the Conservation Biology Institute asked the David and Lucile Packard

Foundation for a grant of $650,000 for roadless area mapping.

Now, the groups supervised by the Audubon Society, with grants

from Pew and other foundations, recently expressed their opinion

of the Forest Service recommendations that were issued on May

9th, and they were dismayed. In looking at their web sites, you can

see a remarkable uniformity.

They say that the President is not to blame, but they assert that

his administration has failed to implement his vision. They are disappointed that the Forest Service recommends a ban on new roads

but does not permanently ban logging and offroad vehicle use.

They are appalled at the decision to defer action on the Tongass

National Forest, and they are unhappy that the ban applies to

inventoried areas of 5,000 or more acres, but not to the

uninventoried areas of 1,000 acres or more. And they urge their followers to turn out for the public comment meetings that were organized last week.

Congress and the public have good reason to question the funding priorities of large foundations. Private foundations are peculiar

creations of public law. Their assets are tax exempt. Contributions

to them are tax-deductible. They are often established to avoid estate taxes.

Government gives a foundation these privileges with the expectation that its trustees will respect the intentions of the donor who

established it and that those intentions are benevolent and charitable.

Certainly, a foundation may support research and education programs. But when a foundation organizes a lobbying campaign on

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highly divisive political issues, when it uses its largess to task one

nonprofit organization—the Audubon Society—to coordinate the

lobbying of other nonprofits, then the Congress should ask whether

the spirit of the law is being upheld.

The Pew Charitable Trusts may respond, and if they were here

they might respond, that they are doing what they have a right to

do, that others do it, and that no one has called on them to stop

doing it. But by making themselves merely another Washington

lobbying group, they undermine, in my opinion, the traditions and

institutions of philanthropy which are a very vital part of our society.

Thank you very much.

[The prepared statement of Mr. Huberty follows:]

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Ms. CHENOWETH-HAGE. Thank you, Mr. Huberty.

And the Chair recognizes Mr. Jack Phelps for his testimony.

STATEMENT OF JACK PHELPS

Mr. PHELPS. Thank you. My name is Jack Phelps. I am the Executive Director of the Alaska Forest Association, which is the Statewide forest products industry trade association for Alaska.

The AFA represents about 90 member companies directly doing

business in the forest products industry in Alaska and their employees, and about another 160 companies that are supportive of

the industry in terms of vendors and that sort of thing.

The Tongass National Forest in southeast Alaska has historically

supported a commercial forest industry that has provided stable

year-round employment for the communities of the region and accounting for one-third of the region’s economy. Over the past decade, however, declining timber harvests from the Tongass National

Forest have eliminated thousands of jobs and millions of dollars

from the regional economy.

According to a recent study produced by the McDowell Group, a

research firm based in Juneau, and I quote, ‘‘Since 1990, the volume of timber harvested from the Tongass National Forest has

dropped from 470 million board feet to 120 million board feet annually, a 75 percent decline.’’ In fact, the Tongass timber harvest is

at the lowest point since 1954, which was the year in which industrial timber harvests began in southeast Alaska.

Throughout the 1960’s and 1970’s, the Tongass timber harvests

ranged from 400 to 600 million board feet per year, fluctuating in

response to world markets for pulp and lumber products. Market

conditions pushed the Tongass harvest to a low point in 1985,

about 230 million board feet. And the harvest increased to 470- in

1990 before beginning a steady decline throughout the 1990’s in response to political forces and changing resource management practices.

The McDowell report goes on to say timber industry employment

is at its lowest point in over 30 years, now directly accounting for

only 670 jobs. At its peak in the 1970’s, it generated 4,000 timber

industry jobs in southeast Alaska. As recently as 1990, the industry accounted for 2,400 direct jobs. Since 1990, however, the industry has lost jobs at a rate of 200 jobs per year. This includes the

closures of pulp mills in Sitka, in Ketchikan, and a large saw mill

in Wrangell.

These mills were the single largest employers in each of these

communities. Most recently, Metlakatla lost its largest private sector employer with the October closure of the saw mill.

The loss of 1,700 pulp mill, saw mill, and logging jobs during the

1990 to 1998 period has rippled through local economies, resulting

in additional job loss. Based on the U.S. Forest Service employment

multiplier for the region’s timber industry of 1.8, the job loss total

is estimated at approximately 2,900 jobs. This job loss translates

into a loss of over 100 million dollars in annual payroll in southeast Alaska.

The loss of year-round family wage jobs has hit small communities the hardest. For most of the 1990’s, for example, Wrangell

has struggled with a 40 percent unemployment rate. Small commuVerDate 11-MAY-2000 12:47 Jan 03, 2001 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 J:\68297.TXT HRESOUR2 PsN: HRESOUR2
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nities on Prince of Wales Island are now beginning to feel the serious economic harm resulting from cessation of activities related to

the Ketchikan pulp mill.

While Congress has attempted to soften the blow by providing

disaster relief money to the communities of southeast Alaska, this

only helps in the short term and is no substitute for long-term employment at wage levels that sustain families and communities. It

has affected those family’s abilities to get health insurance as well.

A factor significantly contributing to this decline is the—have

been the activities of radical groups in the region. These groups

have mounted sustained propaganda campaigns aimed at convincing the American public and the national administration that

the timber industry has been devastating the Tongass National

Forest by its logging activities. A look at the statistics on that—

of harvest on that forest deny that assertion.

The efforts of the anti-development groups are sustained by huge

grants of money from large charitable trusts which receive tax protection from the Federal Government and are, therefore, subsidized

by the American taxpayers, including the taxpayers in southeast

Alaska who are losing their living and their way of life due to the

efforts of these groups.

For example, in 1997 and 1999, the Pew Charitable Trust gave $1.2 million to the Alaskan Conservation Foundation which routed

most of that money into Tongass-related activities, including a

grant of $529,000 to the Alaska Rainforest Campaign in 1998. I

have detailed many of these in an inter alia list in my written testimony, but I would point out to the committee that this represents

only the tip of the iceberg. These grants are hard to track down,

but they are voluminous.

It should be noted that these expenditures leverage the significant amount of other taxpayers’ dollars running into the millions

that were used by the agency to defend itself against these appeals

and litigation. Furthermore, the committee should be aware that it

is this very activity that greatly increases the cost of the timber

sale program in Alaska.

The same groups then turn around and publicly criticize the

agency for running a deficit timber sale program and call it a subsidy to the industry. A recent Forest Service report shows that

nearly half of the cost of the timber sale program in Alaska is attributable to the cost of NEPA compliance, including the costs of

appeals and litigation.

This taxpayer subsidized activity must be stopped or at least controlled. It is simply wrong for the American taxpayers to be supporting efforts aimed at destroying the economies of small American communities in Alaska and elsewhere.

The United States is a country where people are free to hold

whatever political and religious views they want to, and to actively

pursue their own political goals. The Alaska Forest Association

does not object to that. We do object, however, to having those

groups use tax shelters to pursue their political ends when those

ends directly harm other people and destroy the economies of rural

communities.

We, therefore, ask this committee to carefully investigate the activities of these huge, wealthy foundations, and the use of their tax

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shelters to promote campaigns that are wreaking devastation on

the rural communities of our country.

Thank you very much for the opportunity to testify.

[The prepared statement of Mr. Phelps follows:]

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Ms. CHENOWETH-HAGE. Thank you, Mr. Phelps.

And the Chair recognizes Mr. Miller for his testimony.

STATEMENT OF TED MILLER

Mr. MILLER. My name is Ted Miller. I am an elected trustee and

a card-carrying member of PACE Local 75 out of Berlin, New

Hampshire, part of the union representing 700 mill workers in my

area. I am also active in the Pulp and Paperworkers Resources

Council, an organization representing labor in over 100 wood product mills throughout the country.

I have run for public office in the past as a Democrat, and I will

be doing so again. I am here to testify about how foundation grants

affecting public policy have already caused job loss in my community and threaten more jobs and also recreation opportunities.

In 1990, the Jessie B. Cox Foundation awarded the Appalachian Mountain Club a $315,000 grant to promote a greenline strategy

for the northern forests. In other words, the object is for the government to buy land and put it off limits to almost all human activity.

As a direct result, the Northern Forest Alliance was created. This

coalition of over 30 environmental groups includes the Appalachian

Mountain Club, the Sierra Club, the Wilderness Society, and the

National Audubon Society. They have targeted over eight million

acres of private-owned lands in northern New England and upstate

New York to become Government-owned lands.

Over $2 million from foundations, including Pew Charitable

Trust, the John Merck Fund, the Richard King Mellon Foundation,

as well as the Jessie B. Cox Foundation, was given to the Northern

Forest Alliance for the purpose of advocating for huge purchases of

private lands by the Government.

About 85 percent of the 26 million acre northern forest is in private ownership. The major ownership of these lands is with the forest product industry, most of whom provide raw materials for their

use and that of other producers. Under this current land ownership

pattern, forest growth has exceeded harvest since 1920. This could

not have happened if they were harvesting at the rate many environmental groups claim.

In New Hampshire alone, the forest product industry provides almost 17,000 direct and indirect jobs and almost $4 billion in direct

and indirect income. This is only possible because most of the land

is in private ownership.

Over the last two decades, the White Mountain National Forest

where I live and the nearby Green Mountain National Forest have

had their annual timber harvest severely reduced, largely because

of foundation financed activism. The impact on the local economy

has been felt. The loss of timber revenue has resulted in a higher

cost for community residents for their schools and roads. Good-paying timber jobs have been lost as well.

For these reasons, those who want to see more Governmentowned lands are not the people who have lived and worked in the

northern forest area for generations. It is foundation funds that are

going to groups like the Northern Forest Alliance and the AMC,

whose spokesman, Dave Publicover, told an audience at a meeting

in North Conway, ‘‘If my grandchildren can come up here and see

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a cougar, then we have done something right. If not, we have

failed, no matter how many jobs there are.’’

In advocating for large Government land purchases, Mr.

Publicover doesn’t care if almost 10,000 pulp and paperworkers

throughout the northern forest lose their jobs. The AMC doesn’t

care if almost 10,000 pulp and paperworkers throughout the northeast lose their jobs. The Northern Forest Alliance doesn’t care if almost 10,000 pulp and paperworkers lose their jobs.

And it is obvious that the wealthy foundations giving huge

grants to those organizations don’t care if 10,000 pulp and paperworkers lose their jobs. Indeed, that seems to be one of their goals.

It is our only hope that you care about our jobs and that you care

enough to say no to the foundations who are advocating huge Government land purchases. More Government lands may be in the

best interest of the various foundations, but they are not in the

best interest of the economy.

More Government lands are not in the best interest of the American worker. And, as we have learned, more Government lands are

not in the best interest of the environment either.

I have submitted further documentation with the Records Clerk.

And on behalf of the 700 pulp and paperworkers of Local 75, I

thank you for your time and this opportunity.

[The prepared statement of Mr. Miller follows:]

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Ms. CHENOWETH-HAGE. Thank you, Mr. Miller, and I do want to

assure you I do care. It is staggering.

Mr. Miller, I wanted to begin my questioning with you. I wanted

to ask you what do you believe is the justification for the foundations having a contention that public ownership is probably better

than private ownership. What do you think—why do they believe

that? Do you have any idea?

Mr. MILLER. Well, apparently, if such information exists, they

are keeping it a secret. When foundation-funded environmental

groups meet, they have deliberately excluded local citizens and

even public elected officials from their planning sessions. Their

goals were developed without any consultation with local representatives.

I would like—go ahead, please.

Ms. CHENOWETH-HAGE. Can you tell me, have local people been

excluded from these planning sessions? In your experience, has the

union been included, or your neighbors, or community leaders?

Mr. MILLER. We have been deliberately excluded. It was in late

1992 when the Wilderness Society and the AMC sent out notices

to various environmentalists and the public visitors of Pinkum

Notch that they were invited to attend a meeting for the purpose

of activist training at the AMC facility on the White Mountain National Forest.

On the agenda was an item listed as the Northern Forest Alliance Overview, discuss the Alliance, and their three-part platform

for the northern forest. When several publicly elected officials from

various communities, the county, and even our Governor’s executive counselor, requested to be allowed to attend this meeting, they

were told that they were not welcome.

After much publicity and questions about the legality of environmental groups, holding a meeting on Government land and excluding public representatives, the leaders of the meeting and selected

guests fled to a location outside of the national forest—a resort in

Jackson, New Hampshire.

They then hired a policeman to keep the meeting a secret. No

one, not even the press, was allowed to hear how they supposedly

would achieve a healthy environment with a strong local economy.

What do you think that they were trying to hide? It is obvious

that foundation directors are using environmental groups to play

social engineer with the lives of local people.

Ms. CHENOWETH-HAGE. Mr. Phelps, you have spoken about the

activities of environmental groups which are funded by these foundations, and I really found your testimony riveting and interesting.

These well-funded foundation groups give grants and play an active

part in hindering the timber industry’s ability to purchase Federal

timber from the Tongass National Forest, and that is happening all

over in our national forest lands.

Can you give us, from your experience, any recent examples of

specific activities that fit into this category, perhaps an effort that

is presently going on or—I just came back from Alaska, and I am

shocked at the condition of the Tongass National Forest. So can

you enlighten us, please.

Mr. PHELPS. Sure. An interesting one that is going on right now

is a group that decided that it would be useful to its purposes to

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have a slew of postcards generated from what essentially has been

the timber capital of southeast Alaska for a long time—Ketchikan.

So they mobilized a team of people to go in and set up an information distribution booth in front of the local Forest Service facility, which is about a half a block from the cruise ship dock. Now,

interestingly, the city has a municipal ordinance against distributing literature on the cruise ship dock, so they managed to use a

Federal agency to front for them and allow them to distribute their

propaganda on the steps of its own—what they call the Discovery

Center, which is their visitor center.

And they had claimed, of course, that they had no right to tell

them they couldn’t because of First Amendment rights. And in any

case, the interesting thing about this organization is it was clearly

organized by environmental groups located in the lower 48 and was

well-publicized at the first on one of their web pages where they

put out the word that Ketchikan desperately needed their help, because we had been—and I quote—‘‘in the grip of the wise-use

movement for many years,’’ and we are fearful of our Congressional

delegation and the other local political gangsters that prevented

the Ketchikan people from speaking for themselves.

And so it is this kind of hyperbole and gratuitous slander, really,

that is often used to stir up the unwary and mobilize these fellow

travelers to go and do their thing in terms of generating ‘‘public

support’’ for Government actions that are damaging to our communities.

Ms. CHENOWETH-HAGE. I have other questions that I would like

to ask members of the panel, but I see my time is up. So the Chair

will recognize Mr. Kildee for his questions.

Mr. KILDEE. You mentioned, Mr. Phelps, gangsters. Who were

these gangsters?

Mr. PHELPS. Well, the statement was—I was making a quotation

from the environmental groups that were saying that our town was

in the grip of political gangsters, and we believe that those were

references to our local State representative and State Senator.

Mr. KILDEE. OK. Thank you.

Foundations are fairly heavily regulated by the IRS. I know in

Michigan we have three large foundations—the Kellogg Foundation, the Ford Foundation, the Mott Foundation. I know they are

highly regulated by the IRS.

Are you suggesting, Mr. Huberty, new regulations, further regulations, for the foundations?

Mr. HUBERTY. Well, I think it is something that has to be looked

into. It is true that they are regulated, but I don’t think they have

been scrutinized very carefully because foundations have, generally

speaking, a good reputation. There are 40,000 foundations in the

United States, a lot of them family foundations. Most of them are

doing charitable good deeds, and so I think there has been a disinclination, really, to look very carefully at what foundations are

doing.

But to the extent to which groups like the Pew Charitable Trusts

increasingly involve themselves in coordinated activities, in designating nonprofits and telling them, ‘‘Here is the money if you do

particular things, and here is how the money is going to be distributed, and how it is going to—the campaign will be advanced,’’ the

59

more that orchestration is apparent or appears so, I think the more

scrutiny they make themselves subject to.

The Pew Charitable Trusts do many fine things in the Philadelphia area. They do historical restoration, education projects, and so

forth. But in focusing on the environment, they have made it a

point not of spending money on purchases of land and conservation,

that sort of thing, but rather on this kind of coordinated campaign.

Mr. KILDEE. You indicated that the Government should have

more scrutiny. What should they be looking for in their scrutiny of

these foundations?

Mr. HUBERTY. Well, right now, I think it is more to get the word

out, to have the foundations looking at one another.

Mr. KILDEE. We don’t want to scrutinize to say you are saying

the right thing, and you are saying the wrong thing. You don’t

want Government to decide what is right and what is wrong in advocacy, do you?

Mr. HUBERTY. It would be very troubling to have the Government decide what is a particular advocacy action. One solution

would simply be more disclosure. Right now, I don’t think the foundations are—it is not incumbent on them to make clear their relationships to one another, and that might be helpful. To come up

with the research to find out what foundations are spending their

money on is very difficult.

Mr. KILDEE. But I think you and I would agree that we would

not want Government to say you are OK because you advocate this

position, but you are not OK but you advocate that position. We

wouldn’t want Government to do that, would we?

Mr. HUBERTY. Generally speaking, I would agree with you on

that. On the other hand, we have the phenomenon now of Members

of Congress being very critical about soft money spending on campaigns, issue advocacy campaigns. Well, this is what this is becoming. The foundations are becoming soft money providers to those

who have specific issue advocacy.

I think a lot of people have problems with that. But the foundations are putting themselves into that category when they do that.

Mr. KILDEE. I have sometimes problems with some things that

an individual would advocate, but I certainly wouldn’t want to take

away from that individual the right to advocate that way. And who

would want Government to say, you know, your advocacy is not

pleasing to the Government, and, therefore, we are going to limit

you.’’

I think you and I would agree on that, would we not, that we

don’t want to—you yourself, you are the Vice President of the Capital Research Center. You receive foundation funds also, do you

not?

Mr. HUBERTY. We do. We do.

Mr. KILDEE. So aren’t we embarking on maybe a rather dangerous path, maybe an attractive path for a particular goal, but

maybe a dangerous path if we are trying to limit foundations and

where they can advocate, how they can advocate?

Mr. HUBERTY. It is a difficult path, but on the other hand I think

the foundations are taking the step, by injecting themselves in the

political process, by making themselves part of that process. And

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announcing that they are going to become part of that process, I

think they invite that sort of scrutiny.

Mr. KILDEE. But do they lose their basic right of advocacy because they are spending dollars that have been left to the foundation either by one person or others? Do they have less rights of advocacy?

Mr. HUBERTY. You know——

Mr. KILDEE. You mentioned—just think about that. I think we

are just embarking on a very dangerous path, and we are saying

that you are an A classification because we like what you advocate,

but you are a B classification because we don’t like what you advocate. And Government will put some regulations on A category. I

think it is just, in my mind, a dangerous——

Mr. HUBERTY. But, on the other hand, we are talking not just

about speech. But we are talking about money. And the money——

Ms. CHENOWETH-HAGE. The gentleman’s time is up.

Mr. HUBERTY.—and the exercise of power that comes with it.

Mr. KILDEE. That is the whole thing with campaign finance, too.

Is it money, or is it the advocacy, right? We are struggling with

that down here, too, and I appreciate that.

Ms. CHENOWETH-HAGE. The gentleman’s time is up.

Mr. KILDEE. Could I just finish one—the Pew Foundation, for example, not that the chairlady and I need it, but the Pew Foundation each year funds a conference in Hershey, Pennsylvania, to

help us become more civil with one another. Now, the chairlady

never needed to go to that.

You probably went there anyway, but you didn’t need it, because

she has always been civil——

Ms. CHENOWETH-HAGE. Do you think it shows?

[Laughter.]

Mr. KILDEE.—has always conducted these hearings—and I mean

that seriously—in a very, very fair manner, and I appreciate it.

Ms. CHENOWETH-HAGE. I thank the gentleman.

Mr. Duncan?

Mr. DUNCAN. Well, Madam Chairman, thank you very much.

There are—when you are tax exempt, there are certain restrictions on what foundations can do. For instance, certain lobbying activities, although sometimes it is hard to tell the difference.

But I don’t know that I have any questions. I want to make a

couple of comments, though, that maybe some of the panelists may

want to respond to. I know a few months ago in the Forest Subcommittee we were told that over 39 million acres out west, almost

40 million acres, was in immediate or imminent danger of catastrophic forest fires because of all the fuel buildup.

And now we have seen the Los Alamos and the Nevada fires, and

I heard Secretary Babbitt on television last week saying our forests

were 100 times more dangerous than they were 100 years ago. I

don’t know exactly where he got those figures, but they are more

dangerous, in the opinion of many people, because of the policies

that he is following.

Because we were told in the Forest Subcommittee several

months ago that we have 23 billion board feet of new growth each

year on our national forests. And yet the Congress passed, in the

mid 1980’s, what was hailed as a great environmental law that we

61

would not cut more than 80 percent of the new growth. Now we

are down to cutting less than three billion board feet a year, which

is less than one-seventh of the new growth.

And they told us at this hearing that we have six billion board

feet that are dead or dying, and yet these environmental extremists

won’t even let people go in and get the dead and dying trees. And

yet there has been such I think almost a brainwashing of the children that if I went to any school in Knoxville, Tennessee, and told

them that I was against cutting a single tree in the national forest

they would probably cheer or say that they thought that was a

good thing.

But they don’t stop to think that if we don’t cut some trees that

we won’t—we can’t have healthy forests. If we don’t cut some trees,

we can’t build homes, furniture, books, newspapers, magazines, toilet paper, all kinds of products that we desperately need.

And then, even worse, as Mr. Miller has gotten into, when you

start restricting and cutting back on this logging so drastically,

then what do you do? You destroy thousands of jobs, you drive up

prices.

I remember reading five or 6 years ago that the average income

of a member of the Sierra Club was about four times that of the

average American. I think they were bragging about it to get advertisers. And I have noticed over the years that most of these environmental extremists come from very wealthy families.

And I am not sure that they—I know one thing, they are probably insulated from the harm that they are doing, and I am not

sure that they really realize how much harm they are causing for

the lower income and middle income and the working people in this

country. But I think it is kind of sad what they are doing.

And yet it is amazing to me that we still continue down this

path. We have 191 million acres in the national forests in this

country, and I think that what people look at—they look at a map

of the entire United States on one page in a book, and it looks like

it is a little small country. And people forget how big this country

is.

And I represent half of the Great Smoky Mountains National

Park, and about half of the Cherokee National Forest. Well, I can

tell you the Great Smoky Mountains National Park, which is visited by 10 million people each year—and people who go there think

it is huge—it is 565,000 acres. Now, the national forests cover 191

million acres. That is more than—that is 325 times the size of the

Great Smoky Mountains National Park.

I just don’t understand why we have to go to such extremes. I

do know that what is—I think what happens is this. These environmental groups have gotten in big contributions for many years,

and I think years ago when they were more moderate they did

some good things. But they keep having to go to further and further extremes to keep those big contributions coming in. And I

think it is all about money.

They are backed up. You know, there are many big companies.

For instance, I am told that we are having to import all kinds of

Canadian lumber now because we have restricted the logging in

our own country so much. There are a lot of big companies that

benefit, a lot of big foreign companies that benefit when we don’t

62

cut any trees or dig for any coal or drill for any oil. There are a

lot of companies in other countries that benefit from that.

And I think that is what is behind an awful lot of this, but it

is—we are getting to the point where we are destroying all of these

thousands of jobs that Mr. Miller talked about, and we are driving

up prices for our own people. And I think some people need to start

speaking out about it.

Mr. Miller, do you have any comments you wish to add or——

Mr. MILLER. Yes, I would like to just go on a little bit about what

you were talking about. One of the things that bothers us the most

is that there is no accountability by these foundations or by these

groups who are doing their bidding.

I have here, for instance, a letter from Carl Pope with the Sierra

Club, and in one of these things they are—just one point that I

wanted to make. He is telling people that he needs their help to

establish the Maine Woods and White Mountain National Parks in

the northeast to keep timber companies from clear-cutting nearly

four million acres of pristine wilderness.

That is absurd. That is ridiculous. It is downright outright false.

It is simply—as we say up north, it ain’t going to happen.

For one thing, the practice of clear-cutting has been severely reduced, and for another thing when it is applied generally it is applied for a sound timber management purpose. All right. You don’t

have the hundreds of acres being clear-cut like you did in the

1980’s. And when that did happen in the early 1980’s, yes, there

were some unsightly messes. I will be the first to admit it.

A lot of that was because of the spruce bud worm infestation in

northern Maine. And if those forests hadn’t been cut—I have seen

pictures of some of those areas, and those trees are brown. Evergreen trees turned brown because they were dead and dying from

the blight. They were cut. Right now, 20 years later, you have a

healthy forest growing trees that are 30 to 40 feet tall. That would

not have happened——

Ms. CHENOWETH-HAGE. The gentleman’s time is up.

Mr. MILLER. —without some management practices. And, again,

you know, it is very distressing that these foundations are giving

money to these environmental organizations who are making all

kinds of false claims. And if I was, for instance——

Ms. CHENOWETH-HAGE. The gentleman’s time is up.

Mr. MILLER. OK. I am sorry. Thank you.

Ms. CHENOWETH-HAGE. The Chair recognizes Mr. Holt. We will

have a second round of questions.

Mr. HOLT. Thank you, Madam Chair.

It seems that our—with our vast country, with our really intricate environment, requires a lot of effort to look after from a lot

of perspectives. And it seems to me that we don’t all come at these

things from the same perspective, but we, as a society, want to preserve the ability of people to speak out from different perspectives.

It seems to me that these foundations, some of which I am familiar with, have some pretty good accountability built into their own

organization, not to mention the accountability they face from the

IRS and other Federal oversight.

I guess I would like to pursue a couple of points. Let us see, Mr.

Phelps, you represent the Alaska Forest Association. I assume that

63

is funded primarily by corporate interests in Alaska. Is that correct?

Mr. PHELPS. That is correct. Our operations are funded by dues

paid by our members based on the amount of economic activity

they have.

Mr. HOLT. Right. And so you are here at their expense, as an advocate, for their views on forest management, I guess.

Mr. PHELPS. Sir, that is correct. I think the substantial difference

is that they pay taxes on their income.

Mr. HOLT. I would like to ask a couple of you to comment on the

comparison between the influence of corporations and of foundations. What is the expenditure, just take your association, for example, or maybe somebody comment on the Forest Products Association, the AFPA—what is the advertising budget of each of those,

of your organization, Mr. Phelps?

Mr. PHELPS. Sure. Our total advertising budget per year is

around $60,000 now. And, you know, I think it is important to realize that, you know, we provide services such as a group health insurance plan for our companies’ employees, and we manage a pension for those employees. I mean, we are not strictly an advocacy

group. We are an industry trade association which provides direct

services to the employees that our member companies employ.

And our total budget is—only a small slice of it is used for public

affairs, and most of that is used to work with agencies on regulatory activities, so that we accomplish their purposes and ours at

the same time.

So, you know, our availability of money for advertising in response to the huge media campaigns that are funded by these foundations is extremely meager. I mean, I could blow my whole budget

buying one full-page ad in The New York Times.

Mr. HOLT. None of us here are suggesting that you or the Forest

Products Association or anyone else should be restricted in speaking out on subjects of interest. And, by the way, I dare say that

the Pew Foundation and others also provide employee benefits for

their workers.

But my point is that there is, I think, a great deal of influence

of public opinion that comes from corporate interests, that comes

from nonprofit interests. There are a number of perspectives out

there, and we want to have a vibrant intellectual marketplace.

And, you know, I think you are—and all of us are—quite free,

and, in fact, encouraged to find fault with what each person says

from their different perspective. If they are making incorrect claims

about clear-cutting in Maine, by all means expose that. And I think

we can point to a number of examples of organizations over the

years that have lost credibility because they have made unsubstantiated claims.

And I think it is incumbent on you and us to try to get the truth

out there.

I see that my time has expired. Thank you, Madam Chair.

Ms. CHENOWETH-HAGE. Thank you, Mr. Holt.

Mr. Schaffer?

Mr. SCHAFFER. Thank you, Madam Chairman.

64

It seems to me that, you know, there is an interesting issue of

free speech, which we want to, of course, encourage and promote

and honor the Constitutional treatment of free speech in America.

But this debate is an interesting one because it really gets down

to the question of subsidized speech in many cases, or certainly an

area where some people are taxed in order to—at a certain level

in order to organize or associate collectively, in the case of a professional association, for example, to convey a certain message, whether it is for the general good of—the common good of the people or

whether it is some political effort or message to persuade those

same individuals versus those folks who are not taxed who are essentially carrying on the same objective, whether it is for the common good or when it crosses the line and becomes political speech

or some that are self-serving.

So there is that question I think ultimately of the nature of Government’s tax policy. All citizens are not treated equally when it

comes to carrying out the same objective of speaking freely in a

democratic republic.

And along with that, not only the tax law as it applies to nonprofit corporations and educational corporations, or those that are

designed under the education section of the Tax Code, but also I

think the Tax Code needs to be evaluated from the perspective of

what motivates people to donate their funds to some of these organizations in the first place. And that is the inheritance tax, largely.

I think most of the dollars that end up in—much of the dollars

that end up in these foundations are people simply trying to avoid

the high tax of the Federal Government and put their dollars in

some place that earns their confidence because the Government

hasn’t done it when it comes to sending their money this way.

So this is just another classic example, in my estimation, of the

Federal Government meddling too deeply in the affairs of free people, to the point where it has pushed dollars in places that are,

frankly, unproductive and in many cases contrary to the best interests of the American people.

And so that leads me to a couple of questions for Mr. Phelps in

particular. We have heard that some environmental groups—from

some—that they are not against all logging on national forests,

only large-scale logging that they believe has been particularly devastating on forests by cutting too much at once.

They say they favor smaller cottage industries that will harvest

on a more sustainable basis and ultimately produce more jobs for

1,000 board feet harvested. What is your experience with this? In

your experience, did they seem to mean what they say?

Mr. PHELPS. Well, bluntly, no. What we have seen in the Tongass

has been this ever-increasing evolution of their target. In 1990,

they said they wanted to protect the heart of the Tongass, so they

got Congress to enact the Tongass Timber Reform Act, and it protected all of the areas that they identified as the most special

places.

And then, you know, obviously, the Tongass had a heart transplant because immediately thereafter they started talking about

other hearts of the Tongass that needed to be protected. And so

once they went after—first they went after the pulp mills. Then

they went after the saw mills. And they kept saying that, you

65

know, we want it smaller, we want it smaller, and we want it more

focused.

So recently the former properties belonging to Louisiana Pacific

where the pulp mill was in Ketchikan were purchased by a local

group of businessmen who decided that they could take the lowgrade saw logs and utility logs that used to go to pulp and are virtually hard to sell now, and turn them into a product that can be

used for engineered wood products, which in building construction

replaces solid wood beams and that sort of thing.

This was an environmental move in the right direction from the

standpoint of industry, and I guess my prejudice would say from

the standpoint of sanity. It puts some of the people who had lost

their jobs back to work. It was a smaller scale. It did not require—

it did not have the voracious appetite of a pulp mill, which they

said that was too big.

And yet immediately they started using a bunch of foundation

money to try to kill this project. They filed lawsuits, they mounted

campaigns. I mean, it doesn’t—you know, it doesn’t—no matter

how small it gets, the next step is to get—is to lop off the next larger—you know, the next slice. And I think that when they talk

about reducing—and some of them admitted they want to see the

harvest reduced in the southeast to about 20 million feet, that will

not sustain any mills that employ more than two or three people.

So then you have to wonder, well, what will they do about those

guys? Maybe those guys are tramping in the woods too much. It

just—it seems a strategy rather than a truthful assertion.

And if I could briefly respond to something else that you pointed

out. I agree with you about the free speech issue, but I agree with

you more about the policy issue, the tax policy issue. And I think

I would like to point out that one of the things that Congress ought

to be looking at is whether these foundations, with their special tax

protected status, there are restrictions on what they can do with

their money.

The question is: are they doing through others what they themselves are prohibited from doing? In other words, they target their

giving so that their goals that they would be themselves breaking

the law if they pursued, you know, they funnel this money to get

other people to do those things for them. And it seems to me that

is an area of scrutiny that ought to be taken a look at.

Mr. SCHAFFER. Madam Chairman, if we can’t arrive at tax fairness at some point in time that treats all Americans equally with

respect to free speech, political speech, or otherwise, maybe what

we need is more tax manipulations to encourage people to invest

in foundations to police the foundations, to bring lawsuits against

them.

Ms. CHENOWETH-HAGE. I thank the gentleman from Colorado,

and I do have a couple more questions. But I really think that, as

Chair, I am not going to let us lose the focus of why we are having

this hearing.

Clearly, I want it on the record as to why we are having this

hearing. It isn’t free speech. We agree that everyone should have

free speech. This issue goes to the question, is there a shadow government? Are these foundations so large that they are able to wield

the kind of influence through the media and through the influence

66

that they have with the politicians that they themselves are setting

the policy?

I thought it was quite interesting that the Committee on—in a

hearing on the Committee on Forests and Forest Health when I

asked Mr. Frampton to show me the list of those individuals who

had met with him and members in the White House to set the

roadless policy, the list was exclusively the environmental community.

Now, this runs in direct conflict to the kind of government that

was set up by our founders. Our founders set up a government

where the people were supposed to be able to watch what the government was doing. And now we have grantmakers and influence

peddlers who are so large and so doggone arrogant that they are

willing to tell people like those of you who are sitting here at the

witness table that you are not invited into meetings where they set

public policy? And then they have the funds, the wealth, to be able

to carry out the public policy through influenced peddling with the

politicians?

No, I think it is time we ring the bell. And I think it is time that

we bring some light in on this very sad chapter in American history, because it is changing the course of certainly how we view our

natural resources, and that is just the beginning.

The bottom line question should be: does this Congress have any

worth? Do the American people have any worth? Are there a group

of people who care less if 10,000 pulp and paperworkers are unemployed? We better darn well care, and this goes far beyond public

speech and freedom of speech.

Well, usually the Chairman doesn’t get this excited. But I will

not allow the focus of this hearing to be taken away from us, because people’s jobs are at stake, and the very future of the worth

of this body of lawmakers is at stake, which means, do the people

have a house? Do the people have a say in their communities and

in their Congress?

So this is no small issue, and I see that we have been called to

some more votes.

So has the Clerk found what we may be voting on? I do want

to—I have some more questions that I think before I take off I am

going to be—OK. OK. We have a series of three votes, but I have

15 minutes. And there are a couple of questions that I do want to

ask on the record, and then I will have written questions for you.

For Mr. Huberty, what are community foundations? And would

you please state for the record what was the intent of Congress in

creating community foundations?

Mr. HUBERTY. Madam Chairman, community foundations are set

up really as a device by which individuals who don’t wish to establish their own individual family foundation can place funds within

a community for charitable and benevolent purposes. The foundation acts at their discretion. They can instruct the community foundation to carry out their wishes.

On the other hand, for those who don’t wish to do that, the community foundation, in turn, can make grants, at its own discretion.

The intention of the community foundation is to assist charities

within a community. The Cleveland Foundation in about 1905 was

the first community foundation. They are quite extensive around

67

the country now. But the focus is for doing good works in a local

community.

Ms. CHENOWETH-HAGE. Mr. Phelps, a chart in your written testimony shows that the Alaska Conservation Foundation gave more

than $1 million in grants in the last 2 years to stop timber harvesting in the Tongass. This same foundation is a community foundation. Their 21-member board of trustees includes former President Jimmy Carter, David Rockefeller, Jr., and eight out of State

members.

I have two questions to ask you. Did the ACF or any member of

the board consult with local communities in southeast Alaska

about their plans? And how did the residents of communities such

as Sitka, Wrangell, or Ketchikan benefit from the grantmaking activities of ACF?

Mr. PHELPS. Well, I think it would be very difficult to demonstrate how any of the communities benefited, Congresswoman. I

am not aware of any effort by ACF or other groups like them to

consult with communities, particularly with community leaders.

And, in fact, I know for a fact that most of the community leaders

in the communities you mentioned, and others like them in southeast Alaska, are very upset about the disruptive effect on their

economies as a result of these grants and the activities of the people who receive these grants.

And a good illustration of that is that in our litigation against

the United States Forest Service for its illegal formulation of the

1999 record of decision on the Tongass Land Management Plan,

most of the—all of the communities but one that you mentioned,

and several others, are co-plaintiffs with us because they believe

that the effect on their communities has been devastating.

They certainly were not consulted by these grantmakers because

the grantmaker’s position is at odds with both the leadership and

the majority of the people that live in those communities.

Ms. CHENOWETH-HAGE. Thank you, Mr. Phelps.

Mr. Schaffer, do you have any other questions?

We will recess the committee until 4:30. So we will take back up

at 4:30. We have three votes, and I will try to get right back. And

if we can take up even before 4:30, we will.

This panel is excused.

[Recess.]

Ms. CHENOWETH-HAGE. The committee will come to order.

I would like to introduce the second panel, Mr. Eric Williams

from Environomics in Cheney, Washington; Mr. Terence Chandler,

President and CEO and Director of the Redfern Resources, Limited, Vancouver, Canada; and Mr. Matt Bennett, Vice President in

charge of sales for Emmet Vaughn Lumber Company in Maryville,

Tennessee.

And before I swear you in under the oath, I want to say to Mr.

Bennett that Mr. Duncan wanted to be here to introduce you. He

has said great things about you, and unfortunately he had to go

give a speech. And because of all the votes, we were held longer

than we expected.

I want to thank you for your patience, and I do look forward to

hearing all of your testimony. Thank you very much for being here.

68

So as explained on the first panel, it is the policy of this Chairman to swear all of the outside witnesses under the oath. And so

if you will stand raise your hand to the square.

[Witnesses sworn.]

The Chair now recognizes Mr. Williams for testimony.

STATEMENT OF ERIC WILLIAMS, ENVIRONOMICS, CHENEY,

WASHINGTON; TERENCE E. CHANDLER, PRESIDENT/CEO

AND DIRECTOR, REDFERN RESOURCES, LIMITED, VANCOUVER, CANADA; AND MATT BENNETT, VICE PRESIDENT/

SALES, EMMET VAUGHN LUMBER COMPANY, MARYVILLE,

TENNESSEE

STATEMENT OF ERIC WILLIAMS

Mr. WILLIAMS. Thank you, Madam Chairman. I am honored and

sincerely appreciate the opportunity to testify here today.

I am Eric Williams of Environomics. My office is located in the

small town of Cheney, Washington. We are consultants to various

businesses, including those that provide natural resources to the

public. Therefore, I appear to you today as an overpaid, undereducated social misfit. Not by choice, of course, but by virtual declaration of the U.S. Forest Service.

How so? Well, let me tell you that in 1998, the Kootenai National

Forest and the Montana Department of Environmental Quality

issued a supplemental draft EIS for the Rock Creek Mine Project.

The socio-econ section of that document was astounding and disturbing.

Here is one example, and I will quote—‘‘Economic and social dependence on resource extraction industries is widely regarded as an

economic and social liability because it ties social well-being to declining economic sectors, blocking residents into untransferable sets

of skills.

Mining dependence decreases local social and economic capacity

by hindering local flexibility, capability, and diversity of social processes. The project would be expected to increase local labor costs,

decrease average education levels, and weaken the sense of community. Mining dependence increases community underemployment

and decreases social adaptability.’’ That is the end of the quote.

The message was clear. According to the agencies, this region,

with some of the highest unemployment in one of America’s poorest

states, is better off without a mine that would employ 300 people

for 25 years. The fact that the mine would pay high wages and

offer good benefits is actually a negative because other businesses

might have to pay more to compete.

This mine, simply by its existence, would scare off telecommuters

and retirees, which, after all, are a better type of person to have

around. And despite the fact that the mine would employ everyone

from accountants to lab technicians, computer experts to metallurgists, their job skills are not transferrable.

Mysteriously, the EIS virtually declared that miner’s children

are not as educable as other kids, and those communities with

mines inherently lack diversity and are socially backward. Merely

having a mine ‘‘weakens the sense of community.’’

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Sadly, the Rock Creek EIS isn’t an isolated incident. As you will

see in my written testimony, the recently released roadless conservation EIS declares that loggers are just about as unsavory a

bunch as we miners. And as a former miner, it is of little consolation to me—an overpaid, undereducated social misfit—that the Forest Service now considers loggers as possessing not only those nonredeeming values but also as being culturally ignorant trailer trash

who will seem to do anything for a buck.

There is a sort of reason that this sort of language is appearing

in these documents, which ostensibly are based on science and fact,

not political rhetoric and dogma. It is because of all of the pressure

brought to bear by the environmental industry, being well organized and heavily funded by wealthy foundations to produce exactly those results.

The Needmore and Mott Foundations fund a newspaper column

syndicate, so that newspapers nationwide can tell us that, ‘‘The importance of the old rural west has ended, and it is never coming

back,’’ and that, ‘‘Montana and Wyoming don’t lead, and at this

stage don’t really teach much to the rest of us.’’ After all, they are

the ones without a real city.

This well-funded machine has denigrated a whole segment of society—rural resource providers. This atmosphere has been set with

pseudo-scientific reports and non-peer reviewed studies released to

the public through the media and through public agencies. This atmosphere has allowed agenda driven personnel within both Federal

and State agencies to repeat the mantra of cultural smearing that

we find in many management plans being implemented and being

proposed throughout the United States.

I am not an anti-government right-winger. I was raised a lunch

bucket democrat and believe strongly in my country and my government. Yet I find it extremely disconcerting when nonprofit organizations and Federal land agencies are stating loudly that most

people carrying lunch buckets are overpaid, uneducated social misfits.

It is unfortunate that certain foundation funding of environmental groups makes it possible for the Government to use this

type of language, and to use these types of programs to harm rural

America.

Thank you very much.

[The prepared statement of Mr. Williams follows:]

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Ms. CHENOWETH-HAGE. Thank you very much, Mr. Williams.

And the Chair now recognizes Mr. Chandler.

STATEMENT OF TERENCE CHANDLER

Mr. CHANDLER. Thank you, Madam Chairman.

I represent a little bit of a unique viewpoint here. I am a Canadian citizen. I am the President of Redfern Resources, Limited. And

Redfern is a Canadian mining company, which has been in existence since 1979. It is headquartered in Vancouver, British Columbia, and listed on the Toronto stock exchange.

We have as our principal asset a small mine up in northwestern

British Columbia located on the Tulsequah River. It is about 65 kilometers, or 40 miles as the crow flies, from Juneau, and about 26

kilometers upstream from an international waterway, the Taku

River, which the Tulsequah River joins.

This mine was actually operated in the 1950’s and was shut

down at that time. It is proposed to be reactivated as a new mining

operation, and it was run through an environmental assessment

process started in 1994 under the Canadian environment assessment process. But uniquely, because of the potential for

transboundary impacts, the U.S. was involved in the project committee, the State of Alaska, and U.S. Federal agencies to make

sure that all issues related to international potential for impacts

were addressed.

This study and environmental assessment reached a conclusion

in March 1998, at which time the project received its environmental certification, which then gave it the green light to proceed

to acquire operating permits and licenses.

Shortly after that, we were astounded when the Governor of

Alaska determined that it was in the best interest of his constituents that the project should be referred to the International Joint

Commission, a body which deals with international disputes related to boundary waters, on the basis that there could be some impacts to the U.S.

And so since that time, we have been involved in the last 2 years

in a series of protracted responses with the State Department and

the Canada Federal Government to address those issues. Not surprisingly, during that timeframe, no issues and no impacts have

been identified to Alaska resulting from this mine development.

On top of that, we subsequently became aware, through release

of a document anonymously, which is accompanied as an exhibit to

my statement, a campaign—a coordinated campaign strategy outline involving, as listed on this document, 10 groups, mostly located

in B.C., in Canada, but two of which are headquartered in the

United States.

In that document, there are a series of—as a coordinated campaign strategy, it is called ‘‘To Save the Taku River,’’ which proposes to stop the mine, seize development within the whole watershed, primarily on the Canadian side of the border, which is 4.5

million acres, and to instigate a land use policy which will see this

area become a protected and preserved part of the Canadian landscape.

In the process, they have ignored the fact that this is multiple

use designated land, and has already been subject to a review by

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the provincial government related to a protected area strategy that

passed over this area while it was in the process of setting aside

some 1.5 million acres of land in the—sorry, 3.0 million acres of

land in this area.

This document demonstrates or lays out a strategy which calls

for a coordinated campaign to lobby in Congress and in the Canadian Federal and provincial agencies. It has targeted the company

for economic analysis and destabilization in the financial community.

It has provided support and backing for legal initiatives by local

aboriginal groups who are seeking land claims with the Federal

Government. And it has instigated an immediate campaign against

the company. All of this despite the fact that the local community

actively supports the mine and is desperately in need of employment.

It is interesting to me, given some of the statements you made

at the beginning of this hearing, that U.S.-based environmental

funds are actually seeking to export their advocacy to a foreign

country, and actually influence land use policies in Canada.

Thank you.

[The prepared statement of Mr. Chandler follows:]

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[The information referred to follows:]

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Ms. CHENOWETH-HAGE. Thank you very much.

And the Chair now recognizes Mr. Bennett.

STATEMENT OF MATT BENNETT

Mr. BENNETT. Thank you, Madam Chairwoman. I appreciate this

opportunity to come today and share my concerns regarding the

impact that foundation funding is having on decisionmaking on

Federal funds. And if I could interject, I also appreciate those kind

words that you passed along from Congressman Duncan to me.

My primary concern is that many local citizens and community

groups are underrepresented or absent altogether from critical

phases of the planning process. That their input is missing is especially unfortunate, as it is they that are most likely to be affected

by the decisionmaking process.

Where they can participate, they often must do so at a considerable disadvantage. Until recently, there was a dynamic parity

among the various national forest user groups in my area. However, due to foundation grants to environmental groups, that parity

no longer exists. Let me begin with some background.

In early 1995, a new coalition of local and regional environmental groups, the Southern Appalachian Forest Coalition, formed

in Asheville, North Carolina. SAFC is an organization of organizations. It does not accept individual memberships, and its funding

comes entirely from foundation grants. SAFC’s funding is impressive, with a 1998 budget of almost a million dollars.

SAFC’s fiscal agent, the Southern Environmental Law Center, has a budget of just over $5 million. In contrast, counties containing the Southern Appalachian National Forest have not been

so fortunate, since Census Bureau and Department of Labor statistics reveal that they often have higher unemployment and more

people living below the poverty level than the national average.

Therefore, acquiring resources comparable to environmental groups

is difficult, if not impossible.

There are three critical differences in public participation due to

foundation funding. The first is representation and participation in

the planning process itself. With at least six full-time paid employees, plus the staffs of its coalition members, SAFC has a decided

manpower advantage when it comes to attending Forest Service

meetings.

Before foundation involvement, stakeholders were all on roughly

the same non-professional level. This is no longer the case, and it

is wishful thinking to believe that part-time non-professionals can

participate as fully in the planning process as their professional

counterparts.

Another area where foundation support has created a disparity

between activists and local citizens is in the technologies of the

internet, electronic communications, and GIS software and data.

For example, SAFC received a $48,000 technology grant from the

Computer Technology Support Program. With GIS capability,

SAFC is able to develop extremely detailed maps of national forests.

Therefore, SAFC members have knowledge that is unavailable to

other users. Compared to organizations that use advanced technology, those users participate at a distinct disadvantage.

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A third area of concern is legal support and representation. Environmental groups have long received pro bono legal assistance.

However, foundation funding has made possible the development of

law firms specializing in environmental activism and litigation.

Those law firms provide technical assistance and legal advice on

environmental laws to activists at little or no cost. A similar system of legal support is either unavailable or too expensive for other

forest users.

In conclusion, I maintain that foundation funding has created a

serious disparity in the way rural citizens and communities are

able to participate in the NEPA process. Financial support from

foundations has enabled environmental organizations to hire fulltime professional staff, gain access to the latest technologies, and

to obtain free legal support and representation.

As Congressman Richard Pombo noted, ‘‘Tax-exempt foundation

funding of environmental advocacy groups unfairly tilts the playing

field against the views and the input of those most affected by the

policies advocated.’’

Therefore, I maintain that this violates the intent of the President’s Executive Order 12898, ‘‘Federal Actions to Address Environmental Justice in Minority Populations and Low Income Population,’’ and CEQ’s guidance document ‘‘Environmental Justice:

Guidance Under the National Environmental Policy Act.’’

EO 12898 directs that each Federal agency shall make achieving

environmental justice part of its mission and calls for analysis of

the effects of Federal agency on low income communities.

In the final analysis, it seems very clear to me that the intent

of EO 12898 and the CEQ’s guidance document is to guarantee a

level playing field for participants engaging in the planning process. That playing field currently does not exist. It is not level due

to foundation funding. Indeed, I believe those individuals and communities attempting to participate in planning, without similar resources of staff, technology, and legal support, are at a disadvantage in the NEPA process and are, in fact, being denied environmental justice.

Thank you very much.

[The prepared statement of Mr. Bennett follows:]

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Ms. CHENOWETH-HAGE. Thank you very much, Mr. Bennett.

Mr. Bennett, in your written testimony, you talk about the

wildlands project.

Mr. BENNETT. Yes, ma’am.

Ms. CHENOWETH-HAGE. What exactly is that?

Mr. BENNETT. The Wildlands Project is a continent-wide environmental initiative to set aside a minimum of 50 percent of North

America in wildlands or wilderness areas. It was begun in the

early 1980’s by Dave Foreman, co-founder—or former co-founder of

EarthFirst. And over the time that it has been in existence, it has

been reviewed by groups such as Science and the Smithsonian and

some other groups like that.

Basically, what it seeks to do is to set aside all national forest

land or public land into what they call core areas, strictly for the

preservation of biological diversity. These core areas are then surrounded by buffer zones, and then the buffer zones in the core

areas are linked together through what they call corridors.

Much of that language has found its way into many of the policy

initiatives that the Forest Service and this administration are now

pursuing, and it raises some concern among local communities as

to just what the long-term goals of some of these policies are.

Ms. CHENOWETH-HAGE. Well, in the short term, I think that if

we, as lawmakers, are going to be honest, we have got to ask ourselves why. Why does the Government need all this land? You

know, what are they doing? It is obvious that the way they manage

the land is not to its highest and best standard, as indicated in

New Mexico recently.

But you pointed out that it appears that there is an inequity in

the NEPA process with respect to the Forest Service planning. Can

you suggest some possible remedies that you would like to see the

committee and the Congress look at?

Mr. BENNETT. A good friend of mine, Harold Draper, who actually is a NEPA specialist with the Tennessee Valley Authority, he

and I shared some discussion about this, and he is much more of

an expert than I am. But he had some positive suggestions, I

thought.

His first was to identify—have the Forest Service identify and

disclose low income communities that would be adversely affected

by forest planning and site-specific actions. I don’t believe they currently do that now. They could identify and disclose potential impacts to low income communities. And, specifically, they could explain in their documents how they involved impacted communities,

and explain how they will minimize these impacts or the impacts

of these communities in their finding of no significant impact.

I suppose that Congress is much better equipped to consider and

reflect on some of these things than I am. But it does seem to me

that the concept behind environmental justice is not a bad idea,

and I noted some of the concerns that the democratic speakers had

earlier about limiting free speech. And I certainly wouldn’t be for

that.

But I think, on the other hand, it is incumbent on Congress, if

they are committed to the notion of environmental justice, to providing that across the broad spectrum, and it would apply to people

in urban areas that where environmental decisions are too heavily

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weighted by large corporations. It should apply just as equally to

rural communities where decisions on environmental issues are

being made too heavily based on foundation participation.

So I think it is up to the Forest Service—and, hopefully, Congress may at some point decide to figure out a way to redress

this—or address this inequity and make sure we do have that level

playing field.

Ms. CHENOWETH-HAGE. I agree.

Mr. Williams, I wanted to ask you, are you aware of strategies

like the Taku River strategy being employed in the United States?

Mr. WILLIAMS. I must say I have certainly never, until I was

shown that document, I have never seen it quite on paper laid out

in 10 or 12 pages, that you will do this, and you will do that, and

this group will give that group money. However, almost precisely

the same scenarios have played out in other places in the states.

For example, the McDonald Gold Project in Montana. The similarities to me are eerie of different organizations with different

funding sources doing—you are going to take on this part, you are

going to take on that part. So, yes, a rather similar situation, I

would say—at the Crown Butte, the famous mine that was going

to be in the middle of Yellowstone Park ostensibly. Very, very similar situation.

Ms. CHENOWETH-HAGE. Interesting. Well, can you tell—do you

know anything about foundation money going to influence ballot

measures?

Mr. WILLIAMS. Certainly, I guess I would refer probably to Montana where, in 1996, and then in 1998, anti-mining ballot measures

were placed on the ballots. And the organizations that were behind

them were, if not exclusively, primarily funded by non-resident

foundations. Foundations give money to six or seven organizations,

and then those organizations run the ballot measure. Excuse me.

They pay to get the measure on the ballot and then run the campaign.

Ms. CHENOWETH-HAGE. My word. Do you know of grants given

to gather intelligence on organizations or groups skeptical of foundation-driven policies?

Mr. WILLIAMS. Yes. I was particularly struck, again, by Mr.

Chandler’s discussions of the financial aspect, which I would maybe

like to address a little bit in a minute. But, for example, there have

been grants specifically designed to investigate—or, excuse me, to

hire a private investigator to investigate company X or Y, and including investigating their finances.

Briefly, if I could address that, I used to be a newspaper reporter. I am, you know, a staunch believer in the First Amendment. Absolutely. Should there be restrictions on free speech? No.

But, to me, there is a substantial difference in taxpayer-subsidized

free speech and taxpayer-subsidized apparent financial interference

or dumpster diving.

Ms. CHENOWETH-HAGE. Very interesting.

Mr. Chandler, what economic or other benefits would result from

the mine that you testified to going ahead?

Mr. CHANDLER. Well, we have estimated in the feasibility study

that there would be in the range of $50 million. This is Canadian

dollars—about $35 million U.S.—in supplies, services, wages, paid

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to keep the mine running on a yearly basis. And a substantial part

of that would be obtained from the local communities.

The town of Atlin, which is the nearest nearby community—it is

a town of about 500 people—currently, their major support base,

economic base, is placer goldmining, which has been the reason for

the town’s existence for over a hundred years. With the down drop

in the price of gold, they have been severely hit. There is over 50

percent unemployment in the winter months in particular. They

desperately need year-round employment.

The same would apply to the nearby Yukon territory, which has

also been surviving strictly on a limited amount of tourism in recent years. In addition to that, of course, there would be about $50 million

a year—Canadian again—which would be revenues. About 45 percent of that, under BC regulations, would be paid in taxes.

Ms. CHENOWETH-HAGE. Do you feel the environmental campaign/

Taku River strategy, which as I look through it is just astounding,

is influencing our State Department and its position in its discussion with Canada about the mine?

Mr. CHANDLER. I think there is a high likelihood it has. We do

not have any specific evidence to that. But many of the initial letters that came out of the Governor’s Office calling for the IJC involvement to the State Department, and which later led to the

State Department’s investigation of this with the Canadian Federal

side, raised the same sort of alarms that were in the environmental

coalition’s documents about the mine, even though during the

course of the public and detailed review most of those alarms were

shown to be false or vastly overrated.

To give a specific point, we have been involved in these negotiations or discussions back and forth with the State Department. The

company has participated in supplying further information and responses.

Despite the fact there have now been five official responses over

the 2-years, most recently in August a letter from the State Department—although it acknowledged that progress was being

made, and that there was a likelihood that there was no need for

an International Joint Commission review, raised concerns—additional concerns—some of which—and this is mindboggling—they

suggested that perhaps the mine should consider treating its process water before it discharged to the environment and provide——

Ms. CHENOWETH-HAGE. Would you repeat that, please?

Mr. CHANDLER. They suggested that the mine should consider—

and the mine plan should consider treating the process water that

is used by the mine before discharging to the environment, and

provide substantiation of how that might occur.

In actual fact, that is the plan for the mine. It was supplied in

detailed format in the documents supplied for the environmental

assessment review in July 1997, and has been in the hands of the

U.S. participants since that time.

It is hard to believe—and I think this is the sense from the Canadian side as well—that this kind of issue would be raised at this

stage of bilateral discussions because it is quite clear to the Canadian side that people aren’t reading the documents. So there is a

sense that there is a contrived issue.

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Ms. CHENOWETH-HAGE. Very interesting.

Well, Mr. Chandler, I have—and this has become part of your

testimony, part of the record—the Taku River strategy. And, you

know, as I look it over, right here they have a campaign plan for

a TR/TFN land protection plan, and their long-term goal is $200-

to $300,000 they want to raise over a two- to 3-year period using

the Robert Shaw Foundation in Bolton, Ontario; the Hewlitt Foundation; the Packard Foundation; the W. Alton Jones Foundation;

Rockefeller Brothers Foundation; and Paul G. Allen Forest Trust.

Now, they want to raise $180,000, of which $150,000 is the total

cost of Art Poppy’s representation of a TRT for litigation and community liaison. Now, that doesn’t sound very promising. For litigation, they want to get $20,000 from the Brainerd Foun- dation, $10,000 from Endswell Foundation, $20,000 from W. & D.

Gordon Foundation, $30- to $50,000 from W. Alton Jones Foundation. They are hitting them up three times, I see so far. Lannan

Foundation, $50,000; Wilburforce Foundation, $30,000; David Suzuki Foundation, $30,000. That is just for litigation against probably the mine.

Community liaison, Tides Donor Funds, True North Foundation, and Turner Foundation, $10,000.

Mr. CHANDLER. I might add, Madam Chairman, that a limited

amount of research on the internet—some of these funds do publish

the grants that they have administered or allocated. And although

by no means all this probably represents a subset, I have here a

listing that indicates, since 1997, over $300,000 in grants that have

gone specifically to achieve these objectives. And, if possible, I

would like to enter this into the record as well.

Ms. CHENOWETH-HAGE. Without objection, so ordered.

[The information referred to follows:]

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I see that their budget also includes media and communications.

Their goal is $30,000 from the same group, maybe a couple different. Community support, another $30,000; transboundary strategies, their goal is $40,000; and economic corporate financing strategy, their goal is $30,000.

I see the Foundation for Deep Ecology appears here as one that

they are going to be hitting up also. So, you know, it is very difficult for a mine in America, or a mine in Canada, to come up

against anything like this.

And I think of all the organizations who are trying to bring to

the attention of the American people the other side of the story,

and they exist on $5 and $10 contributions that it costs them $2.50

to go out and get the contribution by direct mail in the first place.

And yet, you know, our industries, especially our natural resource

and ag industries—not only here but obviously in Canada—are up

against this kind of campaign.

So it is very instructive and very interesting information that

you have brought to the record.

Mr. CHANDLER. I would like to add, Madam Chairman, that our

company does not have a producing mine, so we raise our financing

based on equity financing.

Ms. CHENOWETH-HAGE. Yes.

Mr. CHANDLER. We have to go to the market to raise funds, basically venture capital. This kind of publicity, negative publicity, and

delays—it is quite clearly designed, if not to achieve its solution,

to delay and perhaps cause us to go away.

It has had an effect. We have—our share price has dropped by

a factor of four since the time that we received our initial approval.

We now trade at below 50 cents, and we were trading above $2 before. And it has become extremely difficult to raise funds to continue to advance the project.

Ms. CHENOWETH-HAGE. Mr. Williams?

Mr. WILLIAMS. If it is not improper, as you were reading those

foundations, I believe you mentioned the David Suzuki Foundation.

Ms. CHENOWETH-HAGE. Yes.

Mr. WILLIAMS. Which I won’t pretend to be an expert on, but

something else that struck me as you were reading that is in researching other grants, I have noticed at times that the David Suzuki Foundation—again, which I am not an expert on—is a recipient of foundation grants from U.S. foundations.

So, thus, you have this foundation apparently giving to this foundation, which then gives to this organization, and then I can assure

you often times underneath that is that organization giving to

other organizations. So at some point, there—you know, where is

the level of accountability? When you are in a community, how do

you know who you are even, you know, ostensibly trying to work

with?

Or, again, what is permitted—I don’t mean in a mine permit—

but what is allowable for a foundation, someone else mentioned

earlier, may not necessarily be—or, excuse me, what is allowable

for an organization at the bottom of this food chain may not be allowable for a foundation. But if you move the money around

enough times, the tasks are accomplished apparently.

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Ms. CHENOWETH-HAGE. That is what I have noticed, that they

move money around between each other.

I notice that our hearing has now progressed to the point that

it is a quarter after 5, and I want to thank you very, very much

for your contribution to this hearing, and the contribution you have

made to the record.

This is an ongoing issue that this Chairman will continue to investigate for the rest of this year. There will be other hearings on

this, and you have brought very, very interesting issues before the

committee.

I want to ask each and every one of you the following question:

has there ever been an effort by the foundations to include the

views of the local communities in designing the initiatives that

they finance with tax-free grants? Do you know of any efforts? Mr.

Bennett?

Mr. BENNETT. I don’t know of them ever seeking to include anyone who had a different opinion from them. In other words, if you

agree with them, they will support you and include you. If you disagree, you are left out.

Ms. CHENOWETH-HAGE. Mr. Chandler?

Mr. CHANDLER. This document lays out a local organization

called the Taku Wilderness Committee, which is an Atlin-based

group. To our best knowledge, it consists of 10 people. No one else

in the community was consulted at all.

Ms. CHENOWETH-HAGE. Mr. Williams?

Mr. WILLIAMS. Very similar. I would say, at the risk of sounding

Presidential, define—or what the definition of ‘‘community’’ is. And

the funders define ‘‘community.’’ Therefore, of course they are dealing with the community, but, again, under their definition.

Ms. CHENOWETH-HAGE. I want to ask you if you have—I am

going to ask each one of you if you have any final comments for

the record. I usually don’t do this, but, beginning with Mr. Bennett,

do you have any final comments for the record?

Mr. BENNETT. Well, I will just briefly say that I really do think

it is important work that you are doing here, to bring this information out and give everybody an opportunity to consider exactly

what may or may not be influencing public policy.

I know we see in the paper all the time references to what this

poll says and what that poll says, and I think that those polls are

based on a very narrow window of information, if you will. And so

anything—certainly, the work that this committee has done, and

the work that you have done, to expand the dialog and bring about

a broader understanding of what may or may not be motivating

certain groups to do what they do is very important.

Ms. CHENOWETH-HAGE. Thank you.

Mr. Chandler?

Mr. CHANDLER. I would echo Mr. Bennett’s comments, and also

state that there does seem to be a need to address the gap of disclosure between public companies who are in the resource sector

versus these organizations who, in many cases, are not for profit

or charitable organizations and do not seem to have the same level

of accountability to the public.

Ms. CHENOWETH-HAGE. Mr. Williams?

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Mr. WILLIAMS. Thank you. I guess I will mention two things. At

least in my mind—and I think everyone else here today—the issue

is not closing off anyone’s free speech rights. I am dead set against

that.

But as we have mentioned, I think there is a line, particularly

when you have various forms of tax exemption or reduction, of—

I am not a tax lawyer, but I think there are some obligations of

what is public benefit and is investigating someone’s company,

their financial situation, or perhaps even trying to interfere with

that—is that the public benefit?

To me, my daughter has diabetes. The Juvenile Diabetes Foundation, to me, is public benefit. I think there is a clear distinction

there.

The other thing—I guess I am a little disappointed coming all

the way from Spokane. I was, frankly, hoping to be able to shake

the hands of some foundation people and talk to them and say,

‘‘Would you come out and talk to people in our communities, rather

than sitting in a board room in, you know, Amherst, Massachusetts, or wherever, and deciding our future?’’

Thank you.

Ms. CHENOWETH-HAGE. Thank you. It has not gone without notice that the foundations refused to come. We may have to ask

them again with a little more serious effort.

It is a shame that they are not here. But the issue—I agree with

you, Mr. Williams. The issue does go beyond free speech. We want

free speech for everyone.

But the issue goes to accountability. And I think that every quarter, when we have to file our income statements—the Congressmen, our personal income statements, and our campaign finance

statements—we file them with the big question in mind, ‘‘Gosh, has

anybody made a mistake that I might be hung out there on the

front page with the press?’’ Because somebody gave a $200—a

$200, not a $3.5 million—but a $200 contribution that we failed to

give the right address or the right employment to.

So on the one hand, the standard of accountability has already

been set up. My concern—the concern of this committee is that that

accountability is not being imposed on the foundations.

I believe in free speech to the degree I think anybody ought to

give any amount of money that they want, and just so long as they

say who they are, who they gave the money to, and what they were

trying to influence.

So accountability to the American people is the bottom line. And,

so far, these foundations are simply not accountable.

I want to thank you for coming so far and offering your testimony. It is greatly appreciated. And it is because of people like you

that we continue to have the other side of the issue brought to this

body.

The hearing record that you have helped compile will make a difference. It is historic. And I thank you again for your patience with

all of the interruptions that have gone on with the votes, and so

forth.

I do want to say that I will be submitting more questions to you

in writing, and the record will remain open for 10 business days,

127

should you have any additional information that you would like to

submit to the record.

With that, this hearing is adjourned.

[Whereupon, at 5:20 p.m., the committee was adjourned.]