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82–563 PDF 2013

S. HRG. 113–65 

SECURE RURAL SCHOOLS AND PAYMENT IN LIEU 

OF TAXES 

HEARING 

BEFORE THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

TO

EXAMINE THE OPTIONS AND CHALLENGES RELATED TO POSSIBLE REAUTHORIZATION AND REFORM OF TWO PAYMENT PROGRAMS FOR 

LOCAL GOVERNMENTS-THE RECENTLY EXPIRED SECURE RURAL 

SCHOOLS AND COMMUNITY SELF-DETERMINATION ACT AND THE 

PAYMENT IN LIEU OF TAXES 

MARCH 19, 2013 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 

(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

RON WYDEN, Oregon, Chairman 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

MARIA CANTWELL, Washington 

BERNARD SANDERS, Vermont 

DEBBIE STABENOW, Michigan 

MARK UDALL, Colorado 

AL FRANKEN, Minnesota 

JOE MANCHIN, III, West Virginia 

CHRISTOPHER A. COONS, Delaware 

BRIAN SCHATZ, Hawaii 

MARTIN HEINRICH, New Mexico 

LISA MURKOWSKI, Alaska 

JOHN BARRASSO, Wyoming 

JAMES E. RISCH, Idaho 

MIKE LEE, Utah 

DEAN HELLER, Nevada 

JEFF FLAKE, Arizona 

TIM SCOTT, South Carolina 

LAMAR ALEXANDER, Tennessee 

ROB PORTMAN, Ohio 

JOHN HOEVEN, North Dakota 

JOSHUA SHEINKMAN, Staff Director 

SAM E. FOWLER, Chief Counsel 

KAREN K. BILLUPS, Republican Staff Director 

PATRICK J. MCCORMICK III, Republican Chief Counsel 

(III) 

C O N T E N T S 

STATEMENTS 

Page 

Baucus, Hon. Max, U.S. Senator From Montana .................................................. 6 

Bennet, Hon. Michael F., U.S. Senator From Colorado ........................................ 3 

Fennell, Anne-Marie, Director, Natural Resources and Environment Team, 

Government Accountability Office ...................................................................... 18 

Haggerty, Mark, Policy Analyst, Headwaters Economics, Bozeman, MT ........... 58 

Haze, Pamela K., Deputy Assistant Secretary for Budget, Finance, Performance and Acquisition, Department of the Interior ............................................ 14 

Heller, Hon. Dean, U.S. Senator From Nevada .................................................... 3 

Landrieu, Hon. Mary, U.S. Senator From Louisiana ........................................... 6 

Manuel, Athan, Director, Lands Protection Program, Sierra Club ..................... 80 

Murkowski, Hon. Lisa, U.S. Senator From Alaska ............................................... 4 

O’Laughlin, Jay, Professor of Forestry & Policy Sciences, and Director, Policy 

Analysis Group, College of Naturan Resources, University of Idaho, Moscow, ID .................................................................................................................. 67 

Pearce, Paul J., President, National Forest Counties and Schools Coalition, 

Stevenson, WA ...................................................................................................... 44 

Tidwell, Thomas, Chief, Forest Service, Department of Agriculture .................. 9 

Wyden, Hon. Ron, U.S. Senator From Oregon ...................................................... 1 

Yates, Ryan R., Associate Legislative Director, Legislative Affairs Department, National Association of Counties ............................................................. 50 

APPENDIX 

Responses to additional questions .......................................................................... 83 

(1) 

SECURE RURAL SCHOOLS AND PAYMENT IN 

LIEU OF TAXES 

TUESDAY, MARCH 19, 2013, 

U.S. SENATE, 

COMMITTEE ON ENERGY AND NATURAL RESOURCES, 

Washington, DC. 

The committee met, pursuant to notice, at 10:02 a.m. in room 

SD–366, Dirksen Senate Office Building, Hon. Ron Wyden, chairman, presiding. 

OPENING STATEMENT OF HON. RON WYDEN, U.S. SENATOR 

FROM OREGON 

The CHAIRMAN. Committee will come to order. Senator Murkowski is on her way. We have gotten permission to begin. 

I’m very pleased that the distinguished Chairman of the Finance 

Committee, Senator Baucus, is here. 

Let me just make a brief opening statement. 

Today the committee is going to look at options for reauthorizing 

and reforming the Secure Rural Schools and Community Self-Determination Act and the Payment in Lieu of Taxes program. Both 

of these programs are absolutely critical to rural America. Today 

we will have a number of knowledgeable witnesses who will talk 

about the funding for these programs as well as possible reforms 

that could be considered in extending and updating them. 

In the 1980s years of unsustainable timber harvests collided with 

renewed public concern over clean air and water and endangered 

species. This collision left our country with a broken forestry system and produced the worst of 2 worlds, an inadequate timber harvest and inadequate protection for our public lands. Our timber 

communities lost jobs while conservation was more often handled 

by lawyers and judges rather than foresters and biologists. 

That’s why in 2000 along with our former colleague, Larry Craig, 

I authored the Secure Rural Schools and Community Self-Determination Act to provide a lifeline for timber dependent communities across the Nation. 

PILT, Payment in Lieu of Taxes, has also existed to help provide 

more stable funding to counties containing Federal land, but it has 

suffered a number of funding shortages over the years. 

Now the funding for Secure Rural Schools expired last year and 

full funding for the PILT program ends this year. So we now have 

across the country cash-strapped, rural communities facing deadlines this spring to decide about retaining teachers, whether or not 

to close schools, what to do about law enforcement and roads and 

2 

other basic services. So it is especially important that Congress act 

quickly. 

I’m especially pleased that our colleague, Chairman Max Baucus, 

who chairs the Finance Committee, on which I’m honored to serve, 

is here this morning. Chairman Baucu, colleagues, has been there 

again and again and again for the Secure Rural Schools program. 

I just want people to know as we begin this debate that looking 

back on the odyssey of the Secure Rural Schools program, it would 

have been hard to keep this program afloat without the good work 

Chairman Baucus has been doing. 

So Chairman Baucus, thank you very much for all the past help 

and the assistance that you have pledged going forward. 

I also want to make clear at this time that a short term extension of the Secure Rural Schools program is not a long-term solution for our hard-hit, resource-dependent communities. So our job 

now is to look for a long-term solution as well. That means focusing 

in 2 areas. 

First, it’s way past time to get our people back to work in the 

woods and increase the timber harvest off Federal lands. More 

good-paying, private sector jobs are needed in resource-dependent 

communities with Federal land and Federal waters. This is something I believe can be done consistent with our environmental laws. 

That’s why I’m working with Senator Murkowski, Senator 

Landrieu, and others on a more comprehensive approach to share 

revenue from Federal land and waters with resource dependent 

communities. In effect what we are talking about is pursuing this 

on a dual track. Boosting timber cuts and providing a safety net 

that provides for schools, roads, and police in resource-dependent 

communities and then our bipartisan coalition will also support reauthorizing the Secure Rural Schools payment program while looking for a long-term solution that understands that we have to increase our timber harvests, look to jobs in communities that abut 

Federal land and Federal water and protect our environmental heritage. With respect to Federal Forests, that means in some areas 

we would increase the harvest and in some areas we would conserve our special treasures. 

The members of this committee have, over the last 15 years, 

made it a priority to build bipartisan coalitions to break the bureaucratic log jams on public lands management. 

That’s what happened with Secure Rural Schools. 

That’s what happened with the Healthy Forest Restoration Act. 

That’s what we’ve seen in Eastern Oregon where the environmentalists and timber industry came together. 

I do want to state that while we are going to look at further 

hearings to focus on forest management, we understand that experts are telling us that it is not possible to cut enough trees to 

produce historic levels of funding in rural communities and comply 

with the multiple uses of our Federal Forests that our communities 

want and meet our bedrock environmental laws. So the challenge 

is to find a way to pursue on this dual track a short-term and a 

long-term solution while looking at some fresh approaches and rejecting those approaches that have not worked in the past. 

Short cuts like selling off Federal lands or ignoring environmental laws cannot be expected to pass the Senate or be signed by 

3 

the President. These ideas have failed for more than 20 years. To 

create a realistic solution for increased forest management, any solution is going to require a broad coalition with buy-in from all 

sides that has been shown to work in the past. 

I believe that as we look to cut more timber on Federal forest 

lands, we can do it in a way that creates jobs, saves mills, and 

makes our forests healthier and more resistant to wildfire, insects, 

and disease. The committee is going to work in a bipartisan way 

to achieve this goal of upping the timber harvest while protecting 

old growth stands, clean water, and essential habitats. We believe 

we can do it in a bipartisan way by streamlining the bureaucracy 

around forest management, promoting tourism and recreation, and 

increasing biomass energy development. 

Rural counties with Federal lands and waters deserve to be able 

to staff their schools, fund law enforcement, and maintain the 

roads required by the use or preservation of these lands. My policy 

to end the perpetual roller coaster from revenue sharing includes 

new initiatives to create private sector jobs, protect the environment and most of all, make sure that rural America does not become a ghost town. It’s time for a broader revenue sharing effort 

that can provide affected States and communities with a share of 

the money generated from resource extraction from nearby Federal 

lands and Federal waters. 

Senator Murkowski, our ranking member, has a great interest in 

this issue as does Senator Landrieu. Let me recognize you now for 

your opening statement, Senator Murkowski. 

[The prepared statements of Senator Heller and Senator Bennet 

follows:] 

PREPARED STATEMENT OF HON. DEAN HELLER, U.S. SENATOR FROM NEVADA

Over 90 percent of all federally-owned land is located in western states. For westerners, the federal government’s ownership of vast quantities of land not only limits 

the self-determination and economic development, it also robs local communities of 

property tax revenues and the taxes associated with private business development. 

As a result, federal land ownership forces westerners to pay higher property taxes 

to pay for essential services such as law enforcement, health care, and education. 

Nowhere is this more on display than in Nevada, where 87 percent of our land 

is controlled by the federal government. In Nye County, only 250,000 acres of the 

11,640,196 acres are private lands. In Lincoln County, only 142,952 of 6,804,733 

acres are private lands. And the list goes on. 

The PILT program is necessary to help maintain and improve the health and vitality of our public lands communities, as well as to help local communities to meet 

obligations and expectations of visitors to federal lands. 

While I am deeply aware of the limitations presented by our current fiscal situation, I remain firm in my belief that the federal government has a responsibility 

to fulfill its obligations to the counties which it denies a local tax base. 

PREPARED STATEMENT OF HON. MICHAEL F. BENNET, U.S. SENATOR

FROM COLORADO

I write to applaud the Senate Energy and Natural Resources Committee for 

scheduling tomorrow’s hearing entitled, ‘‘Keeping the Commitment to Rural Communities.’’ As you know, the Secure Rural Schools (SRS) and Payments in Lieu of 

Taxes (PILT) programs are lifelines for rural counties across the West. 

PILT, in particular, is vitally important to my home state of Colorado. Dozens of 

Colorado counties contain high percentages of federal public land—land on which 

they are unable to collect property tax revenue. PILT serves to compensate partially 

for this foregone revenue, and the program’s resources are employed to provide essential community services like road maintenance and emergency responders. 

4 

Failure to renew PILT will lead to job losses in Colorado and even potential insolvency for some of our communities. I appreciate the Committee’s attention to this 

important matter and stand ready to help as you seek a long-term solution to this 

persistent problem. 

STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 

FROM ALASKA 

Senator MURKOWSKI. Thank you, Mr. Chairman. I appreciate 

that you have scheduled this hearing as early into this particular 

Congress as you have. As you know it’s an exceptionally important 

issue for many of our States and truly a priority here. 

The Federal compensation programs that we’re talking about 

today, whether Secure Rural Schools or Payment in Lieu of Taxes, 

have been extraordinarily valuable in our rural communities, certainly in my State of Alaska. I know that these programs are important to you, certainly to you, Senator Baucus, and I also appreciate your leadership and your efforts as we have tried to find the 

dollars necessary to continue the very important funding. We’re 

going to have to count on you once again to help us out with that. 

But we recognize the challenges. I would certainly concur with 

the chairman here, that we need to find longer term solutions so 

that we don’t go from year to year. The anxiety, the stress, that 

I hear from my communities. 

The community of Wrangell, where I went to elementary school, 

is a community where 64 percent of their budget for the school 

comes from Secure Rural Schools funding. When they don’t know 

where 64 percent of their budget is going to be coming from on a 

year to year basis, it causes a great deal of stress. 

I want to mention first Payment in Lieu of Taxes program. The 

PILT program, of course, is permanent. So we’re not concerned 

about the program expiring. But what we are concerned about is 

the level at which the program is funded. 

Over the last several years when we reauthorized and extended 

Secure Rural Schools we also turned PILT into a mandatory funded program. I think this was primarily done to build the political 

support to reauthorize and extend Secure Rural Schools. PILT was 

created in 1976 by Congress because we changed our Federal land 

policy from one that was focused on disposal to one that was focused on retention. These payments are literally payments in lieu 

of taxes to compensate our local governments for the loss in tax 

revenue caused by this change in policy and how PILT is funded 

in the future whether programmatic changes are needed and its relationship to Secure Rural Schools are certainly something that we 

need to explore. 

Secure Rural Schools, unlike PILT, was largely a replacement 

program for the receipt sharing programs whether it’s the Forest 

Service payments to States and the Bureau of Management that 

Oregon and California have for their payments. These payments 

made under these programs were historically from receipts generated by timber sales for roads and school purposes. But I think 

we recognize that they were never intended to be a permanent entitlement program, but more specifically a temporary, short term 

bridge to allow the communities to transition to the new economic 

reality that was forced upon them by environmental policies that 

were designed to halt timber harvesting. 

5 

But if you are a community, like Ketchikan, where I was born 

down in Southeast Alaska, Ketchikan, their private taxable lands 

within the Ketchikan gateway borough are 0.3 percent, 0.3 percent. 

So if you have no other place to go. 

If 96.5 of the percent of the land in your borough is held by the 

Federal Government. 

The State has 1.3 percent. 

The local government has 0.3 percent. 

There is 0.3 percent that is taxable land. So when you say you’ve 

got this Federal policy that says you can’t harvest within the 

Tongass because we’re just saying you can’t harvest in the Tongass. 

You have no place to go for your tax base. We say, well this is just 

going to be a temporary program for you until you can transition. 

The question is what do you transition to? 

Where do you go? 

Of course, Chief Tidwell and I have had many, many conversations about where we go from there. 

But our counties, our boroughs, our other communities, have received payments for more than a decade now. For some of your 

counties in Oregon and Washington, Northwest California, who receive the Spotted Owl payments, they’ve been seeing these Secure 

Rural Schools payments for more than 2 decades. Now again, we’re 

talking about the need for another short term extension, but I 

think we all know, I mean we’re having budget conversations this 

week. It’s on everybody’s mind. 

The Federal Government, the Federal Government is broke here. 

We can’t continue to pay counties to not utilize the lands within 

their boundaries. Mr. Chairman, you have appropriately suggested 

where we need to go with this. 

You need to be able to access the resources that are on your 

lands. We either need to utilize our Federal lands to generate the 

revenue and the jobs for our rural communities or we should divest 

the Federal Government of those lands and let the States or the 

counties, the boroughs, manage them. 

Mr. Chairman, you’ve suggested that that probably isn’t going to 

enjoy support within the Congress. Maybe that’s true. But boy, oh 

boy, we’ve got to have something here. You’ve got to have some 

way for these communities to survive otherwise, I think, they do 

go the way that you have suggested that they might, which is to 

turn into ghost towns. That’s not a solution that I think is one that 

we would support. 

We do need to address, head on, the fact that federally owned 

land has a profound impact on the fiscal and economic base of a 

community as well as the social fabric. So we’ve got a good panel 

here this morning. I appreciate that we’re led off by Senator Baucus on this issue. 

But Mr. Chairman, I look forward to working with you, with Senator Landrieu and so many others as we try to find a longer term 

solution for these communities in these rural areas that are impacted so profoundly. 

Thank you, Mr. Chairman. 

Senator LANDRIEU. Can I just—— 

6 

The CHAIRMAN. Yes, of course, Senator. If—I know Chairman 

Baucus has his hearing. I know Senator Landrieu would like to 

make a comment or 2. 

STATEMENT OF HON. MARY LANDRIEU, U.S. SENATOR 

FROM LOUISIANA 

Senator LANDRIEU. I’d just like to make 30 seconds while Senator 

Baucus is here. Then I’ll submit the rest of my statement for the 

record. 

But I want to thank you, Mr. Chairman and the ranking member 

for hosting a series of hearings that might find a really, a long 

term solution for the problems that both interior States, western 

States and coastal States are experiencing which is the very disjointed and hard to understand sharing or not sharing of these revenues with the communities that actually are hosting and needing 

the support from the production of these revenues. 

So I’ll look forward to working with Senator Baucus and both of 

you on finding a way forward. Because I think both of you expressed the real need of communities where Federal policies have 

severely impacted their abilities to produce their own revenues and 

the need for some sort of partnership and sharing to produce the 

natural resources in a wise way, respecting the environment, but 

also respecting the needs of Americans to work and to remain competitive in this world. I think we can find the way forward. 

So thank you very much. 

The CHAIRMAN. Thank you, Senator Landrieu. 

I think the point of finding the way forward, having been to both 

of your communities in the last few months, I’m just struck at how 

there’s this common thread wherever there’s Federal land and Federal water. People are looking to find ways to create private sector 

jobs, protect their treasures, and come together. At one point I was 

struck in your State, Senator Landrieu, listening to people around 

the table the main difference between the folks around the table 

in Louisiana and the folks sitting around the table in Southern Oregon is your constituents had different accents than mine. But 

other than that they were looking for the same kind of hope, jobs, 

environment and coming together. 

With that, Chairman Baucus, I know you’ve got a hearing. We 

are so appreciative of the fact that you have been so committed to 

our rural communities. We would not have made it through those— 

that odyssey of authorizations over the years without your being in 

our corner. 

So please proceed. Thank you again for your help. 

STATEMENT OF HON. MAX BAUCUS, U.S. SENATOR 

FROM MONTANA 

Senator BAUCUS. Thank you very much, Mr. Chairman. I appreciate that. 

Senator Murkowski, Senator Landrieu, thank you all 3 and all 

the other members of the committee. 

I’d also like to welcome Thomas Tidwell. I’m very happy he’ll be 

testifying later this morning. 

Even more importantly we have a fellow Montanan here, Mark 

Haggerty. He is an expert on policies affecting public land use. He’s 

7 

sitting just a couple rows behind me. You’ll hear from him a little 

bit later. Mark is from Bozeman, Montana, one of the most beautiful spots, I think, in the whole world. 

We’re here today to discuss 2 programs that support jobs, Montana jobs and other jobs in counties where there’s a lot of Federal 

land, Secure Rural Schools and Payment in Lieu of Taxes. These 

obviously are counties that contain a lot of Federal land. With a 

lot of Federal land they face a much lower tax base and also less 

natural resource revenue. 

I remind everyone that this is America’s lands. All Americans 

own Federal land. Americans use National Forest System land, 

BLM land, other Federal land. Not only the people in the communities use those lands but other Americans all across the country, 

especially when they’re taking their family on vacation, use not 

only those lands, but adjacent areas, the roads in those counties 

that the county commissioners are trying desperately to finance. 

If they don’t have the tax base, it’s pretty hard for them to finance those roads and other amenities that the local folks use, but 

also people from around the country use. That’s all the more reason 

why this is really—there’s a need for a Federal solution to this. We 

all know what it’s been. 

Last year Congress overwhelmingly passed both Payment in Lieu 

of Taxes as well as Secure Rural Schools because it is needed nationwide. More needed probably in those counties that have a lot 

of Federal land included in the tax base. But it’s also needed nationwide because this is a really, in a real sense of the term, America’s program. 

When I talk to county commissioners, you know, they all want 

to do the right thing. They run for office just like we. In many respects they’ve got a tougher job than we. They’re so close to the 

people. 

They talk to me. Max, we just need a bill to get some revenue. 

So we can maintain roads, etcetera. 

In one county, for example, a bit of it is—74 percent Federal. 

Just imagine you’ve got—when 74 percent of your county at one, 

is pretty populous, a county that has a lot of people in it. Seventyfour percent of your county is Federal land. It’s hard to raise the 

property tax rate revenue to support the services there. 

People like Todd Devlin. Todd Devlin is a county commissioner 

from Prairie County. Todd makes the same point to me. I note 

these points are points that you’ve all heard when you talk to your 

people in your home States as well. 

Senator Murkowski, up clear in Alaska, I can’t think of a State 

that’s got more Federal land than yours. So, obviously it’s—what’s 

something you hear about constantly. 

The question is how do we pay for this? 

Last year we were able to cobble together a few provisions to 

help pay for it. It was about $676 million price tag, Secure Rural 

Schools plus PILT. We’re up to the challenge. We’ll find other ways 

to make sure we can finance it another way. 

Why is that important? 

Because this stuff is at neutral. That means there’s not one thin 

dime owed to the Federal taxpayers by providing for Secure Rural 

Schools and PILT payments. 

8 

I might remind all of our—everybody listening too that this is 

non-partisan. While we have fiscal deadlocks around here, we 

stand to get a bit partisan. This is not one of those. 

This is one where Members of Congress, both sides of the aisle, 

work together. It’s not a partisan issue whatsoever. I think that’s 

the reason last year it got a strong vote. This year I know it will 

also get another strong vote. 

Clearly we have to find the revenue. We’ll work hard to try to 

find a revenue in the least oppressive way. I’m not sure what that 

is, but the tax code is pretty big with lots of different futures to 

it. In fact it’s so big that lots of folks want to, so called, broad the 

base and get rid of some of those tax expenditures. 

Be that as it may, I pledge that I’ll work very closely with you. 

This is so important to my State. It’s so important, I know, to your 

States and many other States. Working together, it’s all teamwork. 

We’ll find a way to finance this so we can get it done. 

You made a very good point, Mr. Chairman, about a longer term 

solution. There are way too many short term solutions here in the 

Congress. It’s just—the years that I’ve been here it’s just programs 

that get compressed and compressed and compressed in shorter periods of time. 

There were over 120, about 100 provisions in the code, tax code, 

we call extenders. They last about a year, 18 months. It just turned 

out that way. 

On a highway bill authorization is just, as well know, are very 

short term now. They used to be 5, 6 years. The farm bill used to 

be 5 years. It’s now, you know, about a year. We’ve got extensions. 

Everything is extended. 

I did not come here to be an extender Senator. I’m sure you did 

not come here to be extender Senators. I didn’t come here to be a 

maintenance Senator, neither did you, I’m sure. You came here to 

do stuff. Not be just spend all our time waiting behind the wheel, 

you know, wrapped around the axle as we try to just extend things. 

It takes a lot of time, a lot of time, simply, to extend something 

for a year, a lot of time. The reason it takes so much time is because usually it requires revenue. You’ve got to find revenue someplace to pay for an extender, to pay for something, to pay for SRS, 

to pay for PILT. It’s not easy to find new revenue to do this. 

I have some ideas how to make this longer term. I urge that we 

work together to try to compare notes to try to find ways to accomplish that objective. But I strongly, strongly urge you as you work 

into reauthorize these 2 programs to also pay ordinate attention 

and just thinking out of the box, creatively, figure out a way to 

make this dog gone thing longer term so there’s more certainty predictability for county commissioners, for folks at home, for the Forest Service, other Federal agencies, so they don’t have to keep 

going back every year, every year voting it out, voting it out. 

Also it means we can devote a lot of our time doing some other 

things, knowing that we’ve taken care of SRS, taken care of PILT 

for a while, not permanently, clearly, but at least indefinitely so we 

can, again, move onto something that’s else in addition to making 

sure our people are taken care of with these 2 programs. 

Thank you, Mr. Chairman. 

9 

The CHAIRMAN. Mr. Chairman, thank you very much. I’m struck 

with your point about the teamwork issue. Of course everybody 

came in to work today. They filled out their brackets for March 

Madness. Of course they had the Oregon Ducks in the Final 4. 

[Laughter.] 

The CHAIRMAN. We were happy about that. 

Your point about teamwork is absolutely right. But if you talk 

about teamwork over these last 14 years, there’s somebody we had 

to give the ball to when the game was on the line. That was you. 

I mean, you stepped up for this program again and again and 

again. You gave a lot of hope to rural communities a few weeks ago 

when you announced that you’d help us get that short-term program. 

So teamwork, as you said, is what it’s about. But we’re very glad 

that you’ve been willing to take the ball when—— 

Senator BAUCUS. Thank you, Chairman. I neglected to give you 

sufficient praise. You are working very, very hard on this. 

Whenever I think of Secure Rural Schools and PILT, I also think 

of you. 

The CHAIRMAN. We’re going to stay on in your point about trying 

some fresh approaches. That’s what my colleagues have been doing. 

I know Chairman Baucus? time is tight. Do either of you have 

anything you’d like to ask? 

Senator MURKOWSKI. Just thank you. 

Senator BAUCUS. Thanks for all you’re doing. Appreciate it. 

The CHAIRMAN. Chairman, thank you. 

Alright our next panel will be the Honorable Thomas Tidwell, 

Chief of the Forest Service. 

Pamela K. Haze of the Department of Interior, Deputy Assistant 

Secretary for the Budget. 

Anne-Marie Fennell, with the Government Accountability Office. 

We thank all of you. Chief, let me have you begin to be followed 

by Ms. Haze and Ms. Fennell. 

Chief, I just want to say as we start your presentation how much 

we’ve appreciated your professionalism and assistance for this committee. Again and again, you’ve helped us try to come up with creative approaches. As you know, these issues are not for the fainthearted. 

I mean in rural communities, particularly when I think about 

places in Coos County and rural Lane County, you know, all over 

are Curry County, Josephine County, all over our State. You just 

walk an economic tightrope trying to survive. So these are not abstract issues. 

You’ve helped us come up with approaches to, at least, give us 

an opportunity to get both the short and long-term solutions. So we 

welcome your presentation. We’ll make your prepared remarks a 

part of the hearing record in their entirety. 

Why don’t you start, Chief. We’ll just proceed with our witnesses. 

STATEMENT OF THOMAS TIDWELL, CHIEF, FOREST SERVICE, 

DEPARTMENT OF AGRICULTURE 

Mr. TIDWELL. Mr. Chairman, thank you. 

Ranking Member Murkowski, it’s great to see you again. 

10 

Members of the committee, thank you for the opportunity to be 

here to present the views of the U.S. Department of Agriculture on 

Secure Rural Schools and the Community Self-Determination Act. 

The Administration strongly supports ways that the Federal 

Government can support economic activity in rural America and 

fulfill its obligation to share receipts from these public lands 

whether it’s from the PILT payments, sharing with States the mineral revenues from public lands, to the land use fees, the timber 

receipts, the grazing receipts that contribute to Secure Rural 

School payments. 

Secure Rural Schools has been a key program for 729 countries, 

boroughs and townships. Mr. Chairman and members of the committee, I just want to personally thank you for your leadership 

around this issue for the last few years. It has made a significant 

difference in these local economies. 

The Administration supports reauthorization of Secure Rural 

Schools with mandatory funding. Secure Rural Schools fulfills the 

Federal Government’s obligation to compensate local governments 

for the tax exempt status of national forests to help fund public 

schools and county roads through stable, dependable payments that 

the counties and boroughs can rely on. Also this has really helped 

to sustain and diversify local economies. 

But it’s much more than that. Title II and Title III allow counties 

to dedicate up to 15 to 20 percent of their payments for a variety 

of projects. 

Title II provides funding for projects like thinning on national 

forests to reduce the threat of wildfire to things like integrated 

weed control that benefits all lands. 

Title III helps counties fund search and rescue and provides 

funding for county planning to reduce wildfire threat to communities. 

Although recreation is now the largest economic activity on the national forests and it contributes over 200,000 jobs and $13.5 billion to the GDP. The number of visitors that recreate on the national forests definitely increases the county’s cost for search and 

rescue programs. With the record fire seasons, that I believe will 

continue, county investments into community wildfire protection 

plans to reduce the threat of wildfire, it’s essential. 

So all of the Secure Rural School programs from the payments 

for roads and schools to the projects on the national forest to the 

assistance provided to counties for wildfire protection, all of these 

programs have been invaluable to the economic sustainability of 

our rural communities. But an additional benefit has come from 

the Resource Advisory Committees, the RACs, that are required by 

Secure Rural Schools. These are the RACs that make recommendations for the projects on national forest lands. Because of the requirement that these RACs have a diverse representation, their 

project recommendations have been implemented with very few appeals over the last 12 years. 

I’m not sure you realize what you started with Secure Rural 

Schools. But in my view it was the start of the collaborative processes that we benefit from today all across the country where diverse interests are working together to support active management 

of our national forests. It is through these collaborative processes 

11 

that we are able to continue to accelerate the restoration on our national forests to improve the fisheries, maintain trails, reduce soil 

erosion, improve wildlife habitat and increase the biomass, the saw 

timber harvested from the national forests. 

With 65 to 83 million acres of our national forests that are in 

need of some form of restoration, we recognize the need to increase 

the pace of restoration to ensure that our forests are more resilient 

to disturbance events like floods, wind storms, drought, insect and 

disease outbreaks and wildfire. Stable, guaranteed payments that 

counties can depend on, it’s essential. But I can tell you in the long 

run these RACs have provided a key benefit and are why today we 

are able to accelerate the restoration on our national forests. To restore these watersheds that continue to provide clean water for 20 

percent of this Nation, to maintain the recreational settings that 

all support the economic activity and increase jobs in rural America. 

We want to work with the committee to reauthorize the Secure 

Rural Schools program, a program that has successfully strengthened our rural economics, and developed important collaborative 

working relationships with diverse interests that care about how 

their forests are managed. 

I want to thank you again for the opportunity to discuss the Secure Rural Schools program. I look forward to your questions. 

[The prepared statement of Mr. Tidwell follows:] 

PREPARED STATEMENT OF THOMAS TIDWELL, CHIEF, FOREST SERVICE, DEPARTMENT

OF AGRICULTURE

CONCERNING

Mr. Chairman and Members of the Committee, thank you for the opportunity to 

present the views of the U.S. Department of Agriculture regarding the Secure Rural 

Schools and Community Self-Determination Act of 2000 (the ‘‘Secure Rural Schools 

Act’’), as amended and reauthorized in 2008 (P.L. 110-343) and again for fiscal year 

2012 (P.L. 112-141). The administration supports reauthorization of the Secure 

Rural Schools Act with mandatory funding. Although some receipts for Payment In 

Lieu of Taxes (PILT) payments are generated on National Forest System (NFS) 

lands, management of the program is the responsibility of the Department of the 

Interior (DOI). We defer testimony on this program to DOI. 

Overview 

Since 1908, when Congress enacted what is commonly known as the Twenty Five 

Percent Fund Act (16 U.S.C. 500) to compensate local governments for the tax-exempt status of the national forests, the Forest Service has shared 25 percent of 

gross receipts from national forests with states. The so-called ‘‘25 percent payments’’ 

were made to the states for the benefit of public schools and public roads in the 

counties in which national forests are located. The allocation of the funds between 

schools and roads varies according to state laws. The receipts, on which the 25 percent payments are based, are derived from timber sales, grazing, minerals, recreation and other land use fees. 

In the late 1980s, 25 percent payments began to decline significantly and fluctuate widely. This was largely due, especially in western states, to a significant decline in timber sales. The declines and fluctuations created hardships for local officials charged with providing services to communities in and near the national forests. 

The decline in timber sales, and corresponding reduction in the 25 percent payments, was particularly acute in northern California, Oregon, and Washington. To 

address this concern, Congress provided ‘‘safety net payments’’ to counties in California, Oregon, and Washington for fiscal years 1994 to 2003. The safety net payments were enhanced payments structured to decline annually and intended to help 

the counties transition to the reduced amount of the 25 percent payments. 

12 

Before the safety net payments expired, Congress enacted the Secure Rural 

Schools Act (P.L. 106-393), which provided the option of decoupling the payments 

from receipts, by authorizing enhanced, stabilized payments to states for fiscal years 

2000 through 2006. The Secure Rural Schools Act provided eligible counties with 

two options. A county could elect to continue to receive its share of the State’s 25 

percent payment, which fluctuated based on receipts, or the county could elect to 

receive a share of the State’s ‘‘full payment amount’’, which was a stabilized 

amount. A county that elected to receive a share of the State’s full payment amount 

was required to allocate 15 to 20 percent of its share of the payment to Title II (special projects on federal lands) or to Title III (county projects), or to return that 

amount to the Treasury. Title II funds could only be spent on projects benefitting 

the national forests that were recommended by resource advisory committees 

(RACs). As part of the initial implementation of the Act, the Forest Service established 55 RACs; by 2012 there were 118 RACs across the country. The remainder 

of the county’s share of the payment (80 to 85 percent) was required to be spent 

for Title I purposes (for public schools and roads.) 

Congress appropriated funds for payments to states for fiscal year 2007, and in 

October 2008, amended and reauthorized the Secure Rural Schools Act for fiscal 

years 2008 through 2011 and again in 2012. With a few notable exceptions, the Secure Rural Schools Act reauthorizations mirrored the 2000 Act. The primary change 

in 2008 was a new formula for the stabilized State payment, which includes a rampdown of funding each year. In addition, the 2008 reauthorization amended the 

Twenty-Five Percent Fund Act to reduce the fluctuations in the 25 percent payments. The 25 percent payments are now calculated as the rolling average of the 

most recent seven fiscal years’ 25 percent payments. 

The last Title I and Title III payments under the Secure Rural Schools Act for 

fiscal year 2012 have been made. In 2012, approximately 74 counties elected to receive a share of the State’s 25 percent payment (based on receipts), and approximately 655 counties opted to receive a share of the State Payment (enhanced, stabilized). Payments to States for the Forest Service under the Secure Rural Schools 

Act for fiscal year 2012 total $305,939,381. 

All together, the Forest Service has made payments to 41 States and Puerto Rico 

to benefit more than 729 counties, boroughs, townships and municipalities. Unless 

the Secure Rural Schools Act is reauthorized, beginning with the payment for fiscal 

year 2013, States will receive the 25 percent payment calculated using the new formula based on a seven-year rolling average of 25 percent payments. The total of 25 

percent payments for allStates is projected to be approximately $58 million for fiscal 

year 2013. 

The Secure Rural Schools Act has 3 principal titles. The U.S. Forest Service defers to the Department of the Interior for Secure Rural Schools’ activities undertaken by that agency on the Oregon and California Railroad Grant Lands (O&C 

Lands). 

Title I-Secure Payments for States and Counties Containing Federal Land 

Title I of the Secure Rural Schools Act, as reauthorized, provided the formula for 

the State Payment for fiscal years 2008 through 2011 with a one year reauthorization for fiscal year 2012. An eligible county’s adjusted share of the State Payment 

was determined by a complex calculation involving multiple factors including acres 

of national forest, the average of three highest 25 percent payments from 1986 

through 1999, and the county’s annual per capita personal income. The formula reduces the total payments to all States by approximately 10 percent of the preceding 

year for 2008 to 2011 and by 5 percent of the preceding year for 2012. Eight States 

(California, Louisiana, Oregon, Pennsylvania, South Carolina, South Dakota, Texas, 

and Washington) received a transition payment in lieu of the State Payment for fiscal years 2008 through 2010. The transition payment was based on the fiscal year 

2006 payment and declined by about 10 percent per year. 

The Secure Rural Schools Act directs that the majority of the State Payment be 

used to help fund county schools and roads. This portion of the payment is commonly referred to as the Title I payment and has averaged about 85 percent of the 

total State Payments to date. For fiscal years 2008 through 2012, Title I funds provided to States totaled nearly $1.7 billion. 

Title II-Special Projects on Federal Land 

An eligible county has the option to allocate part of its share of the State Payment 

under Title II for projects that maintain existing infrastructure or enhance the 

health of ecosystems on national forests and support local economies. Title II provides for the establishment of RACs to review and recommend projects. The Secure 

13 

Rural Schools Act as reauthorized added to the duties of the committees and expanded the interests represented by members. 

Title II projects enhance forest ecosystems; restore and improve the health of the 

land and water quality; and protect, restore and enhance fish and wildlife habitat. 

Examples are maintenance or obliteration of roads, trails, and infrastructure; improvement of soil productivity; stream and watershed restoration; control of noxious 

and exotic weeds; and re-establishment of native species. These projects provide employment in rural communities and an opportunity for local citizens to advise the 

Forest Service on projects of mutual interest that benefit the environment and the 

economy. For fiscal years 2008 through 2012, Title II funds totaled $204 million for 

projects recommended in more than 300 counties. 

Title III-County Funds 

Funds allocated by a county under Title III may be used on county projects. Title 

III initially had six authorized uses: search and rescue, community service work 

camps, easement purchases, forest related educational opportunities, fire prevention 

and county planning, and community forestry. When the Secure Rural Schools Act 

was reauthorized in 2008, Congress limited the use of Title III funds to three authorized uses: activities under the Firewise Communities program, reimbursement 

for emergency services on national forests, and preparation of a community wildfire 

protection plan. As reauthorized, Title III now directs each participating county to 

certify annually that Title III funds were used for authorized purposes. For fiscal 

years 2008 through 2012, Title III funds totaled $101 million. 

Additional Revenue Sharing and Payment Programs 

Along with the payments to States under the Secure Rural Schools Act, the Forest 

Service shares 25 percent of net revenues from minerals receipts, grazing, and other 

uses of the national grasslands in the payments to counties program under the 

Bankhead Jones Farm Tenant Act, (7 U.S.C. 1010-1012). Payments to counties go 

to approximately 70 counties in 17 States, and totaled about $15 million in 2011. 

There are also payments made under special acts including those in Arkansas for 

Smoky Quartz (Public Law 100-446), in Minnesota related to the Boundary Waters 

Canoe Area (16 U.S.C. 577) and in Washington for the Quinault Special Management Area (Public Law 100-638.) 

The Forest Service coordinates with the Bureau of Land Management which administers additional payments to certain counties in western Oregon under the Secure Rural Schools Act. In addition, national forests are included in the eligible federal lands for which the Department of the Interior administers the Payments in 

Lieu of Taxes (PILT) program. 

Secure Rural Schools Act Successes 

For fiscal years 2008 through 2012, the Secure Rural Schools Act through Titles I, II, and III programs provided nearly $2 billion in economic support to rural communities. The Forest Service values relationships fostered with tribal, county officials and other stakeholders under Title II. By 2012, 118 RACs were established 

across the country. By actively engaging community members in recommending 

projects, the Forest Service has seen a significant decrease in appeals and a dramatic increase in successful long-term collaborations. 

Each of the 15-member committees represent diverse interests such as environmental and conservation groups; watershed associations; forest and mineral development; hikers; campers; off-highway vehicle users; hunting and fishing enthusiasts; 

tribal, State and local government officials and teachers; and officials from local 

schools. Following the reauthorization for FY 2012, USDA encouraged all RACs to 

recruit new culturally diverse members for the committees. RAC members learn 

about the richness of natural resources on the national forests, and share their 

knowledge of the natural and social environment. Members hear one another’s 

views, interests and desires for national forest management and come to agreement 

on projects that will benefit the national forests and nearby communities. Here are 

a few examples that illustrate successful projects undertaken with Secure Rural 

Schools funding from 2008 to 2012. 

In Sierra County, California, a partnership with the Sierra County Fire Safe & 

Watershed Council supported by Title II funding has resulted in a number of high 

priority projects to reduce hazardous fuels within and adjacent to the communities 

within Sierra County and the National Forest. The fuels reduction projects activities 

are resulting in higher level of effective fuels reduction treatments within the 

Wildland Urban Interface (WUI). In rural Sierra County, the partnerships and Title 

II funds have provided more than $200,000 and the financial mechanism for success. An additional benefit of these projects has been an increased level of opportunity for local employment within the County. 

14 

Since 2008, Apache County, Arizona in partnership with the White Mountain 

Apache Tribe upgraded a main access road to national forest lands using Secure 

Rural School Act funds. These road improvements have been critical to the treatment of areas within the Tribal Forest Protection Act (TFPA)—Los Burros project 

and the removal of materials under the White Mountain Stewardship Contract. To 

date, three quarters of the treatments are completed. This amounts to 12,000 acres 

of stewardship treatments of which 3,700 are within the TFPA project. The public 

is greatly benefiting from road improvements with safer and more comfortable access to quality recreation areas. This project has also improved relations with the 

White Mountain Apache Tribe. 

In northern Utah, the Uinta-Wasatch-Cache National Forest has worked cooperatively with local counties to implement an aggressive ‘‘War on Weeds’’ program with 

Title II funding. These projects are vital to successfully treating invasive weed species threatening critical sage-grouse habitat, watersheds, and high-value recreation 

areas. Work is being accomplished through Forest Service and county crews. Fourteen local youth were hired through the Youth Conservation Corps (YCC) program 

to assist in the implementation of this program. 

Sequestration 

Pursuant to the Balanced Budget and Emergency Deficit Control Act of 1985, as 

amended by the Budget Control Act of 2011 and the American Taxpayer Relief Act 

of 2012, the Secure Rural Schools account is subject to sequestration. When payments were made to counties, the Forest Service opted to make full payment. The 

reduction to Forest Service’s Secure Rural Schools program, Special Authorities, and 

the 25 percent fund required by sequestration is $16.7 million or 5.1 percent of the 

amount subject to sequestration. The Forest Service will very soon notify States of 

the impacts. Communities will be informed of potential options including repayment 

or other reductions. 

Conclusion 

The Secure Rural Schools Act has provided more than a decade of transitioning 

payments to eligible States and counties to help fund public schools and roads and 

provided predictably declining payments to States to transition to the 25 percent 

payment. In addition, it has also created a forum for community interests to participate collaboratively in the selection of natural resource projects on the national forests, and assisted in community wildfire protection planning. 

Thank you for the opportunity to discuss this program with the Committee. The 

Secure Rural Schools Program has successfully strengthened rural economies and 

developed important collaborative working relationships between the Forest Service 

and partners. The Administration supports reauthorization with mandatory funding 

and included a proposal in the FY2013 Budget. The original intent of the Secure 

Rural Schools program was to provide temporary assistance to communities as they 

transition away from timber dependent industries. The 2013 Budget provides longterm economic development opportunities by doubling funding for economic development and forest restoration projects, while ramping down payments to communities 

over the five year authorization period. 

We would be happy to answer any questions you may have. 

The CHAIRMAN. Thank you very much, Chief. We’ll have some 

questions in a moment. 

Ms. Haze. 

STATEMENT OF PAMELA K. HAZE, DEPUTY ASSISTANT SECRETARY FOR BUDGET, FINANCE, PERFORMANCE AND ACQUISITION, DEPARTMENT OF THE INTERIOR 

Ms. HAZE. Good morning. 

The CHAIRMAN. There you are. 

Ms. HAZE. Good morning, Chairman Wyden, Senator Murkowski 

and committee members. Thank you for allowing me to be here to 

testify on behalf of the Department of the Interior and to talk 

about Secure Rural Schools and the Payment in Lieu of Taxes program. 

These 2 programs are good examples of the way in which the 

Federal Government can be a good neighbor to local communities. 

15 

These 2 programs provide funds to counties that help them to pay 

for ongoing community services. In the case of Secure Rural 

Schools, promote enhancement of forest ecosystems and forest 

health, just as Chief Tidwell was explaining. 

The Department of the Interior’s lands and programs benefit 

from this relationship because the emergency response, transportation and other services provided by counties and other jurisdictions help to provide access for people and services that are needed 

to operate and maintain parks, forests, refuges and other public 

lands. We work closely in partnership with the Forest Service to 

administer the Secure Rural Schools program. 

In the Department of the Interior Secure Rural School payments 

are made by the Bureau of Land Management. BLM makes payments annually to 18 counties in Western Oregon that include revested Oregon and California grant lands. Beginning in 1994 and 

including the most recent payments, BLM has allocated 1.6 billion 

in Secure Rural Schools funding. Most recently payments were 

made to those counties by BLM in February including revenues, 

fees and receipts collected in 2012, a total of 36 million was distributed to those 18 counties. We expect to allocate an additional 2 million later this week or the beginning of next week. 

We support reauthorization. If the Secure Rural Schools program 

is not reauthorized payments would return to the historical revenue sharing formula and O and C counties would receive 50 percent of receipts collected on O and C lands. With estimated receipts 

of 15 to 20 million the payments to the counties would be within 

the range of 7 and a half to $10 million. 

BLM has made improvements in its administration of the Secure 

Rural Schools program based on the recommendations made by 

GAO. BLM has strengthened its oversight, revamped its Secure 

Schools Act website, hosted frequently asked questions, changed its 

certification form and conducted outreach to the counties. 

The relationship we have with counties throughout the Nation is 

important. We value that relationship including our ability to make 

Payments in Lieu of Taxes. Local jurisdictions cannot tax Federal 

lands. The PILT program issues payments to counties to make up 

for the lost tax revenue. PILT funds supplemental and other payments shared with States and counties that are generated on Federal lands. 

For example, mineral leasing payments to States are expected to 

be over $2 billion this year. Geothermal revenue payments to counties are expected to be $4 million this year. Since the PILT program began in 1977, a total of $5.9 billion in PILT payments has 

been allocated to counties. 

In 2012 we made payments to more than 1,900 counties. Last 

June a total of $393 million was distributed to counties throughout 

the Nation. We use a formula that is dictated by the law based on 

acreage, population and considering prior year revenue payments. 

The acreage amounts and population rates are adjusted each year 

for inflation. 

Each year in formulating the payment we work closely with Interior Bureaus, the Forest Service and other Federal agencies to ensure that we have accurate acreage data on which to base the payment. We seek input from States on the amounts of prior year revVerDate Nov 24 2008 14:04 Sep 09, 2013 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6602 G:\DOCS\82563.TXT WANDA
16 

enue payments that are retained by counties. Our data is audited 

annually. We regularly meet with counties to keep them informed 

of changes and provide training as requested. We issue and post information about the payments publicly to ensure transparency. 

Since the program was authorized in 2008 and funded through 

mandatory appropriations, we have been able to provide the full 

level of entitlement to counties. Prior to 2008 PILT was funded 

through annual appropriations. During the years 1995 through 

2007 when it was funded from appropriations, payment amounts 

ranged from 41 to 77 percent of the entitlement level. 

We make our next payment this coming June. It is subject to sequester of 5.1 percent. 

We support reauthorization of this program. 

This concludes my statement. Thank you. I’m here to answer 

questions. 

[The prepared statement of Ms. Haze follows:] 

PREPARED STATEMENT OF PAMELA K. HAZE, DEPUTY ASSISTANT SECRETARY FOR

BUDGET, FINANCE, PERFORMANCE AND ACQUISITION, DEPARTMENT OF THE INTERIOR

Mr. Chairman, Ranking Member Murkowski, and members of the Committee, I 

am pleased to have the opportunity to testify today on the Department of the Interior’s Payments in Lieu of Taxes (PILT) Program and the Secure Rural Schools 

(SRS) Program. The Administration supports ways that the Federal government can 

fulfill its role of being a good neighbor to local communities, such as through PILT 

and SRS. 

Secure Rural Schools Act 

The Bureau of Land Management (BLM) manages the Secure Rural Schools program in concert with the U.S. Forest Service. BLM administers the Community 

Self-Determination Act payments as amended (P.L. 106-393) for nearly 2.4 million 

acres of BLM-managed public lands located in 18 western Oregon counties, known 

as the ‘‘O&C’’. The Department of the Interior defers to the U.S. Forest Service in 

matters regarding activities on their lands. 

O&C County Payments 

The Secure Rural Schools Act builds upon the foundation laid in 1937 with the 

Revested Oregon and California Railroad and Reconveyed Coos Bay Wagon Road 

Grant Lands Act (the O&C Lands Act). Under the O&C Lands Act, the 18 O&C 

counties receive yearly payments equal to 50 percent of receipts from timber harvests on public lands in these counties. 

Between 1989 and 1993, income to O&C counties from timber harvests dropped 

significantly. Congress enacted ‘‘safety net payments’’ to stabilize income flow to 

timber-dependent counties in 1994 (P.L. 103-66). In 2000, Congress enacted the Secure Rural Schools Act, which allowed O&C counties to receive a payment equal to 

the average of their three highest timber receipt years from 1986 through 1999. 

Under the Act, the counties also elect the percentage of the payment to be distributed directly to the counties (Title I), and the remaining percentage to be allocated 

between Title II projects (administered by the BLM), Title III projects (administered 

by the counties), or returned to the Treasury. 

The payments have been reauthorized three times, most recently through 2012 as 

part of the Moving Ahead for Progress in the 21st Century Act (P.L. 112-141). Since 

the law has now expired, absent reauthorization, payments to the 18 counties in 

western Oregon will revert to levels under the O&C Lands Act. The President’s 

2013 Budget proposed to reauthorize the program for five years beginning in 2012 

and continuing through 2016 and modify it over the long term. 

We understand the importance of these funds to the viability of western Oregon 

counties in support of county projects and local schools. On February 5, 2013, BLM 

distributed the majority of the Secure Rural Schools payments for 2012, totaling approximately $36 million. Pursuant to the Balanced Budget and Emergency Deficit 

Control Act of 1985, as amended by the Budget Control Act of 2011 and the American Taxpayer Relief Act of 2012, the Secure Rural Schools account is subject to sequestration. When payments were made to counties, Interior held back 10 percent 

of the scheduled payments in preparation for the possibility of sequestration. The 

17 

reduction to Interior’s Secure Rural Schools program required by sequestration is 

$2.0 million or 5.1 percent of the amount subject to sequestration. We are working 

to meet the necessary funds control requirements as quickly as possible to allow 

BLM to issue the balance of payments to the counties as soon as we can. 

Payments In Lieu of Taxes (PILT) 

The PILT Act (P.L. 94-565) was passed by Congress in 1976 to provide payments 

to local governments in counties where certain Federal lands are located within 

their boundaries. PILT is based on the concept that these local governments incur 

costs associated with maintaining infrastructure on Federal lands within their 

boundaries but are unable to collect taxes on these lands; thus, they need to be compensated for these losses in tax revenues. The payments are made to local governments in lieu of tax revenues and to supplement other Federal land receipts shared 

with local governments. The Department has distributed more than $5.9 billion in 

PILT payments since these payments began in 1977. 

While PILT payments are provided without conditions on their use, we know that 

many counties and other local jurisdictions rely on PILT payments for support of 

critically important services and programs, including emergency services such as 

fire and rescue, housing social services, and transportation. 

The annual PILT payments to local governments are computed based on the formula that is contained in the law, which considers the number of acres of Federal 

entitlement land within each county or jurisdiction, the population, and prior year 

revenue payments made to the jurisdiction. 

Federal entitlement lands include lands within the National Forest and National 

Park Systems, those managed by the Bureau of Land Management (BLM), those affected by Corps of Engineers and Bureau of Reclamation water resources development projects, and certain other Federal lands. The formula for calculating PILT 

payments considers the amount of certain Federal land payments received by the 

county or local jurisdiction in the preceding year. These payments are made from 

Federal revenue generating programs (such as receipts from mineral leasing, livestock grazing, and timber harvesting) that the Federal Government transfers to the 

counties using formulas in laws such as the Mineral Leasing Act. 

Prior to 2008, the amounts available for PILT payments to local governments required an annual appropriation by Congress. In 2007, the last year that PILT funding was subject to appropriation, PILT payments were $232.1 million, comparable 

to 64.7 percent of the full authorized level for counties. 

The Emergency Economic Stabilization Act of 2008 (Public Law 110-343) authorized PILT for five years as a mandatory program, under which counties have received the full PILT entitlement level, including inflationary increases. The most recent payment made to counties in June 2012, totaled $393.4 million and was distributed to over 1,900 local government units (mostly counties) in 49 States, the District 

of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands. 

The FY 2013 Budget proposed a one-year extension of PILT payments for 2013. 

The program was extended for 2013, as proposed by the Administration, in MAP21, the Transportation Reauthorization Act. As stated in the Budget, the Administration looks forward to working with Congress to develop a longer-term strategy 

for providing sustainable levels of funding for PILT payments, in light of overall 

constrained budgets and the need for appropriate offsets for new mandatory spending. In the meantime, we plan to make the payments for FY 2013 in June of this 

year, consistent with the payment schedule in previous years. 

Unless Congress takes action to undo sequestration and restore funding before the 

June payments are made, they will be subject to reduction. We are still calculating 

the full entitlement amounts due to counties for this fiscal year; however, based on 

the Office of Management and Budget’s Sequestration Report we will reduce the 

overall allocation by $20.3 million. 

Conclusion 

The Administration recognizes that PILT and SRS are important to local governments, sometimes comprising a significant portion of their operating budgets. The 

PILT and SRS monies have been used for critical functions such as local search and 

rescue operations, road maintenance, law enforcement, schools, and emergency services. These expenditures often support the activities of people from around the country who visit or recreate on Federal lands. 

As we look forward to reauthorization of the programs, the Department will work 

to continue to ensure efficient and effective management of these programs. 

Mr. Chairman, this concludes my prepared statement. I would be pleased to answer any questions that you or the other Members may have. 

The CHAIRMAN. Thank you very much. 

18 

Ms. Fennell, welcome. 

STATEMENT OF ANNE-MARIE FENNELL, DIRECTOR, NATURAL 

RESOURCES AND ENVIRONMENT, GOVERNMENT ACCOUNTABILITY OFFICE 

Ms. FENNELL. Good morning. 

Chairman Wyden, Ranking Member Murkowski and members of 

the committee, I appreciate the invitation to discuss our work on 

Title III of the Secure Rural School Act. As you know the Act was 

in response to the steep decline in Federal timber sales which decreased revenues from the national forest managed by the Forest 

Service and by some lands managed by the Bureau of Land Management. Within the Act, Title III authorizes counties to use payments for certain purposes related to wild land fire and emergency 

services on Federal land. 

At the request of this Committee we undertook a review of the 

oversight and implementation of the 2008 reauthorization of Title 

III and reported our findings last July. 

My testimony today will describe (1), key findings of our 2012 report and (2), actions the agencies have taken since our report was 

issued. 

First, in terms of our report: 

Overall, we found shortcomings in the areas of oversight, expenditures and administrative requirements. Now to briefly address 

each of these areas. 

In terms of oversight, at the time of our report the Forest Service 

and BLM had not issued regulations under the Act and guidance 

was limited and sometimes unclear. This was concerning because 

the Act does not define key terms. For example, the Act authorizes 

counties to use Title III funds for emergency services, but does not 

specify the types of activities covered by this term. Agency guidance at the time did little to clarify this language. 

Also agencies had no assurance that they had an accurate accounting of the amounts of Title III funding spent and unspent by 

the counties which is important because the Act requires that unobligated funds be returned to the U.S. Treasury. 

In terms of expenditures, counties we reviewed reported using 

Title III funds in ways that were generally aligned with the 3 

broad purposes specified in Title III. That is wild land fire preparedness, emergency services on Federal lands and wild fire protection planning. However, we identified expenditures by some 

counties that may not be consistent with specific requirements of 

the Act. These include funding for activities such as clearing vegetation along evacuation routes, updating 911 systems and buying 

capital equipment. Some counties we reviewed for example, reported using the funds for purchasing radios, snowmobiles and 

trucks for patrols. 

In terms of administrative requirements, counties did not consistently follow Title III requirements which include annual certification of expenditures and 45 day public notification periods. We 

found that some counties closely followed these requirements while 

others did not. For example, some counties did not submit certifications when they spent funds or were late in doing so. 

Second, regarding more recent agency actions: 

19 

The Forest Service and BLM issued additional guidance since 

our report that clarified the types of allowable uses of Title III 

funds complete with explicit examples. We believe this additional 

guidance addresses our recommendation. 

Also agencies said that they plan to obtain additional information on the extent to which counties have obligated their Title III 

funds. 

We also suggested that if Congress chooses to extend Title III it 

consider clarifying the Act to make explicit which types of expenditures are and are not allowable. Given recent agency guidance 

there may be less need for changes to the language of the Act itself. 

Still it will be important to monitor county’s Title III expenditures 

in the wake of the additional guidance. 

In conclusion, lack of clarity in what are allowable uses of Title 

III funds left counties, who were already fiscally constrained, to 

make their own interpretations of what is allowable and what is 

not. The new guidance should help alleviate shortcomings we 

found, but it will also be important to observe how the guidance 

gets implemented and what, if any, adjustments may be needed 

going forward. 

Chairman Wyden, Ranking Member Murkowski and members of 

the committee, this completes my prepared statement. I’m happy 

to respond to any questions you may have. 

[The prepared statement of Ms. Fennell follows:] 

PREPARED STATEMENT OF ANNE-MARIE FENNELL, DIRECTOR NATURAL RESOURCES

AND ENVIRONMENT, GOVERNMENT ACCOUNTABILITY OFFICE

PAYMENTS TO COUNTIES.—SHORTCOMINGS IN OVERSIGHT AND IMPLEMENTATION OF

KEY PARTS OF THE SECURE RURAL SCHOOLS ACT MAY BE ADDRESSED BY RECENT

AGENCY GUIDANCE

Why GAO Did This Study 

Under the Secure Rural Schools Act, counties with federal lands may elect to receive payments to help stabilize revenues lost because of declining federal timber 

sales. Under Title III of the act, counties are authorized to use these funds for certain projects related to wildland fire and emergency services on federal lands. The 

act provides oversight roles for the Forest Service and BLM, requiring them to review counties’ certification of their Title III expenditures as the agencies determine 

to be appropriate and to issue regulations to carry out the act’s purposes. GAO reported to this committee in July 2012 that the agencies had provided limited oversight of county spending under Title III and that, although the projects for which 

counties reported using Title III funds were generally aligned with the broad purposes of Title III, county spending did not in all cases appear consistent with specific provisions of the act. 

This testimony describes (1) key findings of GAO’s July 2012 report on oversight 

and implementation of the act (GAO-12-775) and (2) actions the agencies have taken 

to strengthen oversight of county spending since the July 2012 report was issued. 

The testimony is based primarily on GAO’s 2012 report and includes selected updates conducted in March 2013 on actions the agency has taken in response to that 

report. 

GAO is making no recommendations in this testimony. In July 2012 GAO recommended that the agencies strengthen their oversight by issuing regulations or 

clear guidance. The agencies concurred, and took action to implement this recommendation. 

What GAO Found 

In July 2012 GAO reported that the Forest Service and Bureau of Land Management (BLM) had taken few actions to oversee county spending under Title III of the 

Secure Rural Schools and Community Self-Determination Act, and that the guidance they provided was limited and in some cases did not appear consistent with 

the act. GAO also reported that some expenditures by selected counties may have 

20 

1Pub. L. No. 106-393 (2000), as amended. 

2Pub. L. No. 106-393 (2000) covered the period from fiscal year 2001 through fiscal year 2006. 

Pub. L. No. 110-28, Title V, § 5401 (c) (2007), reauthorized the act for fiscal year 2007. Pub. 

L. No. 110-343, Div. C, Title VI, § 601 (2008), reauthorized the act from fiscal year 2008 though 

fiscal year 2011. Pub. L. No. 112-141, Div. F, Title I, § 100101 (2012), reauthorized the act 

through fiscal year 2012. In this testimony, we refer to the Secure Rural Schools and Community Self-Determination Act of 2000 as the Secure Rural Schools Act. 

been inconsistent with the act-which may have resulted in part from the limited 

guidance available from the agencies-and that reviewed counties did not consistently 

follow Title III’s administrative requirements. Specifically, GAO found the following: 

• Neither the Forest Service nor BLM had issued regulations under the act, and 

the guidance the agencies had issued was limited and sometimes unclear. Forest Service guidance, for example, did little to clarify language in the act, neither defining terms from the act nor specifying which types of expenditures 

were allowed under the act and which were not. The absence of clear guidance 

or regulations was of particular concern to GAO because the act itself does not 

define key terms. For example, the act authorizes counties to use Title III funds 

for ‘‘emergency services’’ but does not specify the types of activities covered by 

this term. Moreover, the agencies did not have assurance that they had an accurate accounting of the amounts of Title III funding spent and unspent by the 

counties, which is important because the act requires unobligated funds to be 

returned to the U.S. Treasury upon the act’s expiration. • The counties GAO reviewed reported using Title III funds for projects that were 

generally aligned with the three broad purposes of Title III-wildland fire preparedness, emergency services on federal land, and community wildfire protection planning-but GAO identified certain expenditures by some counties that 

may not be consistent with specific requirements of the act. Such expenditures 

included funding for activities such as clearing vegetation along evacuation 

routes, updating 9-1-1 systems, and conducting routine law enforcement patrols 

on federal land. Some counties GAO reviewed reported using funds to purchase 

equipment, such as radios and GPS equipment, sonar equipment, watercraft, 

all-terrain vehicles, snowmobiles, and trucks for patrols. 

• Counties also did not consistently follow Title III’s administrative requirements, 

which include annual certification of expenditures, 45-day notification periods 

to the public and others before spending funds, and deadlines for project initiation. For example, some counties did not submit a certification for certain 

years when they spent funds, some counties submitted their certifications late, 

and some counties did not consistently follow notification and project initiation 

requirements. 

Since GAO’s report was issued, the Forest Service and BLM have provided additional guidance to counties, which clarifies allowable uses of Title III funds. In addition, the agencies reported that they plan to change their requirements for annual 

reporting of expenditures to obtain additional information regarding the extent to 

which counties have obligated their Title III funds. The additional guidance addresses the recommendation in GAO’s July 2012 report. 

Chairman Wyden, Ranking Member Murkowski, and Members of the Committee 

I am pleased to be here today to discuss our work on the Secure Rural Schools 

and Community Self-Determination Act.1 As you know, the act was a response to 

the steep decline in federal timber sales during the 1990s, which significantly decreased revenues from national forests managed by the Department of Agriculture’s 

Forest Service and from some public lands managed by the Department of the Interior’s Bureau of Land Management (BLM). Counties containing federal lands have 

historically received a percentage of the revenues generated by the sale or use of 

natural resources on these lands, and the act was enacted in part to stabilize payments to counties dependent on revenues from federal timber sales. The act, which 

covers all National Forest lands and certain BLM lands in western Oregon, was initially enacted in 2000 and has been reauthorized several times, most recently for 

a 1-year extension in 2012.2 Under the act, each county may continue to receive a 

portion of the revenues generated from the sale or use of resources from federal 

lands or can choose instead to receive annual payments based in part on historical 

revenue payments to the county. Title III of the act authorizes counties to use a 

portion of the payments for certain purposes related to wildland fire and emergency 

services on federal lands. 

In 2011, at the request of this committee, we undertook a review of the oversight 

and implementation of the 2008 reauthorization of Title III. We examined the actions the Forest Service and BLM had taken to oversee county spending under Title 

21 

3GAO, Payments to Counties: More Clarity Could Help Ensure County Expenditures Are Consistent with Key Parts of the Secure Rural Schools Act, GAO 12 775 (Washington, D.C.: July 

16, 2012). 4 Counties receiving $100,000 or less in payments may allocate all of their payments to uses authorized under Title I. Counties receiving more than $100,000 must allocate from 15 to 20 

percent of their payments to Title II and Title III projects or give the funds back to the federal 

government. Counties choose how to divide this percentage among Title II and Title III, although counties receiving $350,000 or more in payments may allocate no more than 7 percent 

of the payments to Title III projects. 5The Firewise Communities program is a nonregulatory program administered by the National Fire Protection Association and sponsored by the Forest Service, Interior, and state forestry organizations. It is designed to involve homeowners, community leaders, planners, developers, and others in efforts to protect people, property, and natural resources from the risk of 

wildland fire. 6Payments under all three titles of the act totaled over $2 billion for fiscal years 2008 through 

2011 

III and the extent to which county expenditures were consistent with the provisions 

of the act. In July 2012 we reported that the agencies had provided limited oversight of county spending under Title III and that, although the projects for which 

counties reported using Title III funds were generally aligned with the purposes of 

Title III, county spending did not in all cases appear consistent with the act.3 We 

recommended that the Forest Service and BLM strengthen their oversight by 

issuing regulations or clear guidance specifying the types of allowable county uses 

of Title III funds. The agencies concurred with this recommendation and have taken 

action to do so. We also suggested that Congress, if it chooses to extend Title III 

beyond the 1-year reauthorization enacted in 2012, consider revising and clarifying 

the language of Title III to make explicit which types of expenditures are and are 

not allowable under the act. 

My testimony today will describe (1) key findings of our 2012 report related to 

oversight and implementation of the act and (2) actions the agencies have taken to 

strengthen oversight of county spending since our report was issued. This statement 

is based on our July 2012 report, and includes selected updates conducted in March 

2013 on actions the agencies have taken in response to our report’s recommendation. To conduct the updates, we reviewed additional guidance issued by the agencies and interviewed agency officials. Detailed information about scope and methodology can be found in our July 2012 report. We conducted the performance audit 

work that supports this testimony in accordance with generally accepted government auditing standards. Those standards require that we plan and perform audits 

to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our 

audit objectives. 

Background 

The Secure Rural Schools Act was enacted to help address fiscal difficulties confronting rural counties having substantial federal lands and a history of federal timber harvesting. The act, as reauthorized, comprises three principal titles. Under 

Title I, counties are to use the majority of payments they receive for the same purposes for which they used federal receipts, in most cases for the benefit of roads and 

schools. Under Title II, counties may reserve a portion of the payments to fund certain land management projects that benefit federal lands. Title III authorizes the 

use of a portion of the payments for certain purposes related to wildland fire and 

emergency services on federal lands.4 These authorized uses include carrying out 

certain activities to increase the protection of people and property from wildland 

fires under the Firewise Communities program,5 reimbursing the county for search 

and rescue and other emergency services performed on federal land, and developing 

community wildfire protection plans to help protect homes and neighborhoods. Title 

III requires counties to follow certain administrative requirements, including publishing public notices of proposed uses for the payments and submitting annual certifications of Title III expenditures to either the Forest Service or BLM, as appropriate, stating that any Title III funds spent in the previous year went toward authorized uses. For fiscal years 2008 through 2011, 358 counties received a total of 

$108 million for Title III projects, and individual counties received from about 

$3,600 to over $2 million in a single fiscal year for such projects.6

The Forest Service and BLM are responsible for carrying out certain parts of the 

Secure Rural Schools Act. Both agencies calculate the amounts that counties are to 

receive each year, and both agencies are required by the act to review the counties’ 

certification of Title III expenditures as the agencies determine to be appropriate. 

The act also requires the agencies to issue regulations to implement the act, alVerDate Nov 24 2008 14:04 Sep 09, 2013 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6621 G:\DOCS\82563.TXT WANDA
22 

7 GAO-12-775. 8The legislative history of Title III contains almost no information that clarifies the phrase 

‘‘emergency services.’’ 

though it does not describe what the regulations are to address or establish a deadline for issuing them. 

Federal Agencies Had Provided Limited Oversight of County Spending at the 

Time of Our Report, and Some County Expenditures May Have Been Inconsistent with the Provisions of the Act 

In our July 2012 report, we found that the Forest Service and BLM had taken 

few actions to oversee county spending under Title III of the Secure Rural Schools 

Act and that the guidance they provided was limited and, in some cases, did not 

appear consistent with the act.7 We also found that some expenditures by selected 

counties we contacted may have been inconsistent with the act-which may have resulted in part from the limited guidance available from the agencies-and that counties we reviewed did not consistently follow Title III’s administrative requirements. 

Oversight by Federal Agencies 

In July 2012, we reported that neither the Forest Service nor BLM had issued 

regulations under the act and that the guidance the agencies had issued was limited 

and sometimes unclear. We expressed particular concern that the agencies had not 

developed regulations or clear guidance because the act itself does not define key 

terms. For example, the act authorizes counties to use Title III funds for ‘‘search 

and rescue and other emergency services, including firefighting, that are performed 

on federal land’’ but does not specify the types of activities covered by this phrase.8

We concluded that because the language of the law leaves certain provisions open 

to varying interpretations, and available guidance from the agencies had done little 

to clarify this language, counties had generally been left to make their own interpretations about which types of expenditures are allowable under Title III and which 

are not. 

To provide guidance, the Forest Service had developed a brief overview of Title 

III, which generally echoed wording in the act, and a ‘‘frequently asked questions’’ 

document responding to questions on authorized uses of Title III funds. At the time 

of our report, agency officials told us they believed the frequently asked questions 

document provided sufficient clarity for counties to use when considering how to 

spend Title III funds. 

Officials from several counties we contacted, however, told us they found these 

documents to be of little help, and our review of these documents found that they 

did not clearly define terms from the act or specify which types of expenditures were 

allowed under the act and which were not. For example, the act authorizes counties 

to use Title III funds for ‘‘search and rescue and other emergency services, including 

firefighting, that are performed on federal land’’ but does not define the types of activities covered by this phrase. Neither of the Forest Service documents defined such 

activities. In addition, in the frequently asked questions document, the Forest Service listed eight specific uses of Title III funds-including purchase of capital equipment, capital improvements, purchase of land, and training for emergency responseand asked, ‘‘Are Title III funds authorized for the following uses?’’ Instead of answering the question directly, the documents stated that for certain uses-such as 

construction of facilities, purchase of real property, and purchase of vehicles and 

other capital equipment-the act does not explicitly authorize these uses. It then further stated that reimbursement for certain uses-such as the purchase of replacement equipment damaged or destroyed during an emergency response or maintenance of vehicles and equipment in proportion to their actual use for emergency 

services performed on federal land-may be allowable. We concluded that such statements were confusing and unclear. 

Further, our review showed that, in addition to being unclear, the Forest Service’s 

frequently asked questions document appeared to be inconsistent with certain provisions of the act. For example, the act authorizes counties to use Title III funds to 

carry out activities under the Firewise Communities program to educate homeowners about, and assist them with, techniques in home siting, construction, and 

landscaping. Forest Service guidance documents, however, defined Firewise Communities as an approach that, among other things, ‘‘emphasizes community responsibility for planning in the design of a safe community as well as effective emergency 

response.’’ The documents did not emphasize the act’s requirement that counties’ 

Firewise activities with Title III funds must be limited to providing fire-related education or assistance to homeowners. Moreover, the frequently asked questions document stated that developing emergency 9-1-1 systems under Firewise-which is not 

23 

9For our 2012 review, to obtain information about the projects and activities on which counties spent Title III funds, and their administrative practices related to Title III, we interviewed, 

in person or by telephone, officials from 42 selected counties of the 358 counties receiving Title 

III funds since the act was reauthorized in 2008. These 42 counties make up a nonprobability 

sample of counties selected for variation in both the amounts of Title III funds received and 

in geographic location. Because the 42 counties we selected are a nonprobability sample, the information we obtained from these counties cannot be generalized beyond these counties; the information did, however, provide us with an understanding of how the selected counties spent 

Title III funds and the actions taken to follow Title III’s administrative requirements. 

an activity clearly authorized under the act-may also be an authorized use of Title 

III funds. We raised concerns that including emergency response in a definition of 

Firewise and suggesting that developing 9-1-1 systems may be an authorized activity under the act could lead some counties to interpret the act as allowing expenditures that improve the county’s emergency response-a use not clearly authorized 

under the act. 

Our report also raised issues related to counties’ certification that any Title III 

funds spent in the previous year went toward uses authorized under the act. For 

example, we found that the Forest Service and BLM had jointly developed a process 

to assist counties in certifying their Title III expenditures but that the information 

the agencies directed the counties to submit-typically the amount spent in each of 

the three allowable Title III spending categories but without further details regarding actual activities-did not allow either agency to determine whether counties spent 

their Title III funds appropriately. In addition, the act requires counties to submit 

certifications only for the years they have spent funds, and we found that neither 

the Forest Service nor BLM had a process to contact counties that did not submit 

a certification to determine if these counties spent no Title III funds that year or 

had simply not submitted the required certification. Some county officials we interviewed said they had not submitted certifications even when their counties had Title 

III expenditures the previous year. Overall, we found that of the $108 million in 

Title III payments provided to 358 counties for fiscal years 2008 through 2011, the 

counties had certified having spent about $46 million-or less than half the total 

amount-by the end of calendar year 2011. However, because the agencies did not 

have a process to ensure an accurate accounting of the amounts of Title III funds 

spent and unspent, we concluded that it was unclear whether the amounts were accurate and that it would be difficult to ensure that counties return to the U.S. 

Treasury any funds that remain unobligated upon the act’s expiration, as the act 

requires. 

Consistency of County Expenditures 

We also found that expenditures by counties we contacted for our 2012 report did 

not in all cases appear consistent with the act.9 These counties reported using Title 

III funds for projects that were generally aligned with the three broad purposes of 

Title III-wildland fire preparedness, emergency services on federal land, and community wildfire protection planning- and some counties reported expenditures that 

were clearly authorized by the act. Nevertheless, we identified various expenditures 

by some counties that may not have been consistent with specific requirements of 

the act, such as the following examples: 

• Wildland fire preparedness.—Title III authorizes counties to spend funds for activities carried out under the Firewise Communities program but specifies that 

these activities are to involve educating or assisting homeowners with home 

siting, home construction, or home landscaping to help protect people and property from wildfires. Some counties we reviewed used Title III funds on broad 

emergency preparedness activities that may not be consistent with the 2008 act. 

For example, two counties we reviewed told us they spent part of their Title 

III funds to clear vegetation along roads, some of which are potential emergency 

evacuation routes, and others said they removed vegetation from county lands, 

parks, schools, or cemeteries or from larger swaths of land to create fuel breakslocations not directly associated with home siting, home construction, or home 

landscaping. In addition, four counties used Title III funds to update their 9- 

1-1 telephone systems, according to county officials-an activity not clearly authorized by Title III (although, as noted, agency guidance stated that such an 

activity may be allowable). 

• Emergency services on federal land.—Title III authorizes counties to use funds 

as reimbursement for search and rescue and other emergency services, including firefighting, that they perform on federal lands. Some counties we reviewed 

spent Title III funds on activities that may not have been consistent with this 

requirement. For example, instead of reimbursements for specific incidents, a 

24 

10 Resource advisory committees are established primarily under Title II of the act and are 

to contain 15 members representing diverse local interests. For more information on these committees and Title II in general, see GAO, Update on the Status of the Merchantable Timber 

Contracting Pilot Program, GAO 10 379R (Washington, D.C.: Mar. 4, 2010). 

number of counties used Title III funds to pay a portion of their fire or emergency services departments’ salary and administrative costs, including office 

supplies, utility costs, or insurance. As justification for this approach, these 

counties cited the high percentage of federal land in their counties or the difficulty in breaking out the costs of emergency services on federal versus nonfederal land. Some counties we reviewed also used the funds to carry out routine law enforcement patrols on federal land; officials from one of these counties 

told us that these patrols help reduce and deter criminal activity and enhance 

visitor safety on federal lands. In addition, some counties reported that, to 

maintain access to federal lands, they used Title III funds to help rebuild flooddamaged roads, and some reported using funds to purchase equipment, such as 

radios and GPS equipment, sonar equipment, watercraft, all-terrain vehicles, 

snowmobiles, and trucks for patrols. • Community wildfire protection planning.—The act authorizes counties to use 

Title III funds ‘‘to develop community wildfire protection plans in coordination 

with the appropriate Secretary concerned.’’ Some counties we reviewed reported 

Title III expenditures for wildfire protection planning activities that may not be 

consistent with this provision. For example, one county used Title III funds to 

purchase vehicles having firefighting capabilities, as well as other equipment 

associated with emergency response. Another county used Title III funds to contract for firefighter dispatch and suppression services. Officials from this county 

explained that county emergency service units cannot reach certain remote 

areas quickly, so they contract with a state agency to provide dispatch and suppression services during the heavy wildland fire season, and because the area 

served is largely federal land, the county pays for a portion of the contract costs 

with Title III funds. 

Administrative Requirements 

We also found that counties we reviewed did not consistently follow Title III’s administrative requirements. Title III requires counties to certify expenditures to the 

Forest Service or BLM annually and provide 45-day notification to the public and 

any applicable resource advisory committee before spending funds.10 The 2008 act 

also required projects to be initiated by September 30, 2011. Our review identified 

instances where counties did not follow the requirements, including: 

• Certification.—Some counties did not submit certifications at all or submitted 

their certifications late, some certified expenditures for multiple years simultaneously, and some acknowledged putting incorrect information on the certification form. We found various reasons for counties’ not complying with the certification requirements in the act. Three counties, according to county officials 

we interviewed, did not submit their certifications to the Forest Service for the 

years they spent funds because they were unaware of the requirement to do so. 

Two other counties submitted certification forms for some but not all years in 

which they spent funds, and many counties submitted their certification forms 

after the deadline specified in the act, in some cases because they were initially 

unaware of or overlooked the requirement to do so. • Public notification.—The act directs each county, before moving forward with 

Title III projects, to publish a proposal describing its planned use of Title III 

funds in local newspapers or other publications, after which the county must 

allow a 45-day comment period before using the funds. Some counties in our 

review followed only part of the public notification requirement. For example, 

some counties published notices in their local newspapers but did not allow for 

a 45-day comment period before moving ahead with projects or activities, according to county officials and documents, while other counties issued public notices in some years but not in others. We also found four counties that did not 

issue any public notices on their Title III project proposals; officials from these 

counties told us that they were unaware of the requirement to do so. • Notice to resource advisory committees.—Some counties in our review did not 

notify the relevant resource advisory committees of their Title III projects, as 

required under the act. County officials cited a number of reasons for the lack 

of notification, including (1) they were unaware of the requirement to do so; (2) 

the committee meets only once a year in the summer, which does not coincide 

with the county’s timeline for the Title III budgeting process; and (3) the county 

planned to notify the resource advisory committee but did not because a local 

25 

11The 2012 reauthorization of the act extended the deadline for initiating such projects to 

September 30, 2012. 12The 2012 reauthorization of the act extended the deadline for funds to be obligated to September 30, 2013. 13GAO-12-775. 

Forest Service official stated that resource advisory committees were involved 

only in Title II, not Title III projects-even with a specific reference to such committees in Title III of the act. 

• Project initiation.—Some counties did not initiate projects by September 30, 

2011, as required by the 2008 act.11 County officials we interviewed provided 

a number of reasons why they missed this deadline. For example, counties did 

not receive their Title III funds for fiscal year 2011 until 2012, and officials in 

one county told us that their county’s guidelines prohibit starting projects before 

funding is actually received. Another county had not initiated all of its Title III 

projects because some of its previous projects had cost less than estimated, unexpectedly leaving the county more Title III funds to spend; county officials told 

us that they were selecting additional Title III projects on which to use the 

extra funding. 

The 2008 act also required Title III funds to be obligated by September 30, 2012, 

and officials from nearly all counties in our review that had spent funds told us they 

anticipated doing so.12 However, as noted, the agencies did not have a process to 

ensure an accurate accounting of the amount of Title III funds spent and unspent, 

making it difficult to ensure that unobligated funds are returned to the U.S. Treasury when the act expires. 

The Forest Service and BLM Have Taken Action to Strengthen Oversight 

In response to our recommendation that the agencies strengthen their oversight 

by issuing regulations or clear guidance specifying the types of allowable county 

uses of Title III funds, the Forest Service and BLM provided additional guidance 

to counties, which clarifies the types of allowable uses of county funds. In addition, 

the agencies reported that they plan to update their expenditure reporting requirements for Title III funds, so that counties report not only funds expended the previous year but also amounts remaining unobligated. 

Regarding guidance, soon after our report was issued in July 201213, the agencies 

updated their websites to provide substantial additional information on allowable 

expenditures under the act. Given that this information includes specific discussion 

about, and numerous examples of, expenditures that are and are not authorized by 

the act, we believe that this additional guidance addresses our recommendation. The 

guidance addressed each of the three main areas of allowable spending under Title 

III, as follows: 

• Wildland fire preparedness.—As we noted, several counties reported expending 

funds for broad emergency preparedness activities under the Firewise Communities program that did not appear consistent with the act because they did not 

involve providing fire-related education or assistance to homeowners. This issue 

is specifically addressed in the guidance, which now states that Title III authorizes funds to be ‘‘spent on Firewise Communities program activities that (1) 

educate homeowners in fire-sensitive ecosystems about techniques in siting (positioning or locating) a home, constructing a home, landscaping and maintenance around a home... .or (2) assist homeowners in implementing these 

techniques’’ (emphasis in original). The guidance goes on to list examples of activities that are authorized-such as disseminating Firewise information or assisting with ‘‘clean-up days’’-and those that are not-such as updating 9-1-1 systems or clearing vegetation along emergency evacuation routes or from county 

lands, parks, schools, cemeteries, or other larger swaths of land not directly associated with home siting. 

• Emergency services on federal land.—Likewise, the guidance addresses concerns we raised about whether certain projects related to emergency services on 

federal land were clearly consistent with the act. The guidance, among other 

things, clarifies the definition of emergency services and provides lists of expenses that are authorized (e.g., salary or wages of emergency response personnel deployed during an emergency response) and those that are not (e.g., 

routine sheriff’s patrols of national forest roads and campgrounds, cleanup after 

a flood event, and purchase of capital equipment or real property). 

• Community wildfire protection planning.—The guidance also addresses concerns 

we raised about development of community wildfire protection plans by clariVerDate Nov 24 2008 14:04 Sep 09, 2013 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6621 G:\DOCS\82563.TXT WANDA
26 

fying authorized uses and illustrating those that are not authorized, including 

the implementation of activities described in such plans. 

Regarding annual reporting requirements on the part of counties, both agencies 

updated the certification form for counties to use in certifying Title III expenditures, 

so that counties must report not only on the funds expended the previous year but 

also on the amount of their Title III funds that remain unobligated. Such an update 

is consistent with guidance provided by Agriculture’s Office of General Counsel in 

response to a Forest Service request for legal advice on its role in counties’ return 

of unobligated Title III funds. The update is likely to allow the agencies a more accurate accounting of the overall amounts of Title III funds spent and unspent-a need 

we noted in our report. 

In our July 2012 report, we also suggested that if Congress chooses to extend Title 

III beyond the 1-year reauthorization enacted in 2012, it should consider revising 

and clarifying the language of Title III to make explicit which types of expenditures 

are and are not allowable under the act. Given that the agencies have issued guidance that we believe clarifies the allowable uses of Title III funds, there may be less 

need for changes to the language of the act itself. Nevertheless, it will be important 

to monitor counties’ Title III expenditures to observe whether the incidence of expenditures that appear inconsistent with the act diminishes in the wake of the additional guidance the agencies have issued. 

Chairman Wyden, Ranking Member Murkowski, and Members of the Committee, 

this completes my prepared statement. I would be pleased to respond to any questions that you may have at this time. 

The CHAIRMAN. Ms. Fennell, thank you. 

Before we go to questions, colleagues, we’ve received a letter from 

Senator Michael Bennet of Colorado commending the committee for 

holding today’s hearings on Secure Rural Schools and PILT. Without objection, we will make Senator Bennet’s letter a part of the 

record. 

The CHAIRMAN. Let me begin, if I might, with a question or 2 for 

you, Chief Tidwell, and you, Ms. Haze. 

Our rural communities are really hurting. You know, they are 

watching all the bickering going on in Washington, DC. What I 

find when I have town hall meetings around our State in every 

county, every year, people just say, who is going to do something 

back in DC to change things and put in place some policies so that 

the rural economy can get going again? 

That’s what this is all about in just, kind of, breaking it down 

in sort of simple, understandable English. So what the committee 

has essentially been looking at is this idea of a dual track kind of 

strategy. 

On one hand, both short-term and long-term we would be trying 

to get the timber harvest up. We think we can do that, particularly 

Chief, with collaborative approaches like you have stressed today. 

Do it consistent with our environmental laws. 

Then we’ve also said we’re going to have to try some fresh approaches which is what we’re trying to look at with revenue sharing, bringing together communities where there’s Federal land and 

Federal water. It’s why we’re saying we’ve got to have Secure Rural 

Schools for essentially some period of time in order to start looking 

at these broader approaches. 

So my question to you, Chief, and Ms. Haze, first of all is what 

can be done now, this point, this year, quickly to take steps to 

boost the timber harvest and do it in line with environmental laws? 

Chief, I think you’ve given us some ideas with your approach for 

collaborative kinds of efforts because clearly a healthy forest will 

help equal a healthy economy. 

27 

But what can be done short term so these communities can get 

moving again and see some real progress? 

Mr. TIDWELL. Mr. Chairman, you know, last year we came out 

with our accelerated restoration strategy that identified the 65 to 

83 million acres that we need to do restoration on. Along with that 

we made the commitment to increase the amount of acres that we 

treated along with the outputs. The key output, of course, is saw 

timber, to increase that 20 percent over the next couple years. 

We made our target this last year. We are focused to do everything we can to be able to stay on that because we recognize the 

need of restoring these lands. Out of the 65 to 83 million acres 

there’s over 12 million acres that we have no choice but to use 

some form of timber harvest to be able to restore those lands. 

That’s what we want to continue to focus on, to be able to make 

sure we can sustain the infrastructure, but at the same time to be 

able to get more of this work done. 

So we are continuing to stay focused on that. Your support for 

these collaborative efforts, and I can use your State as a perfect example, of where people are coming together today and finding ways 

to be able to reach agreement and move forward. There’s a greater 

understanding about the need to restore these lands before we lose 

forest to whether it’s fire, insect and disease or ongoing drought, 

wind storms, whatever. Those are the things that are really resonating with rural economies, rural America today. 

The CHAIRMAN. Chief, when you say restoration work particularly in these areas susceptible to insects and disease, what you 

just said in response to my first question is that it really means, 

in many respects, increasing the timber harvest. Is that correct? 

Mr. TIDWELL. It is. Especially on that 12 and a half million acres 

that we believe we don’t have any other tool that we can use. 

The CHAIRMAN. Good. 

Chief, I want to let my colleagues ask some questions so I’ll get 

into more on a second round. But I just want to again appreciate 

your leadership, particularly on the East side of Oregon even before 

our bill has been enacted. We’re seeing progress in terms of litigation going down and the cut going up. So I thank you for it. 

I do want to ask you, Ms. Haze, the same question because, as 

you know, the Chief with the Forest Service is talking about the 

East side where we’ve made some progress. But on the West side, 

the Bureau of Land Management manages the O and C lands. 

These communities also feel like they’ve just been flattened. So 

we’ve got to get the cut up. We’ve got to get the harvest up both 

short term and long term. 

What steps can you take, starting now, to do that? 

Ms. HAZE. So Secretary Salazar has talked about a commitment 

to restore healthy habitat and provide sustainable timber harvest. 

BLM initiated their 3 collaborative pilot projects in Roseburg, 

Medford and Coos Bay. Those are underway and working with and 

with the input of Drs. Norm Johnson and Jerry Franklin to look 

at sustainable, collaborative projects. BLM is in the process of implementing 7 more. 

So I think that in combination with the reauthorization of Secure 

Rural Schools are the short term needs. 

28 

The CHAIRMAN. So what can be done now to increase the harvest? I understand the plans that have been laid out in the past. 

I think you know from my conversations with the agency, so many 

of these communities say that the agency isn’t hitting the targets. 

So what can be done to increase the harvest now? 

Ms. HAZE. So my understanding is that BLM is planning to work 

toward their target this year. I think we have some evaluating to 

do based on the sequester that is impacting all of our programs. 

I don’t think we have a final answer for the impacts of that yet. 

The CHAIRMAN. Can you get me an answer to that question? 

Ms. HAZE. Yes. 

The CHAIRMAN. Because in those hard-hit communities, in Josephine County, in Coos, and places like Cottage Grove, you know, 

rural counties. if they hear the words that you talked about, planning to hit the target, evaluating the effort-these communities that 

have been hit so hard, that’s not going to address their concerns. 

They want to hear specifics. 

Can you get me an answer, say within the next 10 days, specifically on what will be done on this point to increase the harvest? 

Ms. HAZE. Yes, Chairman. 

The CHAIRMAN. OK. Thank you. 

The CHAIRMAN. Senator Murkowski. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

I’ll continue on what we’re going to do to increase the harvest. 

You know, even in the areas where we have agreed as to what the 

plan may be, we’re not seeing that, we’re not seeing the production 

there. In the Tongass the current land management plan calls for 

cutting of 267 million board feet a year yet we’re barely getting 15, 

1, 5, million board feet per year. 

So, you know, the frustration, of course, is huge. We have had 

many opportunities to discuss just this about well, OK, we’ve 

agreed that this is where we should be with the harvest. We’re not 

even—it’s not only we’re not in the ball park. We’re not even in the 

same town here when we’re talking about what we’re putting up 

for sale or what our goal is and what we are achieving. 

Now Ms. Haze, you indicate that because of sequester we’re 

going to be seeing even less. As a member of the Appropriations 

Committee we got a letter from the Department of Ag saying that 

due to sequestration the amount of Forest Service timber volume 

offered would be and this is offered nationwide, would be reduced 

by approximately 15 percent. The sequester is 5 percent. Not quite 

sure why we’re seeing a reduction in the board feet of 15 percent. 

Again, when you’re a community that is looking for an answer 

here even before sequester we weren’t even close to getting where 

we needed to be in terms of the timber harvest. Now it would appear that we’ve got, I don’t know, an excuse to do even less. What’s 

our problem here? Why can’t we even begin to start achieving what 

we have agreed to in places like the Tongass? 

I recognize we’re talking a lot about restoration here which is important. But we have to recognize that in the Tongass it’s not an 

issue of thinning because we have disease. We need to be working 

on our timber sales. 

I’m going to give you a chance to answer that Chief Tidwell. But 

I want you to also respond in context with the Governor of Alaska’s 

29 

recent move toward increased timber production within the State. 

He’s appointed a State Timber Task Force to come up with some 

ideas. 

One of the recommendations is to create a 2 million acre State 

forest out of our national forest system lands. Would something 

like this help us, a smaller pilot project to test the effectiveness of 

State timber management? We’re just not seeing it at the Federal 

level. We’ve got to do something. 

So can you speak to not only the idea of the State’s proposal, but 

how we can do better to keep the agreements that have already 

been made? 

Mr. TIDWELL. Senator, I know that we need to deliver because 

we’ve talked about the opportunity to transition to second growth 

harvest there in Southeast Alaska. A key part of that is for us to 

be able to deliver each year on our targets to be able to provide 

that bridge of material from the old growth harvest until we can 

move to the second growth. 

Last year when I was at a hearing with you I told you we were 

going to sell 80 million board feet from the Tongass. We didn’t 

make that target. We sold about 53, 54 million this year. 

This coming year the forest is telling me that they are on target 

to sell 100 million. They’ve got to get a difficult decision out. But 

that’s the focus that we’re on to be able to demonstrate that we can 

deliver on our part to be able to move forward with this transition 

strategy. 

Senator MURKOWSKI. Even though the Tongass management 

plan calls for 267 million board feet. So what we’re saying is, is 

that we’re delivering a little bit more, but we’re not even half way 

to what the Tongass management plan calls for. 

Mr. TIDWELL. The Tongass forest plan, that’s an allowable harvest level. It’s not a target. That term that we used in the planning 

it’s, I think, in times has been misleading. But all that does is it 

indicates what is allowable, what’s the capability within our suitable timber lands to be able to produce at a sustainable basis. 

Our targets are driven by really what our budgets are and what 

we feel we can get accomplished every year. So when I talk about 

the 80 million last year, the 100 million this year, it’s based on 

what we feel we can actually get prepared. Actually it will also sell. 

In the past we used to just—we put up a lot of sales. We’d offer 

a lot of sales. Our target used to be based on what we’d offer. But 

we changed that a few years because we wanted to get the work 

done. So our target now is just for what we actually sell, not just 

what we offer. 

Senator MURKOWSKI. So, Chief, given the budget constraints that 

we are dealing with, what do you think of the State’s proposal to 

allow for State management of State forest? 

Mr. TIDWELL. You know, this issue has come up in the past. I 

think it’s—we have different mandates. We have different laws 

that represent what the public wants from their national forests. 

That’s what governs the management of our national forests. It’s 

based on the public involvement in our planning process. 

Senator MURKOWSKI. But the public also needs some jobs or they 

can’t live there. 

30 

Mr. TIDWELL. They do need the jobs. That’s why we’re focused on 

moving forward with our transition plan to be able to move to second growth that I believe will be able to produce more jobs than 

what we have in the past. 

Senator MURKOWSKI. Chief, you and I have both acknowledged 

that in order to get to that second growth we can’t just snap our 

fingers. We can’t make those trees grow any faster. In the meantime you’ve got an industry that is dying out. The trees might be 

able to transition but the people, the families, the economic opportunities that were there, won’t be able to hold on. 

So I think we recognize that things don’t measure up as neatly 

in real life as they might on paper. So we’ve got a lot more work 

to be doing together. 

My time has expired. But we’ll continue this questioning. Thank 

you. 

The CHAIRMAN. Thank you, Senator Murkowski. 

Senator Landrieu. 

Senator LANDRIEU. Thank you. 

Mr. Chairman, I am so looking forward to helping us figure this 

out because I think if we can it will be a tremendous help to our 

entire country and to the people that live in the communities that 

Senator Murkowski and Senator Wyden were just referring to and 

a real benefit to our environment as well. 

Let me ask this question to Chief Tidwell and Ms. Haze. Do you 

all have a total amount of money that comes into the Federal Government from all of these sources that we’ve talked about, harvesting, grazing, geothermal, etcetera, etcetera, etcetera, from Agriculture and Interior? Can you give me a rough estimate of what 

that dollar amount is every year? 

If you can’t I really do need somebody to submit that to the committee by close of business today because you should have it. 

How do—— 

Ms. HAZE. Senator Landrieu, for the Department of the Interior 

I can tell you we collect approximately $13 billion a year in revenues, fees, receipts. 

Senator LANDRIEU. From onshore and offshore? 

Ms. HAZE. Onshore, offshore, grazing, aeration. 

Senator LANDRIEU. Offshore, everything. 

How about Agriculture? 

Ms. HAZE. Agriculture is in there. 

Senator LANDRIEU. So it’s about $13 billion. 

Ms. HAZE. Thirteen billion. 

Senator LANDRIEU. So this issue really is about looking at that 

13 billion and figuring out a way to better allocate it for the communities that actually produce it, that produce that, to share, in 

a way, that helps them to achieve some of the objectives that the 

chairman and the ranking member and some of us have in mind. 

So, we’re working off of a $13 billion income? Is that it? 

Ms. HAZE. That’s right. 

Senator LANDRIEU. OK. 

Let me ask how much of that money comes from onshore and 

how much does come from offshore? 

Ms. HAZE. That’s a good question. I should know that. 

31 

Senator LANDRIEU. I think it’s—what is it? It’s 6.3 from offshore 

and so it’s about equal. It’s a little bit more from onshore. 6.3 from 

offshore. 

Those offshore revenues come from what States, off the coast of 

what States? 

Ms. HAZE. Louisiana. 

Senator LANDRIEU. That’s good. What else? 

[Laughter.] 

Senator LANDRIEU. What other States? 

Ms. HAZE. Mississippi? Florida? 

Senator LANDRIEU. Nope, not Florida, Alabama. 

Ms. HAZE. Alabama. You know better than I do. 

Senator LANDRIEU. Mississippi, Louisiana, Alabama, a little bit 

of California and Texas, slightly a little bit in California. 

So 4 States are producing 6.3 billion and then all the rest of the 

States, including a little bit from Louisiana, I think, although we 

only have 2.5 percent of our land is Federal, completely different 

than the West which I understand their dilemmas. But the rest of 

that comes from, you know, onshore production. 

Now, Mr. Tidwell, let me ask you this. I was very encouraged 

that you said that the Administration is interested in a revenue 

sharing program for interior States to help them. But I didn’t hear 

you mention anything about coastal States. Do you want to elaborate? 

Mr. TIDWELL. My remarks were about all the States where we 

have national forest system lands. So it’s 41 States across the country. So and it’s a Secure Rural School. It’s 729 counties that we 

share that. 

Senator LANDRIEU. Yes, but what about the coastal States that 

are producing the 6.3 billion that comes into the Federal Treasury. 

I think we’ve been doing that since when? 1923? 

Mr. TIDWELL. That is shared. That’s through the Department of 

Interior’s programs that they administer is where that sharing occurs. 

Senator LANDRIEU. OK. Ms. Haze, let’s talk to you about that? 

Since 1923 we’ve produced, you know, literally billions and billions and billions of dollars. Are you aware of what’s happening 

along the Gulf Coast with the erosion that is going on that’s the 

greatest erosion on the North American continent? Are you at all 

aware? 

I know that you focus on the interior of the country, but the exterior is in really, tremendous, stress and strain whether it’s Louisiana or Massachusetts or New Jersey? 

Ms. HAZE. So, it’s fair to say I focus on the financial aspects of 

the Department. I did actually once visit the wetlands land down 

in Lafayette, Louisiana and learned a great deal about the erosion 

along the coast there. 

Senator LANDRIEU. It’s pretty bleak. I mean, we’re losing a football field every 30 minutes. It’s the largest erosion underway on 

the whole continent including, you know, Mexico, Canada and the 

United States. We’re having a little difficultly with the Administration, kind of, even recognizing that it’s happening. 

So you might want to take this message back and let them know 

that I’m looking forward to working to find a way forward for PILT 

32 

and for Rural Schools and fire. But you know, we also have some 

coastal issues that need to be dealt with as well with the resources 

that we help to provide for the country. 

Thank you. 

The CHAIRMAN. Thank you, Senator Landrieu. 

Just before we go to our next Senator, Senator Risch, on the 

point that you’re making and I think it’s a very good one about 

finding, you know, common cause. I did have a chance to talk to 

Secretary Vilsack recently. Of course, the Department of Ag is your 

Agriculture and the Forest Service intertwined. He is very interested in exploring with us this whole revenue sharing concept and 

trying to find common cause between the communities where 

there’s Federal land and Federal water. So I think we’ve got some 

good conversations just beginning. 

Alright, let’s see. Senator Risch has departed. 

Senator Barrasso. 

Senator BARRASSO. Thank you very much, Mr. Chairman. 

The Secure Rural Schools and Payment in Lieu of Taxes or PILT 

programs are distinctly different programs. They are separate topics but they have equally divergent histories and stated purposes. 

I support the PILT program. 

The PILT program provides Federal money to county and local 

governments to make up for or in lieu of property taxes that can’t 

be levied on Federal property. PILT payments are simply the U.S. 

Government acting as a responsible land owner to help support essential local government services such as schools and roads. As in 

the case with all land owners if the existing owner is unwilling or 

can’t pay the property taxes then new owners are needed. 

The purpose of the Secure Rural Schools program is different. 

That was best summarized, I believe, on the Senate Floor last year 

by Senator Merkley when he said, ‘‘It is a commitment our Federal 

Government made to rural forest counties when it determined,’’ 

that’s the Federal Government, when the government, ‘‘determined 

that it would put environmental overlays over large blocks of forest 

land that were dedicated to timber production with revenue then 

shared with local counties.’’ I agree with Senator Merkley. 

I agree with him that the purpose of the program is to assist 

communities impacted by the overlay of Federal environmental 

policies. These policies have destroyed rural communities all across 

the West. They have forever altered the life of small towns and 

counties, especially and to me, has been not for the better. 

They have taken away the economic ability of communities to 

survive and to thrive on their own which would be without Federal 

Government assistance. As the environmental overlays were put 

into place, jobs that supported families and communities for generations have been lost. The listing of the northern spotted owl, 

President Clinton’s road less rule and a whole host of Federal regulations and actions set in motion the decline and elimination of 

thriving communities all across the West. 

In 1991, 38 Oregon and Washington counties began receiving owl 

guarantee payments as a temporary safety net to soften the blow 

to their timber based economy. Prior to the need for owl payments 

counties were funded by receiving 25 percent of the Forest Service’s 

timber sale receipts. They were compensated and rightfully so to 

33 

help provide services to the tens of thousands of people and their 

families who relied on timbering for their jobs. 

These were thriving communities with an economic base that 

created a strong middle class. In the year 2000 when the Secure 

Rural Schools act became a law owl guarantee payments were extended to 721 counties nationwide. The program was only supposed 

to be temporary to expire in the year 2006. 

However, the environmental overlay of regulations and other 

policies of the Federal Government didn’t go away. Communities 

continued to struggle to survive against the economic barriers created by Federal policies. Extension and reauthorizations have occurred in 2007, 2008 and 2012. 

Now, I understand why Senator Wyden and others have worked 

so hard to continue funding the program. The Federal Government 

essentially took away the livelihoods and funding for families in 

counties by blanketing the region with environmental overlays. Regrettably, the same government that imposed the overlays is 

now$16 trillion in debt and funding existing programs often comes 

at the expense of others. 

I have a poster behind me. This poster shows that last year’s 

transportation bill included 1 year extension of PILT and SRS. The 

1-year extension was paid for through tax provisions and by using 

10 years of funding from the abandoned mine land program that 

was designated for the State of Wyoming. It is the classic robbing 

Peter to pay Paul scenario. 

It’s not sustainable. It did not solve the problem. 

The solution is not to make communities dependent on Federal 

payments which is the path we’re currently on. Rather the solution 

is to remove the environmental overlays that Senator Merkley referenced in his floor speech. I believe this can be done in a way that 

provides both economic growth and environmental stewardship. 

Rural counties are clamoring for a hand up, not a hand out. We 

need more active management to foster healthy, vibrant forests. 

The Vancouver Sun reported March 1st, ‘‘There’s no way North 

American’s stud lumber sawmills will be able to keep up with the 

recovering U.S. housing market.’’ European sawmills will likely 

make inroads into North America. 

Rural counties that were once robust can become so again. So I’m 

encouraged by statements I’m hearing and comments made over 

the last few months by Members of Congress and Governors from 

both parties. The future of counties should not be dependent on the 

uncertainty of the Federal Government budget. 

It’s time to empower rural communities to create their own financial stability. With national deficits soaring, bark beetle infestation and excessive fuel loads feeding catastrophic fires, we can no 

longer afford environmentally or economically to passively manage 

our forests and for rural counties to depend on the Federal dollar. 

So my question, Mr. Chairman, as my time is expired, is are 

there specific actions that the Forest Service and BLM are going 

to take to limit the impact of environmental overlays and go ahead 

and actually increase timber production and revenue for the counties involved? 

You can answer. 

34 

The CHAIRMAN. I think you ought to be in a position to respond 

to the Senator’s question. So, go ahead, Chief. 

Mr. TIDWELL. Senator, in my earlier remarks I talked about the 

effort we have to increase the amount of tree limits occurring 

which is resolving an increase in harvest. 

You know, I’ve spent a majority of my career dealing with the 

conflict and the controversy around public land management, 35, 

now 36 years in the Forest Service. What I’m seeing today is how 

groups are coming together. Diverse interests are coming together 

and agreeing about the type of work that needs to happen on the 

landscape. 

We are seeing a significant change in the amount of work that 

we’re getting done. I think the more that we can embrace these collaborative efforts, to support those efforts or bring people together 

because there’s more and more of a recognition of the things that 

you’ve pointed out of the need for us to do more treatment, to do 

more timber harvest to reduce the fuels, to reduce the insect and 

disease outbreaks. Because of that, that’s why we were able to, I 

felt confident, that I could put the Agency’s reputation out there to 

say that we would be increasing harvest over the next few years 

and with a flat budget with no expectation that we’d see an increase. 

But because—but the reason for that is because it is collaborative efforts. The other thing is that we’ve recognized that we 

need to do analysis for much larger areas. We used to spend a lot 

of time doing projects for 500 acres, maybe 1,000 acres. 

Today we recognize we need to be doing analysis on tens of thousands of acres at one time. This has been a reach for us. But I’ll 

tell you we’ve have success. Up in South Dakota last year they did 

one EIS for 248,000 acres that they’ll be able to get in there for 

the 7 years and do whatever treatment they need to on that land. 

That along with as we move to more and more long term contracts so that our mill owners and our loggers know that they have 

something that provides some certainty so that they can invest in 

new equipment, make the investment to hire people, make the investment in their mills. These are things that are starting to 

change the dynamics that we’ve been dealing with for the last few 

decades. Those are the things that we’re really focused on to be 

able to increase the restoration work, increase the amount of harvest that’s coming off of the national forests. 

Senator BARRASSO. Thank you, Mr. Chairman. 

The CHAIRMAN. I thank the Senator. 

Senator from New Mexico. 

Senator HEINRICH. Thank you, Chairman. 

I want to thank both you and the Ranking Member for having 

this hearing. This is an issue where there’s actually quite a lot of 

agreement. I think concern on both sides of the aisle, something 

that touches communities throughout the Intermountain West. 

Chief Tidwell, good to see you again. I wanted to point out and 

I appreciate your comments in your earlier testimony because you 

touched on some of the things that I hear consistently back home. 

In New Mexico many counties use their SRS funds to carry outward for stewardship projects. They reduce the risk of catastrophic 

wildfire to communities. 

35 

New Mexico counties also support local fire fighting and emergency response units that are viable when fire strike close to homes 

and businesses as well as search and rescue efforts. I know that 

the Forest Service works closely with forest communities to prepare 

for wildfire and to respond to catastrophic wildfires. 

What role do SRS funds play in making that collaboration possible for those communities? 

Mr. TIDWELL. There’s a couple ways. The first thing with Secure 

Rural School payments it provides that certainty to the county so 

they know what they can plan on for the funding they’ll have for 

their roads and schools program. 

But the second part is the Title II and Title III funds that the 

counties can choose to basically share some of the payments to do 

work on the national forest or to be able to do the wildfire community protection planning or also deal with emergency services. 

The other key part of this is also the Resource Advisory Committees. Because of the requirement when Secure Rural Schools was 

first authorized it required this diverse set of interests to come together and often in places for the first time. It was a requirement. 

It provided the catalyst, the incentive of these diverse interests to 

come together and to be able to find ways to agree on what type 

of work should go forward. 

Because of that, I really believe that Secure Rural Schools should 

get a lot of credit for helping us to really kick start the collaborative processes that we see across the country. So it’s been an additional benefit that I don’t even think the Chairman, when he 

worked so hard on this initially, that he recognized really that this 

additional benefit was going to come out of this act. So I just want 

to make—I want to stress that because it goes way beyond the payments. 

Because of these efforts, these diverse interests that have come 

together, we’ve seen some diversification of economies in these communities. It’s really helped to provide sustainable economies in 

these countries. Of course, by working together to deal with the 

wildfire threat that you, especially in your State, have had to deal 

with the last 2 years. 

Senator HEINRICH. If that funding stream were not available to 

these counties how would it also change how the responsibilities 

that the Forest Service has and what you would have to do differently in order to fill that void in terms of additional stewardship 

projects, additional fire management and interface issues? How 

would it change things if this funding stream weren’t there for the 

counties to be a good local partner? 

Mr. TIDWELL. It would stress our use of our appropriated funds. 

It would, I think, really limit what the counties can do to be a partner. The counties want to be a partner in this work. 

That’s the other benefit that comes from Secure Rural Schools. 

It allows them to make the decision to dedicate some of their funding toward this work. So it lets them be at the table. Helps them 

to be able to be a better partner as we work together. 

Without these funds it will be difficult, especially in today’s 

budget climates, for us to be able to find the additional appropriations to make up for the loss of this, the work that gets done with 

these funds. 

36 

Senator HEINRICH. There’s been some discussion in Congress 

about returning to the model where county payments are dependent on revenues generated by our national forests. I’ll be the first 

to admit that New Mexico forests are a little different than Oregon 

and Washington and Alaska in that we have very arid forests 

where oftentimes sometimes it takes 200, 300 years to grow a mature Ponderosa Pine. So sometimes we need to pull biomass off the 

forest. But we’re not producing sawmill timber as a result. 

So I’m curious what you think that—what would that, you know, 

that linkage of revenues to county payments mean for forest management, particularly in Southwestern arid States? 

Mr. TIDWELL. Senator, I don’t anticipate any change in what 

we’re doing. The work that’s being done on the national forests is 

driven by what the public wants and what the land needs. So the 

amount of harvest, whether through timber sales or stewardship 

contracting, I don’t think that’s going to change. 

What will change is the need to get more of this work done. 

We’re going to continue to do that, with or without. But I wouldn’t 

expect to see any change in the management. 

Senator HEINRICH. OK. Thank you very much, Chief. 

The CHAIRMAN. Thank you, Senator Heinrich. We’re very fortunate to have an actual forester as a member of this committee. 

Senator Risch, welcome. 

Senator RISCH. Thank you very much, Mr. Chairman. 

I—this is an issue that obviously in a lot of our States is critically important. I was interested in the GAO report. I hadn’t read 

it until we—I got ready for this hearing. 

This is no reflection on you, Ms. Fennell, but let me tell you 

something. I have real confidence in the county’s being able to 

spend this money. Indeed I have more confidence in the county’s 

being able to spend this money than I do the Federal Government. 

I have no doubt they’ll make some mistakes. But I can guarantee 

you they won’t be nearly as big a mistake as the Federal Government would make if they were spending the money. So appreciate 

what you’re doing, but they’re probably going to do alright out 

there. 

In this town it’s kind of hard to explain this to people, but Senator Wyden knows this and Senator Murkowski knows this. When 

you go out into the—well and Senator Heinrich knows this too. 

When you go out into the hinter lands you’ll find counties that are 

managed pretty well by people who are well educated and well 

schooled in what they’re doing. Then you’ll find other counties that 

are run by the people. 

So as a result of that it’s less formal than what we’re used to. 

So you’re going to find those kinds of things when you go out there. 

But in any event, keep up the good work. But I have real confidence in the county’s being able to make this work if we get them 

the money. 

Thank you, Mr. Chairman. 

The CHAIRMAN. I thank my colleague. 

Let’s go to a few additional questions. I want to stay with you, 

Chief and you, Ms. Haze, to go into some of what’s being debated 

with respect to our approaches for the future. 

37 

I’ve tried to describe our approach both short term and long term 

as a dual track. So we get the cut up and particularly, Chief, you’ve 

mentioned doing that through the collaborative approach which I 

think makes a lot of sense. We recognized that Secure Rural 

Schools is certainly going to be needed in the short term. There are 

some approaches for the future, long term, that involve revenue 

sharing. 

So I call that the dual track. Get the cut up and also ensure that 

we have Secure Rural Schools as a kind of bridge. There are some 

who are advocating what I call a one track strategy where they’re 

saying we don’t need Secure Rural Schools. We can just get there 

by getting the cut up. We get the volume up that will take care of 

it. 

Now I’ve already made it clear again and again, probably more 

times than colleagues want to hear. I’m for getting the cut up. But 

I’m trying to get my arms around the idea of what level of timber 

harvest would be needed in the short term to keep these communities afloat in terms of law enforcement and schools and essentials 

and how that would be achievable. 

Can you give us some sense of that, Chief, if you just said we’re 

going to drop Secure Rural Schools and we’ll just do it by getting 

the cut up? What would that require say, in the next couple of 

years? 

Mr. TIDWELL. Mr. Chairman, to provide the same level of funding 

that the counties have received under Secure Rural Schools on the 

national forests we’d have to increase our harvest to 16.8 billion 

board feet. That’s based on today’s prices. 

That’s the other thing I wanted to stress is that, the saw timber 

prices have been going up for the last year which is very helpful. 

But before that we were at some of the lowest prices that I’ve seen 

throughout my career. The stumpage value of the timber coming off 

the national forests has been at the lowest point in my entire career. So that too has had a significant reduction in our revenues. 

Hopefully, as the housing market improves and we continue to 

expand markets over the biomass, the wood off the national forests, 

that we’ll see a continued improvement in the markets. But at today’s market it would take 16.8 billion board feet off just the national forests to provide the same level of revenues that we provided through Secure Rural Schools last year. 

The CHAIRMAN. Ms. Haze. 

Ms. HAZE. So just looking at the numbers. If our payments to the 

counties this year was 38 million. If there is no Secure Rural 

Schools maximum revenue sharing would be $10 million. So a 4- 

fold increase—— 

The CHAIRMAN. In the cut. 

Ms. HAZE. In the revenues generated. I can’t personally tell you 

what that means in the cut. 

The CHAIRMAN. OK. 

Just 2 other points to move along quickly as I see Senator Lee 

is here and we want to give him another opportunity to ask questions. 

Chief, I especially note your point about the Resource Advisory 

Committees. Senator Craig and I, when we talked about them, we 

thought they were going to work well because the idea was they 

38 

would get people talking who had never talked, you know, before. 

But based on what I hear in rural communities, this is not something that we dreamed up in Washington, DC. 

In the smallest nooks and crannies of our State, where the Federal Government owns land, people say that these Resource Advisory Committees are working beyond anything they imagined. That 

you’ve got people in the timber industry and environmental folks, 

who practically were screaming at each other before, looking for 

common ground. It’s because a project can’t go forward under a 

RAC unless you do reach common ground. 

So I appreciate what you’ve had to say. I want you to know, since 

we’ve had some conversations, that as we look to the future in 

terms of some of these revenue sharing ideas. We are going to build 

on your collaborative thinking and these Resource Advisory Committee because that has been a part of Secure Rural Schools. 

It probably didn’t get a lot of attention because people want to 

talk obviously about the finances. But it is making a difference. It’s 

making a difference in terms of bringing communities together so 

we can have jobs and protect our treasures. 

One last question for you, if I might, Chief. As you know the 

communities are very concerned about the impact with respect to 

the sequester and these payments that have already gone out to 

the counties. What can be done to make sure that these communities are in a position to get funding, even if we have to get the 

sequester part resolved? I saw some comments indicating that it 

would be taken from the RACs which concerned me simply because 

you made the case that the RACs are working so well. 

So what can we tell these rural communities that have just gotten pounded recently about the prospects of your working with 

them so we can make them whole on this situation with the budget? 

Mr. TIDWELL. Senator, we’re in the process of informing the 

States and the counties that the Secure Rural School payments are 

subject to sequester. Where we went out ahead and sent out the 

title, the Title I and the Title III payments back in December. 

We’re—for the States that receive Title II we’re going to provide 

them the option that if they want to just take the full sequestered 

amount out of the Title II payment which will reduce the amount 

of work that can be done, we’ll give them the option. 

I just regret that we’re in a position to have to inform the States 

that we’re going to have to, reduce the Title II. For the States that 

do not receive Title II funds we will have to work with them to 

get—to recover 5 percent of their payments. 

The CHAIRMAN. Chief, I know you didn’t dream up the sequester. 

I understand that. You’re playing a tough hand. 

If you’ll keep working with me and the committee, there’s just 

enormous concern in these rural areas that even that amount 

which in a lot of programs doesn’t sound like, you know, much. 

These are communities that are hurting so badly it really means 

a lot. I need to keep working with you on it. 

Let’s, at this point, if Senator Murkowski is acceptable we’ll go 

to Senator Lee and then we’ll go to Senator Murkowski. We’ll 

start—we’ve already started the second round. 

Senator Lee, welcome and appreciate all your interest on this. 

39 

Senator LEE. Thank you very much. Thanks to you and Senator 

Murkowski for accommodating me in this. 

Ms. Haze, I’ve got some questions regarding PILT. PILT is an 

important program for my State considering that the Federal Government owns about two-thirds of the land in Utah. As a result of 

that, States like mine depend pretty heavily on PILT payments. 

But it’s important for us to keep in mind a few factors including 

the fact that the cost of having a lot of Federal land in a particular 

county goes, I think, potentially far beyond the lost property tax 

revenue. 

It also, properly understood, has to include all the lost revenue 

that would come from economic development that might otherwise 

occur on that land. Whether that occurs in the form of traditional 

energy development or renewable energy development, certain 

kinds of recreational activities that may or may not occur on the 

land as a result of its Federal ownership or any other kind of economic activity. 

Now I understand that PILT was not intended to offset the lost 

revenue that might come from these lost economic development opportunities. I get that. But this context makes it important for us 

to consider those revenues when considering what PILT was designed to do. 

Now at the time PILT was enacted, at the time the program was 

created by Congress it was understood that the total funds received 

by most local governments under Federal lands to revenue and fee 

sharing statutes in existence at that time seldom approached the 

level of revenues that would be collected by ad valorem taxes, you 

know, the property taxes were these lands in private ownership. So 

judging from that language, from that legislative history from the 

understanding that was in place at the time PILT was created, the 

PILT program was, I believe, intended to make up that difference. 

With the goal being to make up for the lost revenues due to the 

presence of Federal land and not simply the compensation—not 

simply to provide compensation to counties for their out of pocket 

expenditures in terms of their maintenance of infrastructure, roads 

and other infrastructure on Federal land. 

So if that’s the case then shouldn’t payments under the PILT 

program be made at least to be roughly equivalent to what those 

counties might be receiving in ad valorem property taxes? 

Ms. HAZE. So I appreciate your question. 

I can only answer that the PILT act, the way that it’s constructed now, specifically defines per acre values and a sliding population scale to be used for the payments. When Congress enacted 

it in 1976 I’ve gone back and read some of the history around the 

long debates over it. I mean there were a lot of debates about the 

equivalency to local taxes and to the tax base. It’s not perfect by 

any stretch, but there was a lot of angst and agonizing about how 

to establish rates for the act. 

Senator LEE. You can certainly sympathize with those taxing jurisdictions and the plight that they incur because you concede, I assume, that in most, nearly all instances, the amount that they receive under PILT is a very small, small fraction of what they might 

otherwise receive if they were able to tax those lands, even if it was 

at the lowest rate, say the green belt rate. 

40 

Ms. HAZE. So I’ll say I think the next panel has a couple people 

who will be able to speak very clearly to the lack of equity across 

and how the payments impact individual counties. It varies because of the population factors. It varies because of the acreage, 

clearly. Then one of the very big variables is that the payments factor in a deduction for prior year revenue payments. 

So if there are large revenue payments then the PILT payment 

goes down. 

Senator LEE. Right. 

Now the Federal Government is, by far, the largest land owner 

in the United States. No one else comes close or even comes close 

to coming close. The Federal Government owns about 30 percent of 

the land mass in the United States. 

Most of that land is concentrated in the Western United States. 

Most of that is concentrated in just a small handful of States where 

the Federal Government owns a majority or in the case of my 

State, a very substantial majority of the land. Given the fact that 

most of that land is concentrated in just a few Western States, 

when we’re told over and over and over again as Westerners that 

hey, everyone benefits from Federal land ownership, don’t you 

think there ought to be some offset? 

If everyone in the United States benefits from Federal land ownership than shouldn’t those—isn’t it a little bit unfair to make 

those who reside in those few States pay for what everyone else 

benefits from? 

Ms. HAZE. I think I’m not the expert to comment on the fairness 

of it. Like I said, it’s not perfect. It is the way Congress constructed 

it. 

I think those are the—those are clearly the debates you’ll be having in reauthorization. 

Senator LEE. I understand Congress created it. I see my time is 

expired. I’ll just leave you with a parting thought. 

Keep in mind as the Federal land manager of the largest swath 

of Federal land in our country, as you manage that we’re already 

suffering because of the relative dearth of income that we have as 

a result of that Federal land ownership. There are things you can 

do to offset in some ways that absence of revenue in the way you 

manage it and what you permit and what you don’t permit. 

Thank you very much. 

Thank you, Chairman. 

The CHAIRMAN. Thank my colleague. 

Let me tell the witnesses what’s going to happen now. In addition to forestry being so important to the Oregon economy, international trade is as well, a real economic engine for our State. 

So Senator Cantwell is going to Chair the hearing for a bit so 

I can go down and make the case for expanding the opportunity to 

create more good paying jobs in trade. Then we’ll come back to forestry. 

So, Senator Cantwell, you have not even had your first round. If 

Senator Murkowski is agreeable you would now Chair and ask any 

questions you may have. Then Senator Murkowski and Senator 

Risch have not had a second round. 

41 

I appreciate the patience of both our colleagues and our witnesses. We are lucky to have Senator Cantwell step in now. I will 

return very shortly. 

Senator Cantwell, thank you. 

Senator CANTWELL. [presiding] Thank you, Mr. Chairman. 

Chairman, I was actually going to go to the next panel. So I don’t 

know if anybody has more questions for this panel. 

So, yes, Senator Murkowski. 

Senator MURKOWSKI. Thank you. 

I guess to the entire panel here. You’ve heard the frustration 

clearly here. You all each have said that there is support for reauthorization of Secure Rural Schools, support for PILT and appreciation as to why the need, why the necessity. 

I guess the question for you is we’ve been talking about some of 

the proposals that we have. I have suggested that if you’ve got a 

Federal Government that’s $16 and a half trillion in debt and we 

need other ways to find this reliable, steady funding stream that 

you’ve talked about, Chief. Let’s look to some. 

The State of Alaska has come up with what I think is a reasonable proposal in terms of State management. Others have, I think 

Senator Barrasso was very clear in saying assign this, turn the 

Federal lands over to the counties, to the States. Look for other operations. 

You’ve suggested that what we need to do is we need to harvest 

more, but 16.8 billion board feet is what it would take this year to 

match what is going out in Secure Rural Schools funding. Probably 

not going to get there from here today. 

So I guess the question to you is surely if you support these programs you’ve noodled over what some of the options might be and 

how we pay for it. How—what the Administration’s proposal is to 

pay for it? I guess an additional question would be are we going 

to see a legislative proposal contained within the budget when that 

comes out in the next month, I guess, or so? 

Can you tell me where your thought process is on what you 

might do to better provide for Secure Rural Schools and PILT? 

This is to you, Chief, Ms. Haze, Ms. Fennell? Go ahead. 

Mr. TIDWELL. Senator I understand the difficulty of finding the 

finances. Senator Baucus, expressed that in his remarks earlier. 

There are a lot of different ideas out there that you’ve presented. 

Senator Wyden has presented others. Mr. Barrasso. So there’s a 

lot of different ideas out there. 

So we are committed to work with the committee to be able to 

find ways to maybe move forward with some different ideas. 

Senator MURKOWSKI. Do any of those ideas rise to the top of the 

stack? Are there any that you look at and say, that’s a non starter? 

That would help us as a committee because we are looking for 

that longer term solution. Again, I think Senator Baucus doesn’t 

want to be in the position of year after year trying to figure out 

how we piece this together. How we rob Peter to pay Paul, to use 

Senator Barrasso’s expression here. 

Surely there must be something that you think is better than 

others? 

Mr. TIDWELL. You know I’d like to just get back to you on that. 

I think we can probably identify some things from the AdministraVerDate Nov 24 2008 14:04 Sep 09, 2013 Jkt 000000 PO 00000 Frm 00045 Fmt 6633 Sfmt 6602 G:\DOCS\82563.TXT WANDA
42 

tion’s view that are probably non starters so as not to spend time 

on some things like that. But I would like to just take the opportunity to be able to get back with the committee on some different 

ideas. 

Senator MURKOWSKI. Ms. Haze. 

Ms. HAZE. So I would—we’re not at liberty to talk about the 2014 

budget. But we can talk about the 2013 budget which included proposals to reauthorize both of these programs. Within the budget 

there were a number of offsetting ideas, revenue collecting ideas, 

some more challenging than others. 

So we could offer to go back and look at some of those and as 

the Chief suggested come back and have some more conversations. 

Senator MURKOWSKI. Ms. Fennell, you want to jump in? 

Ms. FENNELL. Thank you, Senator. 

We have not looked at the various options that are being proposed. Our work has principally looked most recently at the implementation and oversight of Title III of the Secure Rural School Act. 

So my comments are more specifically aligned with that. 

One lesson that I would take away from the work that we did 

is the importance of clarifying authorized uses for various funds, to 

limit confusion that exists amongst counties given how the counties 

are very tightly constrained with their current budgets. I would 

suggest that in terms of any changes to the law itself it would be 

important to consider clarity of terms to ensure that the authorized 

uses are clear to the counties that need to implement it. 

Senator MURKOWSKI. I think where we will probably go from 

here, what I certainly will suggest to the Chairman is that we do 

have a sit down with you, Chief, with folks over Department of Interior. I think there is a real effort to try to figure out a longer 

term solution and how we might construct that is going to require 

an effort that is collaborative. In order for us to make this work 

it’s going to have to work from, not only a bipartisan basis, but 

we’ve got to get folks on the West or on the East to understand 

why we have to do this in the West. I think the Administration 

needs to be part of these discussions as well. 

But I, for one, am weary, just weary of having to go back to constituents at home again who are looking at their communities and 

recognizing that from year to year they don’t really know what’s 

going to happen to them. Then you throw in just the calamity of 

sequester and declining budgets and then a lack of any clear, identifiable path on this. It’s not right. It’s not fair. 

So we’ve got a lot more work to do. Maybe when we’re sitting together quietly we can come up with some good ideas. So thank you 

for being here today. 

Thank you, Madame Chair. 

Senator CANTWELL. Thank you. 

Senator Risch. 

Senator RISCH. Madame Chairman, thank you. It’s twenty to 

noon and we got another panel to hear. So I’m going to yield my 

time back. 

Senator CANTWELL. Thank you, Senator Risch. 

Let’s call up—thank you all for being here to testify. I’m sure 

we’ll have some follow up questions for you. 

43 

Senator CANTWELL. But let’s move to the second panel that we 

have. 

I’d like to welcome them to the table. 

Paul Pearce, who is the President of the National Forest Counties and Schools Coalition. 

Mr. Ryan Yates, the National Association of Counties. 

Mr. Mark Haggerty, Headwaters Economics. 

Professor Jay O’Laughlin from the University of Idaho College of 

Natural Resources. 

I thank you all for coming today. I wanted to particularly thank 

you for your continued leadership on the County Payments program that includes the Secure Rural Schools and Payment in Lieu 

of Taxes. As you know these programs are critically important to 

the Pacific Northwest and across our country. 

I want to thank Paul Pearce for traveling across the country to 

testify today. He’s been a long time partner on the County Payments program. I certainly have called on him many times. 

His home of Skamania County in Southwest Washington exemplifies the needs for these payments. Almost 80 percent of 

Skamania County is in the Gifford Pinchot National Forest making 

it non-taxable by the county. Other large portions of land are also 

owned by State and timber companies. In total about 2 percent of 

the county remains eligible to be taxed a full value. 

Now someone might say why do you, you know, why do you care 

if so much is already in timber land? Skamania County is also a 

gateway across our State in the Columbia Gorge. It’s a source of 

major technology companies that are locating there as well as a 

huge tourism attraction. So Skamania County does need to operate. 

It does need revenue to operate. 

So the National Forests are key features across our State. Within 

5 national forests and the Mount St. Helens volcanic monument, 

the Forest Service manages nearly 9.3 million acres or 21.7 percent 

of our entire State. Because over a fifth of the State is excluded 

from the tax base as a Forest Service land, it becomes clear that 

the county payments are not only essential to counties, but also an 

obligation of the Federal Government. 

The Federal Government’s obligation extends beyond just the 

loss of tax base due to non-taxable Federal lands. These lands are 

also impose real cost on the counties. They include maintenance of 

roads, providing access, planning and managing forest fires and 

providing emergency services such as search and rescue operations. 

The Federal Government is obligation to compensate all these costs 

that many of our rural communities could not otherwise afford. The 

Federal Government also has the obligation to provide transitional 

assistance to these counties. 

So when abrupt changes to these programs have occurred I think 

our committee has worked in the past to extent and reform the 

county payments. I hope that we will make more direct connections 

between the obligations that the Federal Government has. How 

these payments are calculated and distributed. 

I believe that the formula must be simpler and more transparent. That it also should link directly to the all Federal Government obligations. That means that each and every variable in the 

44 

formula needs to have a direct link. These payments are too important to put to jeopardy or gainsmanship here in the Federal arena. 

The County Payment program has proven effective and responsive and it is essential to our nation. Without this vital revenue 

counties in Washington State would lose more than $35 million in 

irreplaceable funds that are so critical for these programs that I 

just mentioned. 

So I look forward to having all of you have your testimony in the 

record. I hope that we’ll give all our colleagues in Congress a clear 

understanding of these issues. 

Senator Murkowski, I didn’t know if you wanted to make any 

further statements before this panel? 

If not, let’s just go to the panel. We’ll start with you, Mr. Pearce 

and we’ll go right down the line. 

STATEMENT OF PAUL J. PEARCE, PRESIDENT, NATIONAL FOREST COUNTIES AND SCHOOLS COALITION, STEVENSON, WA 

Mr. PEARCE. Thank you very much, Senator Cantwell. It’s very 

nice to see you again, especially in my new role. 

Obviously Senator Murkowski and members of the committee, 

thank you very much for this opportunity to testify. 

Counties and schools in 41 States and Puerto Rico wish to thank 

you for your leadership. We also want to thank Senator Wyden specifically for his co-sponsorship of SRS, wherein he recognized the 

damage being done to forest dependent communities and has 

worked tirelessly on their behalf. 

I thank Senator Cantwell for her hard work on this. I remember 

several floor speeches that—where I sat and listened to someone 

really fight hard for counties. Thank you very much for that. 

Senator Murkowski for your work on forest health, second to 

none. 

We want to thank Senator Murray for her unending support of 

counties and schools including the Chairman’s mark this last week 

in the Senate budget for SRS and PILT. 

Congress passed the 1908 act, the 25 percent act which created 

a contract with the counties for revenue sharing. It was the first 

in the Nation. 

The Weeks Act of 1911 became the legislation for creating Eastern and Southern national forests including them in this same contract. The contract worked well into the late 18—or 1980s when 

court decisions endangered species listings and agency priorities 

and a general change in the priorities of the Nation dramatically 

reduced extraction activities on public lands including timber. 

In 1992 Congress created owl guarantee moneys for those communities hardest hit by the spotted owl listing. 

In 2000 Congress passed the Secure Rural Schools Act which authorized payments through 2006. 

In 2007 it’s been reauthorized 3 times up to this last year, 2012. 

We thank you very much for that. 

SRS Title I payments are direct payments to counties and 

schools. A handful of counties they’re used for county roads and 

schools. A handful of counties can use these funds to support libraries, public health, law enforcement and other services besides 

roads. 

45 

Dr. Eyler’s report which is attached, shows that a loss of SRS 

payments will result in a loss of $1.3 billion in sales, $178 million 

in realized tax revenue at the local, State and Federal level, over 

10,000 jobs, these would include 3,000 education jobs and 1,400 

jobs in counties and county road departments. 

My own county, Skamania County, is a county of 11,500 people. 

I was a commissioner there until this last—until just the beginning 

of this year. The last 2 years of actual 25 percent payments we 

made over $7 million per year. SRS in 2006 was approximately $6 

million. This past year our, the payment to the county, was $1.8 

million. If we were to lose this funding 2 of the 4 school districts 

in the county will in fact close. 

SRS Title II are moneys used for forest projects utilizing the Resource Advisory Committees, or the RACs. The amount of these 

funds are determined by county commissioners in each forest county between 8 and 20 percent of their counties share the State’s payments. This has been a highly successful program. 

We’ve heard earlier talk about the collaboration. These 

collaboratives actually work. In Sitka, Alaska RAC funds the 

science mentor program partnering high school students with Forest Service Fish and Game and the University of Alaska to collect 

and analyze data on the Tongass National Forest. 

In Louisiana on the Kisatchie National Forest RAC funds have 

been used to leverage other funds securing completion of road repair, environmental mitigation, safety challenges. 

In Oregon the Medford RAC restored a 3 mile section of Spencer 

Creek near Keno in order to revive the creek’s natural habitat and 

increase the population of native species. 

So this is actual work being done on the forest using these funds 

and the RACs. 

Title III funds are reimbursement for emergency services, community wildfire planning and fire wise implementation. 

Examples of 2 searches this last year include a hiker, who fell 

into the Mount St. Helens crater, eventually costing local, State 

and Federal agencies over $150,000. 

The second involved a 2-week search for a young woman lost in 

the Columbia River gorge costing local, State and Federal agencies 

$550,000. 

These are 2 examples in one forested area. Without Title III the 

counties could not absorb these costs. 

In closing, reference to SRS reauthorizing we would respectfully 

request that new language state, ‘‘All counties opting to receive a 

portion of the State payment will receive an amount equal to their 

Fiscal Year 2010 payment which was received in January 2011.’’ 

Further, we agree with the Chairman, who said recently, a short 

term extension of SRS is not a long term solution for these communities. We in fact pledge to work to enact legislation that provides 

bridge funding to forested counties and school districts and believe 

that long term economic vitality must include active, sustainable 

forest management to achieve resilient forest lands. 

Thank you very much for your time. I’ll answer whatever questions you might have. 

[The prepared statement of Mr. Pearce follows:] 

46 

PREPARED STATEMENT OF PAUL J. PEARCE, PRESIDENT NATIONAL FOREST COUNTIES

AND SCHOOLS COALITION, STEVENSON, WA 

Chairman Wyden, Ranking Member Murkowski, members of the committee and 

guests. Thank you for the opportunity to appear before you today on this topic of 

intense interest and concern to the National Forest Counties and Schools. 

Before I begin and on behalf of Counties and Schools, from Alaska to Texas...

Washington to Florida . . . in 41 states and Puerto Rico, I wish to thank Senator 

Wyden for his continued leadership. As the original co-sponsor of the Secure Rural 

Schools legislation he recognized the damage being done to these forest dependent 

communities and has tirelessly continued these efforts through a multitude of reauthorization successes. 

I additionally wish to thank Senator Murkowski for her hard work over the years 

on SRS and forest health issues. 

And we wish to thank Senator Murray, Budget Committee Chair, who has always 

supported Counties and Schools, including as a Chairman’s mark both SRS and 

PILT as deficit neutral programs in the current Senate budget. 

Seven hundred twenty nine (729) or 24 percent, of the nation’s three thousand 

sixty nine (3069) counties contain national forests, some equaling up to 90 percent 

of their land mass. The 154 National Forests cover an area of 193 million acres 

across this country. These counties are responsible for the infrastructure including 

roads, schools, and emergency services that allow those forests to be used, and gateway communities to survive. Thereby fulfilling the promise of Gifford Pinchot; ‘‘that 

no community would suffer for housing National Forests’’’. 

In 1891 the Congress created Forest Reserve authority through the General Revision Act. By 1905 those reserves had grown to more than 80 million acres. President 

Roosevelt remade the U.S. Bureau of Forestry into the USDA Forest Service with 

Gifford Pinchot as the first chief forester. That began a three year process which 

resulted in Congress transferring all forest reserves to the new Forest Service. 

The 1908 Act also concluded the conversation between the Counties containing 

these forests, Congress and the Administration. The contract was for revenue sharing, the first in the nation, of a share of all revenues generated on these lands. This 

clearly made sense at the time as the growing nation extracted renewable resources 

for the good of all. 

The Weeks act was signed into law on March 1st, 1911 becoming the mechanism 

for the creation of our Eastern and Southern National forests, including them in the 

contract for revenue sharing. The contract worked well for nearly a century, into 

the late 1980’s, when court decisions, endangered species listings, such as the spotted owl, agency priorities and a general change in the priorities of the nation dramatically reduced extraction activities on public lands including timber. 

In 1992 Congress created Owl Guarantee monies for those counties hardest hit 

by the northern spotted owl endangered species listing. 

In 2000 Congress passed the Secure Rural School and Communities Self Determination Act which authorized payments through 2006. These payments were a life 

saver for our forest counties. In 2007 Congress reauthorized the act for one year and 

then in 2008 reauthorized it for an additional four years through 2011. This reauthorization could not have come at a more appropriate time and clearly recognized 

the ongoing contract between these forest Counties and the Federal government— 

and what a tremendous success it has been. 

And as you all aware Congress reauthorized the program for an additional year 

in 2012. 

The Act has three Titles, each of which carries clearly defined responsibilities. 

TITLE I

These are direct payments for county roads and schools. In a handful of counties 

these funds are available as general fund dollars supporting among other services 

libraries, public health and law enforcement. Each state determines the division of 

these funds between Counties and Schools based on the original 1908 revenue sharing law. This money equates almost exclusively in these communities to jobs; county 

road department and school employees. Without this symbiotic relationship our children would not be able to get to school, often over large distances, nor in many cases 

would they necessarily have schools to attend or teachers to instruct them within 

their own communities. 

These gateway communities to our national forests would simply not exist without 

this infrastructure. These County roads are how the vast population that recreates 

on these millions of acres travel to and from them. In fact, many roads inside the 

National Forests are owned or maintained by Counties. 

47 

Also, we need to explore the impact SRS has on rural road maintenance and the 

far-reaching impacts to health and safety issues. According to the Fatality Analysis 

Reporting System (FARS), every year nearly 25,000 people die in rural road crashes 

(accounting for 58 percent of total road fatalities) across this nation. Traffic crashes 

are assessed to be the one of the nation’s most costly health problems. 

The fatalities and injuries associated with rural auto accidents come as no surprise to those of us who represent rural communities. The Department of Transportation documents, ‘‘8.4 million lane-miles of roads in the United States, with over 

6 million of these rural.’’ Rural areas face numerous unique highway safety challenges. Crashes usually occur at higher speeds than accidents in urban areas, and 

due to remote locations, it often takes longer for emergency assistance to arrive at 

the scene. 

Any abandonment of maintenance of rural roads will compound existing infrastructure problems and greatly contribute to future economic, health and social 

problems including an increased level in rural road fatalities. 

According to Dr. Eyler, Economic Forensics and Analytics, (report attached) the 

loss of Secure Rural Schools and Community Self-Determination Act payments, 

averaged over the FY 2008 to FY 2021 period, $1.296 billion in sales revenues, government at all levels losing over $178 million in tax receipts, and over 10,400 people 

losing their job. These job losses include over 3000 jobs in education and over 1400 

in County Roads. 

Loss of one family wage job in these rural communities often results in the entire 

family having to leave the community to find work. This results in the spouse quitting their job, children being withdrawn from school, lowering enrollment causing 

even greater economic hardship and job loss. 

According to the Sierra Institute report (attached) on the 20 year cumulative impacts to the Counties of Washington, Oregon and California impacted by Northern 

spotted Owl critical habitat there are far reaching impacts to these communities; 

Case studies, two in California and three each in Oregon and Washington were 

conducted to better understand socioeconomic changes and current socioeconomic 

conditions ‘‘on the ground.’’ Some key findings from these cases include in California: 

• Siskiyou County lost all its saw mills, has seen its population age, and has lost 

eight schools, challenging the county to provide for the remaining students and 

reverse the loss of young families. 

• In Humboldt County there are powerfully suggestive relationships between mill 

closures and student impoverishment as reflected in Free and Reduced Price 

Meal (FRPM) enrollment rates. This county has suffered dramatic declines in 

its goods- producing sector, with the manufacturing subsector losing 65 percent 

of its 1990 jobs by 2011. 

In Oregon 

• Tillamook County has 24 percent of its children living in poverty, and 39 percent living in single- parent households, almost double the national average. 

• Douglas County has 31 percent of its children living in poverty—twice the national average and 34 percent in single-parent households. 

• In both of these counties, but especially in Douglas County, there are significant 

declines in manufacturing jobs, particularly since 2008. Free and Reduced 

Priced Meals participation rates increased over the last four years as well, some 

schools by almost 20 percent. 

• Josephine County, over the last several decades saw forestry and logging jobs 

decline by 80 percent. Wages have stagnated and are two-thirds of the Oregon 

average. The county now ranks near the bottom of Oregon counties in health 

indicators and FRPM participation rate for the county is 70 percent. 

In Washington 

• Grays Harbor County Natural Resources and Mining jobs declined by over 50 

percent and Forestry and logging jobs by just under 70 percent from 1990 to 

2010. The county is near the bottom of the health rankings for counties in the 

state. FRPM participation rates for the county exceed 60 percent, with one 

school district at 92 percent in 2011 and another at 88 percent; the lowest rate 

is 41 percent, reflecting the considerable differences across the county. 

• Skamania County has 90 percent of its land in federal ownership, and 59 percent of the land in the county is designated as critical habitat area. Natural resource and manufacturing jobs have declined by over 50 percent over the last 

20 years. 

48 

Secure Rural School and Community Self- Determination Act (SRS) payments to 

replace lost timber receipts to counties and schools have been historically important. 

In California, on average, Humboldt County Schools received just under 5 percent 

of their funding through SRS; Siskiyou received on average just under 7 percent; 

and Trinity County received 15 percent. In Oregon, U.S. Forest Service SRS funding 

has provided on average 23 percent of county road budgets, with six counties receiving over 40 percentof their total road budget. Though dramatically lower in 2011, 

SRS payments comprised 40 percent or more of Skamania County general fund 

throughout the 2000s. In Oregon ., the Bureau of Land Management contribution 

to county budgets has been significant. In Douglas County in 2009 it comprised 17 

percent of total county revenues and in Jackson County; it makes up 7 percent of 

total county revenues. 

We wish to thank Congress for having continued these payments in lieu of revenue sharing which have resulted in ositive economic benefit to our communities 

and schools. Without them the economic damage would clearly be significantly 

worse. 

TITLE II

These are monies specifically to be used for projects on or of benefit to the forest 

itself utilizing one of the greatest successes of this entire act, the Resource Advisory 

Committees, or as they are known RAC’s. 

Membership on the 15-member RAC is balanced to reflect the array of interests 

and users of Public Lands: 

• Five members represent commodity interests such as grazing permittees, commercial timber, energy and mining, developed recreation and/or off-highway vehicle groups, and transportation & rights-of-way. • Five members represent conservation interests such as environmental organizations, historic & cultural interests, conservation, and dispersed recreation. • Five members represent community interests such as elected officials, Indian 

Tribes, State resource agencies, academicians involved in natural sciences, and 

the public-at-large. 

For a project to be approved it must have a majority of votes from each of the 

five member groups. RAC’s are the most successful nationwide collaborative effort 

today within the forest system. Well over 6000 projects have been implemented on 

the forests without a single appeal. These projects occur in the Southern, Lake, 

Intermountain West, and Western states. Many of the RAC’s actually meet to collaborate successfully on projects outside of the use of Title II monies. 

In Alaska, Sitka is a small rural community that is completely surrounded by the 

Tongass National Forest. One of the RAC projects is the Science Mentor Program. 

This program partners high school students with land and resource managers from 

the US Forest Service, State of Alaska Department of Fish and Game, and University of Alaska Researchers, to help collect and analyze important research and monitoring data on natural resources in the lands and waters of the Tongass National 

Forest. Outputs of this project produce publishable scientific research materials that 

also serve to help guide management activities. Additionally, the project gives students scientific research experience and prepares them for University pursuits and 

future careers as land managers and scientists. The project has already inspired 

several young women to pursue science careers. In addition to the benefits to future 

leaders, the projects gives resource managers an opportunity to engage the larger 

public on the research and management topics that they are working on and educate the larger public on public lands and natural resource management issues. 

In SW Idaho a project the RAC funding assisted with concerned access to private 

property and public land which required fording a sensitive stream where endangered Salmon spawned. This project was too costly for individual agencies to fund. 

Using the RAC process and Title II funding the project brought together the County, 

Forest Service, the Nez Perce Tribe and local landowners to pool all their resources 

to build a bridge to eliminate the impacts to the Salmon habitat and provided the 

needed access to the private property and the public lands beyond. 

In Socorro County, New Mexico they were able to improve drainage and chip seal 

Hop Canyon Road in the Magdalena area (all the way to the Fire Station). They 

used the $226K in Title II funds for materials and provided all equipment and labor 

through the County so they could complete more of the road. Without these improvements, the road would have continued to wash out (they have a FEMA disaster claim on this road due to flooding), essentially cutting off residents. For the 

next project, they will use the $51K in available Title II money to repair and reseal 

Water Canyon Road. This is so important; they even negotiated an MOU with New 

49 

Mexico Tech to pay for some of the materials as the road leads to the MRO observatory and is a high-use campground 

In Washington on the Gifford Pinchot there is the Forest Youth Success program 

which was funded from Title III under the 2000 Act and is now funded through 

Title II. As collaboration between the County, Schools and Forest Service this program puts up to 40 high school age kids to work on crews in the forest on restoration projects throughout the summer. Recently Washington State University conducted a survey of the past participants of the program and found some very interesting initial data. Some of the reported outcomes: 

• 100 percent said FYS increased their life skills such as team work and leadership. • 97 percent said they learned important workplace skills such as punctuality and 

responsibility. • 92 percent said they increased their use of financial resources. • 69 percent said FYS influenced the shaping of their career choices. • 47 percent said FYS shaped their college degree goals. 

In Louisiana, on the Kisatchie National Forest, RAC monies have been used to 

leverage local funds and secure completion of road repair, environmental issues, and 

safety challenges. Monies have been used to protect endangered species, protect 

water quality, hard surface roads, and provide safe access to public recreational 

areas. Support from the public and private sectors have contributed greatly to the 

efficient and judicious use of federal monies. 

In Oregon the Medford RAC approved funding that restored a three-mile section 

of Spencer Creek near Keno, Oregon. Over 50 log structures, created from 220 cull 

logs salvaged from local timber sales, were placed in the creek to reestablish its 

original character. Additionally, the project plans to restore the creek’s natural habitat and increase the population and distribution of native fish and amphibians, including the Klamath River redband trout, Klamath small-scale sucker, lamprey, and 

Pacific giant salamander. 

TITLE III

Referred to as County Funds, in the original act the purpose of these funds included emergency services on the forest, fire planning, community service work 

camps, easement purchases, forest related after school programs and planning efforts to reduce or mitigate the impact of development on adjacent Federal lands. 

The 2008 reauthorization removed all categories except emergency services and 

community wildfire planning and implementation. 

In terms of search and rescue I will cover just two examples. On the 1.2 million 

acre Gifford Pinchot National Forest which includes the Mt St Helens National 

Monument and the 80,000 acres of the Columbia Gorge Scenic Area. In this area, 

close to the Portland metropolitan area, search and rescue events are frequent. The 

volunteer searchers are not reimbursed except for their mileage. Yet the average 

search costs are in the several thousand dollar range for those searches lasting just 

a few days and not requiring aircraft. That being said, in 2011 alone the following 

searches resulted in the hundreds of thousands of dollars. 

The first was a hiker who fell into the Mount St Helens crater. The total local, 

state and federal cost reached over $150,000. 

The second involved a two week search for a young woman who was lost in the 

Columbia River Gorge. This incident eventually cost local, state and federal taxpayers $550,000. 

Sadly, both cases ended up being recoveries rather than rescues. Without Title III 

and assistance from both state and federal resources our counties could not afford 

these costs. Multiply these examples across the US Forest Service system and you 

begin to understand the immensity of cost associated with these activities which fall 

to the Counties to manage. 

CLOSING RECOMMENDATIONS

On reauthorization of the act we respectfully suggest that new language simply 

state; All counties opting to receive a portion of the state payment will receive an 

amount equal to their Fiscal Year 2010 payment, which was received in January 

2011. This would return the program to a more equitable basis for all Counties and 

Schools, with a minimal additional cost and would replace the current formula 

which is cumbersome and impossible for a lay person to interpret. 

As an example Skamania County, my home, in Washington received our last 25 

percent payment in 1992 of $7 million dollars each to the County and the Schools. 

Our SRS payment in 2006 was a little less than $6 million each. Our 2012 payment 

50 

* The mission statement and Principles for Legislation has been retained in committee file. 

just received was $1.8 million each. The 2010 SRS payment was $3.8 million, a substantial reduction in its own right. 

Further, we agree with the Chairman who said in a recent article ‘‘A short-term 

extension [of SRS] is not a long-term solution for these communities. We’ve got to 

get our people back to work in the woods, for example. We have got to increase the 

number of jobs in resource-dependent communities where there’s federal lands and 

federal water. We believe that can be done consistent with protecting our environmental values.’’ 

Our mission statement* and Principles for Legislation (attached) echoes that sentiment; Long term economic vitality must include legislation requiring active sustainable forest management to achieve resilient forest lands managed by the US 

Forest Service and . the Bureau of Land Management. 

Additionally, on the issue of reauthorization of Stewardship Contracting we feel 

it is extremely important that a conversation occur between Congress and the Counties as to its impact on the revenue sharing contract between us before it is permanently reauthorized. 

Thank you once again for the opportunity to speak about the success of the Secure 

Rural Schools and Community Self-Determination Act. 

Senator CANTWELL. Thank you, Mr. Pearce. 

Mr. Yates, thank you for being here. 

STATEMENT OF RYAN R. YATES, ASSOCIATE LEGISLATIVE DIRECTOR, LEGISLATIVE AFFAIRS DEPARTMENT, NATIONAL 

ASSOCIATION OF COUNTIES 

Mr. YATES. Thank you, Senator Cantwell, Ranking Member Murkowski and members of the committee. 

Thank you for the opportunity to testify on behalf of the Nation’s 

3,069 counties, parishes, boroughs to provide insight on the Payment in Lieu of Taxes program. For more than 30 years the PILT 

program has provided payments to counties and other local governments to offset losses in tax revenues due the presence of substantial acreage of Federal land within their jurisdictions. Since local 

governments are unable to tax the property values or products derived from Federal lands these payments are essential to support 

local government services. 

Congress passed the Payment in Lieu of Taxes act in 1976. The 

impetus for its passage was the passage of FLPMA which specifically established the disposal of public lands would largely cease. 

In lieu of a future in which lands could continue to pass from Federal ownership to private ownership, Congress opted to reimburse 

local governments for land that would remain in Federal Government in lieu of paying direct property taxes. 

Historically payments were limited to an amount appropriated 

by Congress. Initially authorized at $100 million, that amount was 

appropriated annually during the first decade of the act. Following 

strong pressure from NACO and counties the act was amended in 

1994 to provide for a more equitable authorization level in light of 

the disparities that existed between property values and current 

PILT payments. The law, as amended, using the Consumer Price 

Index to adjust the population limitation and the per dollar acre 

amounts used to calculate payments. 

From 1994 to 2007 the authorized level and the appropriated 

level began to diverge. Since the authorization crept up that 

amount equal to the CPI each year while the appropriations stayed 

roughly constant. 

51 

In 2008 Congress enacted the Emergency Economic Stabilization 

Act of 2008 which authorized counties to receive their full PILT entitlement for Fiscal Years 2008 through Fiscal Year 2012. All mandatory funding minus a 5.1 percent sequestration cut will be available for counties through the enactment of MAP21 last year which 

provided 1 year of an additional mandatory funding for Fiscal Year 

2013. 

Last week Senate Budget Committee Chairwoman Patty Murray 

made continued funding of the PILT program and the reauthorization of SRS a priority in a proposed Committee Budget for Fiscal 

Year 2014. The proposed budget resolution included a deficit neutral reserve fund for rural counties and schools to provide for the 

reauthorization of SRS and/or changes to PILT. They could believe 

several policy modifications could be explored by Congress to identify ways to make payments to counties more equitable, a range of 

possible alternatives could be considered to more evenly distribute 

PILT funds to counties to provide greater budget certainty. 

Over time some programmatic anomalies have become evident. 

Among these are the non inclusion of Federal acquisitions, substantially reduced payments to jurisdictions with large Federal estates 

and the inability of current formulas to account for externally induced costs resulting from Federal land use by persons originating 

from outside of the county. 

First, the use of population caps may not be the most appropriate 

method for providing fair allocation. Depending on the current 

county population the PILT payments are capped at predetermined 

levels. The use of population caps fails to accurately demonstrate 

the actual population of people being serviced by the county. 

For example, counties with large acreages of Federal land and 

small populations are often gateway communities to recreation 

areas in the national forest and national park system. County governments are required by law to provide services to people regardless of their place of residence. 

An additional formula inequity has occurred due to the formulas 

used in prior year payments. Revenue sharing payments identified 

as prior year payments provide funding to county governments 

such as the Mineral Leasing act and Secure Rural Schools payments. However payments from these programs reduce the amount 

of PILT funding to many resource dependent counties. The Federal 

Government should not reduce its tax obligation to local governments solely because other land management revenue agreements 

between—because of land management revenue agreements between governments. 

PILT is not only an important element to county funding, the 

fact that it is indexed to inflation and is paid to counties for general purposes is critically important to retaining its character as a 

property tax payment. NACO believes this formula should retain 

its basic character. 

Some have suggested the consolidation of PILT with revenue 

sharing programs such as SRS. Comparing SRS and PILT is like 

comparing apples and oranges. 

The first being a revenue sharing program based on resource extraction, the latter being based on Federal land ownership and loss 

of property taxes to local governments. Any consolidation of these 

52 

2 or other would be disastrous to Federal land counties and ultimately politicize and otherwise apolitical and straight forward Federal program. While Congress make seek to fund both SRS and 

PILT on the same legislative vehicle, we would oppose any effort 

to consolidate PILT with natural resource based revenue sharing 

programs. 

NACO appreciates the opportunity to provide testimony before 

the committee. I look forward to working with members of the committee and staff to develop and pass legislation that will continue 

the historic partnership between Federal and county governments 

by extending continued mandatory funding for the Payment in Lieu 

of Taxes for Fiscal Year 2014 and beyond. 

This concludes my testimony. Be happy to answer any questions. 

Thank you. 

[The prepared statement of Mr. Yates follows:] 

PREPARED STATEMENT OF RYAN R. YATES, ASSOCIATE LEGISLATIVE DIRECTOR, 

LEGISLATIVE AFFAIRS DEPARTMENT NATIONAL ASSOCIATION OF COUNTIES

Chairman Wyden, Ranking Member Murkowski, and members of the committee. 

Thank you for the opportunity to testify on behalf of the Nation’s 3,069 counties, 

to provide insight on the Payment in Lieu of Taxes (PILT) program. 

For more than 30 years, the PILT program has provided payments to counties 

and other local governments to offset losses in tax revenues due to the presence of 

substantial acreage of federal land in their jurisdictions. Since local governments 

are unable to tax the property values or products derived from federal lands, these 

payments are essential to support essential government services (mandated by law) 

such as education, first responders, transportation infrastructure, law enforcement 

and healthcare in nearly 2,000 counties in 49 states, the District of Columbia, 

Guam, Puerto Rico, and the U.S. Virgin Islands. 

This testimony will provide a historical overview of the PILT program, provide 

context to programmatic changes that (if enacted by Congress) could lead to a more 

equitable distribution of PILT funds, and lastly address the current funding situation and requirements for future payments. 

HISTORY 

In 1954, elected county officials from several western states joined together to develop a regional coalition of counties called the Interstate Association of Public Land 

Counties-an organization that would ultimately evolve into the Western Interstate 

Region of the National Association of Counties. The primary purpose of the organization was to educate policy makers in Washington, DC and advocate for Federal 

payments to counties in lieu of lost property tax revenue due to the presence of the 

vast Federal estate. 

The organization grew and incorporated membership from counties in the fifteen 

western states and enlisted support from other public land counties in other regions 

of the United States through what was then the National Association of County Officials. After several years of growing pressure from county officials nationwide, the 

94th Congress passed the Payment in Lieu of Taxes Act (PL 94-565). The PILT Act 

was codified in Chapter 69 of Title 31 of the United State Code. Applicable regulations are in Subpart 1881, Title 43 of the Code of Federal Regulations. 

The impetus for its passage in 1976 was the passage of the Federal Land Policy 

and Management Act (FLPMA), which specifically established that disposal of public lands would largely cease. In lieu of a future in which lands could continue to 

pass from Federal ownership to private ownership (as provided through the Homestead Act), Congress opted to reimburse local governments for land that would remain in Federal ownership ‘‘in lieu’’ of paying direct property taxes. 

Congress established national formulas which took into account population, existing revenue-sharing payments for resources harvested or extracted from public 

lands, and base acreage of the Federal estate within the jurisdiction. With a few 

exceptions in New England and Wisconsin, states determined that counties were the 

jurisdictions that would receive payments. 

Local governments (usually counties) which provide services such as public safety, 

infrastructure, housing, social services and transportation and have non taxed federal land within their jurisdiction, are eligible for annual payments. 

53 

Payments are made directly to the counties unless the state government concerned chooses to receive the payments and, in turn, pass the money on to other 

smaller governmental units such as a township or city. (Wisconsin is the only state 

currently employing this option) 

Historically, payments were limited to an amount appropriated by Congress. Initially authorized at $100,000,000, that amount was appropriated annually during 

the first decade of the Act. During the 1980s there were attempts to zero out the 

amount in budgets, but Congress consistently restored the funds to the authorized 

level, such that the minimum amount was available each year. 

Following strong pressure from NACo and public lands counties nationwide, the 

Act was amended in 1994 to provide for a more equitable authorization level in light 

of disparities that existed between property values and current PILT payments. The 

law as amended, uses the consumer price index (CPI) to adjust the population limitation and the per acre dollar amounts used to calculate alternative ‘‘A’’ and ‘‘B’’ 

under Section 6902. However, an individual county’s payment from one year to the 

next may not necessarily increase since the total amount of money available under 

the PILT program is set by Congress each year in the Department of the Interior 

and Related Agencies Appropriations Bill. Payments also vary with changes in 

‘‘prior year’’ payments. 

From 1994 on, the authorized level and the appropriated level began to diverge, 

since the authorization crept up by an amount equal to the CPI each year, while 

appropriations stayed almost constant. Initial payments were set at $0.75/acre (Alternative A) and $0.10/acre (Alternative B). 

While most enabling acts set an authorized funding level, PILT is one of the few 

Federal programs which have no defined expiration and a ‘‘floating’’ authorizationin which the authorized level flows directly from a summation of each county’s indexed maximum payment level. Since the 1994 Act indexed individual payments, 

authorization levels have grown annually from roughly $100 million to over $393 

million (FY2012). 

The table below shows the national levels of authorization and appropriation since 

1981. There was a large increase in FY 2001, and steady increases until FY 2006. 

In FY 2008, the U.S. Department of the Interior (DOI) submitted two payments-the 

first payment in June was fixed at the FY 2007 level by Continuing Resolution (P.L. 

110-5), less a 1.6 percent rescission. The second payment was paid following the 

signing of P.L. 110-343-which modified the PILT program from a discretionary program (subject to annual appropriations) to a fully funded mandatory entitlement 

program. PILT was fully funded from FY 2008 to FY 2012. 

54 


yate1.eps

Fiscal AltA Alt B Authorization level Appropriation level Appropriations 

Year payment payment (full funding) adjustment 

per acre per acre 

FY 1981 $0.75 $0.10 N/A $103,978,313 N/A 

FY 1982 $0.75 $0.10 N/A $95,482,034 N/A 

FY 1983 $0.75 $0.10 N/A $95,986,754 N/A 

FY 1984 $0.75 $0.10 N/A $104,636,368 N/A 

FY 1985 $0.75 $0.10 N/A $102,781,455 N/A 

FY 1986 $0.75 $0.10 N/A $99,827,971 N/A 

FY 1987 $0.75 $0.10 N/A MISSING DATA N/A 

FY 1988 $0.75 $0.10 N/A $104,073,629 N/A 

FY 1989 $0.75 $0.10 N/A $103,854,065 N/A 

FY 1990 $0.75 $0.10 N/A $102,761,372 N/A 

FY 1991 $0.75 $0.10 N/A $100,092,381 N/A 

FY 1992 $0.75 $0.10 N/A $99,398,485 N/A 

FY 1993 $0:75 $0.10 N/A $103,205,555 N/A 

FY 1994 $0.75 $0.10 N/A $99,333,194 N/A 

FY 1995 $0.93 $0.12 $127,960,355.00 $100,333,915 0.78 

FY 1996 $1.16 $0.16 $162,518,887.00 $113,099,999 0.70 

FY 1997 $1.36 $0.18 $212,021,988.00 $113,072,000 0.53 

FY 1998 $1.59 $0.22 $257,943,500.00 $118,824,327 0.46 

FY 1999 $1.82 $0.24 $301,182,357.00 $124,580,977 0.41 

FY 2000 $1.87 $0.25 $314,912,098 $133,986,821 0.42 

FY 2001 $1.92 $0.26 $336,040,296 $199,160,880 0.59 

FY 2002 $1.99 $0.27 . $350,851,795 $209,364,595 0.60 

FY 2003 $2.02 $0.27 $324,197,726 $218,172,589 0.67 

FY 2004 $2.06 $0.28 $331,303,522 $224,301,697 0.68 

FY 2005 $2.09 $0.29 $331,971,069 $226,804,730 0.68 

FY 2006 $2.15 $0.30 $344.356.399 5232,527,874 0.67 

FY 2008 $2.29 $0.32 $367,226,525 N/A N/A 

FY 2009 $2.37 $0.33 $382,047,942 N/A N/A 

FY 2010 $2.40 $0.33 $358,078,641 N/A N/A 

FY 2011 $2.42 $0.33 $375,158,254 N/A N/A 

FY 2012 $2.47 $0.34 $393,044,454 N/A N/A 
55 

HOW ARE PAYMENTS CALCULATED 

Payments under each section of the Act are calculated as follows: 

Section 6902 payments 

Alternative A 

$2.47 (in fiscal year 2012) times the number of acres of qualified federal land in 

the county, reduced by the amount of funds received by the county in the prior fiscal 

year under certain other federal programs. 

($2.47 X [number of acres of qualified federal land])-[prior year funds received] 

OR

Alternative B 

Thirty four cents (in fiscal year 2012) times the number of acres of qualified federal land in the county, with no deduction for prior year payments. 

$0.34 X [NUMBER OF QUALIFIED ACRES]

Payments under either alternative are subject to population payment limitations. 

Section 6904 and 6905 payments— 

Payments on Federal lands acquired after December 30, 1970 as additions to 

lands in the National Park System or National Forest Wilderness Areas (Section 

6904) and payments on Federal lands in the Redwood National Park or lands acquired in the Lake Tahoe Basin near Lake Tahoe under the Act of December 23, 

1980 (Section 6905) are computed by taking one percent of the fair market value 

of the purchased land and comparing the results to the amount of property taxes 

paid on the land in the year prior to federal acquisition. The payment to the county 

is the lesser of the two. 

Section 6904 Payments are made for a period of five years following each acquisition. 

Section 6905 Payments are made each year from the date the land was purchased 

by the federal government until an amount equal to 5 percent of the fair market 

value at the time of acquisition is fully paid. However, the yearly payment may not 

exceed the lesser of one percent of the fair market value or the property taxes assessed prior to federal acquisition. 

DEFINITIONS 

Federal entitlement acreage 

All Federally held lands in all States, Commonwealths and Territories are counted with the exception of those lands that are part of Department of Defense installations and withdrawals. Nationally the following lands are counted: 

a. All land administered by the United States Forest Service 

b. All land administered by the National Park Service 

c. All land administered by the Bureau of Land Management 

d. All land withdrawn from public lands administered as part of the National 

Wildlife Refuge System (acquired land is not included) 

e. All dredge and flood control land administered by the Corps of Engineers 

f. Project lands withdrawn and administered by the Bureau of Reclamation 

g. Lands in Colorado acquired after Dec. 31, 1981 to expand Ft. Carson 

h. Land on which are located semi-active or inactive Army installations for 

‘‘use for mobilization and for reserve component training’’ 

i. Land in Utah acquired for the inter-basin water transfer (URC land) project 

Prior Year Payments 

Prior year payments are payments to local governments under programs other 

than PILT during the previous fiscal year. These payments include those made 

under: 

a. the Refuge Revenue Sharing Fund, 

b. the National Forest Fund (‘‘25% Fund’’) 

c. the Taylor Grazing Act, 

d. the Mineral Leasing Act for acquired lands, 

e. the Federal Power Act, 

f. Titles I and III of the Secure Rural Schools and Community Self-Determination Act. 

56 

The PILT Act requires each state to report these payments to the U.S. Department of the Interior each year. 

DISBURSEMENTS 

In 2010, DOI announced a decision to delay the annual PILT payments. This decision caused widespread panic and confusion for counties nationwide as local governments have historically received annual PILT payments in June of each year and 

plan their budgets accordingly. The DOI last minute decision to delay payments 

without providing any notice was problematic, and placed countless public lands 

counties in difficult financial hardship. 

Many counties begin their fiscal year July 1 and rely on the June PILT payment 

to be available as net working capital available to the county general fund. For example, in the state of Oregon, property taxes are primarily received in November. 

The PILT payment being received in June allows for adequate operating funds to 

provide services to the community until the tax revenue flows again. In counties 

that are heavily encumbered by Federal lands, the PILT payment represents a sizeable percentage of the counties’ beginning cash balance. 

Another problem created by the DOI decision to delay payments has to do with 

violating individual state budget laws. In a number of states, counties operate on 

a cash basis, which requires posting of revenue once it is received. In counties whose 

fiscal year ends June 30, without the PILT payment, those counties could be in violation of state budget law. 

NACo and a bipartisan list of United States Senators and members of the House 

of Representatives requested that Interior Secretary Salazar take every effort to disburse payments to counties prior to June 30, 2010 in order to avert substantial financial distress in public lands counties across the nation. 

Ultimately, the DOI resolved the problem in time and released the payments in 

late June, 2010. In light of the payment disbursement conflict, Senators John Ensign (R-NV), Tom Udall (D-NM), and Mark Begich (D-AK) introduced Payment in 

Lieu of Taxes Amendments Act of 2010 (S. 3730). The legislation would require DOI 

to issue payments to counties not later than May 1 of each fiscal year. While the 

legislation was not enacted, the DOI received a very strong message from Congress 

and NACo that payments need to be made in a timely fashion. 

STATUS QUO 

On October 3, 2008, Congress enacted the Emergency Economic Stabilization Act 

of 2008 (PL 110-343) which authorized counties to receive their full PILT entitlement from FY 2008 through FY 2012. Until the passage of the EESA, appropriation 

levels had never reached authorized levels. Counties received payments totaling 

$393.4 million in FY 2012. Full mandatory funding for FY 2013 (minus a 5.1 percent sequestration cut) will be available for counties through the enactment of the 

Moving Ahead for Progress in the 21st Century Act (P.L. 112-141) last year. 

Currently, the Department of the Interior has one remaining payment that will 

be disbursed in June 2013. Congress will be required to act in order to maintain 

mandatory funding for fiscal years FY 2014 and beyond. Currently, no legislation 

has been introduced in the 113th Congress to provide continued funding for the 

PILT program. In the 112th Congress, many members of the Senate Energy and 

Natural Resources Committee including Chairman Ron Wyden (D-OR) and Ranking 

Member Lisa Murkowski (R-AK) sponsored the County Payments Reauthorization 

Act of 2011 (S. 1692) which would have provided secure mandatory funding for PILT 

through FY 2017. NACo appreciates the longstanding commitment from this Committee to the PILT program and commits to working with the Congress to achieve 

a multiyear commitment to full mandatory funding for PILT. 

Last week Senate Budget Committee Chairwoman Patty Murray (D-WA) made 

continued funding of the Payment in Lieu of Taxes (PILT) program and the reauthorization of the Secure Rural Schools and Community Self-Determination Act a 

priority in the proposed committee budget for fiscal year 2014. The proposed budget 

resolution included a deficit neutral reserve fund for rural counties and schools to 

provide for the reauthorization of the Secure Rural Schools program and/or changes 

to the PILT program. The deficit neutral reserve fund language sets the stage for 

a much needed legislative solution to continue forest payments to counties and continued mandatory funding for PILT. Similar language had been included in House 

Budget Chairman Paul Ryan’s (R-WI) budget proposal for FY 2012 and FY 2013, 

but was removed in the FY 2014 request. The President has not yet released a 

budget proposal to Congress for FY 2014. The commitment from the Senate Budget 

Committee provides a great step forward toward securing the government’s financial 

commitment to rural, public land counties. 

57 

POTENTIAL MODIFICATIONS TO PILT 

NACo believes several policy modifications should be explored by Congress to 

identify ways to make payments to counties more equitable. A range of possible alternatives should be considered to more evenly distribute PILT funds to counties to 

provide greater budget certainty. 

Over time, some programmatic anomalies have become evident. Among these are 

the non-inclusion of Federal acquisitions, substantially reduced payments to jurisdictions with large Federal estates, and the inability of current formulas to account 

for externally induced costs resulting from Federal land use by persons originating 

from outside the jurisdiction. 

Counties have suggested the use of population caps (up to 50,000 persons) may 

not be the most appropriate method for providing fair allocation. Depending on the 

current population of the county, the PILT payments are capped at pre-determined 

levels. The use of population caps fails to accurately demonstrate the actual population of people being serviced by the county any given day. For example, many 

counties with large acreages of federal land and small populations are gateway communities to recreation or heritage areas, national parks, and scenic areas. While increases in tourism and recreation can be beneficial to local economies—counties are 

burdened with the extra expense to law enforcement, infrastructure, search/rescue, 

and road maintenance budgets as visitor populations are not taken into consideration by the current PILT formulas. County governments are required by law to 

provide services to people—regardless of their place of residence. 

The 1994 Act primarily changed the method of establishing the annual authorization level, but left the basic distribution formulas intact. Revenue sharing programs 

identified as prior year payments do provide additional funding via revenue sharing 

to county governments, such as the Mineral Leasing Act and the Secure Rural 

Schools program. However, increases in these other payment programs have reduced the amount of PILT funding annually in many resource dependant counties. 

The federal government should not reduce its tax obligation to local governments, 

solely because of other land management revenue agreements between governments. 

An example of potential PILT formula inequities effects current legislation before 

this committee. Specifically, several Senate Energy and Natural Resources Committee members have cosponsored the Public Land Renewable Energy Development 

Act (S. 279). This legislation would establish a leasing and royalty system for renewable energy development on federal lands. Additionally, the legislation would share 

25 percent of revenues with counties with developments in their jurisdictions. Under 

the current PILT formula, any new county revenues from alternative energy development on public lands would be deducted from the counties annual PILT payment—resulting in no net gain to the county. 

While some revenue sharing payments have diminished as Federal land use has 

shifted from revenue-producing use to public outdoor recreation use, such shifts 

have not only reduced or altered the inflow of revenue sharing; they have also created cost impacts to jurisdictions to provide services such as emergency search and 

rescue, law enforcement and increased road maintenance, among other impacts. 

PILT is not only an important element to county funding, the fact that it is indexed to inflation and is paid to counties for general purposes is critically important 

so as to assure it retains its character as a property tax payment and can be utilized 

for any general fund purpose. NACo believes the formula should retain this basic 

character. Counties with extensive Federal estates, however, receive lower PILT 

payments which neither reflect the local government costs resulting from that estate, or the payment is not fully reflective of the vastness of such estate within the 

jurisdiction. 

National formulas inadequately account for all the factors present. NACo has reviewed a number of possible formula changes, but as with any formula change— 

there can be ‘‘winners and losers.’’ We agree that PILT should count acres first and 

consider local population last, if at all. Equitable distributions can result through 

modifications to the current formula to reflect not only acreage and current revenue 

payments, but also other factors such as external use pressures that may be present 

within some of the jurisdictions. 

CONCLUSION 

While the United States Senate and the House of Representatives may approach 

legislative solutions for funding the PILT program differently, NACo will continue 

to urge leadership on both sides of the isle to act in a spirit of bipartisan and bicameral cooperation and work together to move a final legislative solution to the 

President’s desk. 

58 

NACo appreciates the opportunity to provide testimony before the Senate Energy 

& Natural Resources Committee. I look forward to working with members of the 

Committee to develop and pass legislation that will continue the historic partnership between Federal and county governments by extending continued mandatory 

funding for the Payment in Lieu of Taxes program for fiscal years 2014 and beyond. 

Senator CANTWELL. Thank you, Mr. Yates. 

Mr. Haggerty, thank you very much for being here.Statement of 

Mark Haggerty, Policy Analyst at Headwaters Economics, Bozeman, MT 

STATEMENT OF MARK HAGGERTY, POLICY ANALYST, 

HEADWATERS ECONOMICS, BOZEMAN, MT 

Mr. HAGGERTY. Thank you, Chair Cantwell and Ranking Member Murkowski and members of the committee. I’m pleased to join 

you today to discuss Secure Rural Schools and PILT. 

I’m a policy analyst at Headwaters Economics, an independent 

research group based in Montana. We work with local, State and 

Federal Government to improve economic and community development decisions in the West. For a number of years my research has 

focused on the role of Federal county payments and rural economic 

development. I work closely with counties in collaborative groups 

across the West. I appreciate the important role that county payments play in supporting local government services in rural economies. 

With SRS already expired and funding for PILT in question 

there’s a risk for counties in returning to a revenue sharing model 

with known problems. A revenue sharing approach would reduce 

payments overall and expose funding for basic government services 

to the tremendous volatility that has characterized timber markets 

since the late 1960s. Indeed as figure 1 in my written testimony 

shows, Congress has acted repeatedly to address the volatility and 

inequitable compensation inherent to revenue sharing programs. 

Today, Congress has an opportunity to extend funding with 

minor reforms and build toward a county payment program that 

provides stable and predictable payments, directs payments where 

they can have the most economic benefit and begins to lower the 

cost of the Federal taxpayer over time. 

One way these goals can be achieved is by combining SRS and 

revenue sharing payments with PILT into a single payment program. Such a program would maintain continuity with historic payments, retain the economic needs of adjustment in a SRS and direct a larger share of funding to rural communities. 

Let me briefly review the history that leads us to this point. 

Initially revenue sharing payments were quite small, but grew 

dramatically during the post World War II economic and housing 

boom. As Federal payments increased volatility became an important concern. Booms and busts in local and regional timber markets created uncertainty and generated pressure to maximize commercial returns. 

PILT, instituted in 1976 attempted to address volatility by using 

appropriations to shore up payments during times of commodity 

price contraction. Yet even with PILT in place total payments declined by 62 percent during the recession of the early 1980s. 

In 2000 SRS furthered a couple payments from commodity receipts to help stabilize payment levels. SRS also added an economVerDate Nov 24 2008 14:04 Sep 09, 2013 Jkt 000000 PO 00000 Frm 00062 Fmt 6633 Sfmt 6602 G:\DOCS\82563.TXT WANDA
59 

ics need component to the distribution formula in 2008 addressing 

concerns about payment equity. 

If SRS is not reauthorized the decline in total funding will be felt 

most acutely in rural communities. Consider Dawson County, 

where I’m from, and I thank Senator Baucus in his introduction 

from recognizing Bozeman which is a small, prosperous, diverse 

city anchored by a thriving—by our public lands. 

If SRS goes away a $271,000 increase in PILT payments to Gallatin County will offset most of this loss. In contrast, Beaverhead 

County, Montana is a nearby ranching, timber and tourism dependent county with a small population and a budget more dependent on county payments. Beaverhead County will not be able to recoup $1.2 million in annual losses because of the population limit 

in the PILT formula. Without SRS rural counties across the U.S. 

stand to lose twice as much as metropolitan counties and will receive only about one-third of total payments. 

Continuing appropriations and single payment reforms can resolve these long standing challenges associated with volatility and 

reverse what may become an increasingly metropolitan program. 

This program would combine SRS and revenue sharing payments 

with PILT. 

It would provide stable and predictable payments by maintaining 

the decoupling between county distributions and the funding 

source. 

It would benefit rural communities by raising the population ceiling payment based on the acres of protected public lands and direct 

payments to counties that have the greatest economic needs. 

Map one in my written testimony shows how the single payment 

program would change the distribution payments for every county 

in the country if total funding for SRS and PILT together declined 

by 44 million from 2011 funding levels. 

I want to draw your attention to Central Idaho to show how the 

single payment approach could work. 

The Clearwater Basin Collaborative is a partnership with 21 

tribal, Federal, State, local, industry and conservation associations 

united by a shared vision, to enhance and protect the ecological 

and the economic health of the Clearwater Basin. A single PILT 

payment moves the goals of the collaborative forward in ways that 

the status quo cannot. Predictable and stable payments will support a consensus approach and allow greater flexibility in achieving 

multiple goals including greater predictability for timber, recreation, forest and watershed restoration and conservation. 

For the counties, knowing that they can support their rural 

schools and maintain roads is fundamental to retaining families 

and existing businesses and to start creating new jobs. In contrast 

returning to a revenue sharing model threatens to re-entrench the 

battle lines over Federal management and re-expose counties to 

payment uncertainty. 

Thank you for your attention to this critical issue. I look forward 

to answering any questions you may have. 

[The prepared statement of Mr. Haggerty follows:] 

60 

* All figures and maps have been retained in committee files. 

1 Act of May 23, 1908, Pub. L. No. 60-136 (the Twenty-Five Percent Payment). 

2 Federal legislation mandated payments fund county roads and schools, but left to states how 

to allocate these funds between these two services. See Congressional Research Service Memorandum, Forest Service Revenue-Sharing Payments: Distribution System. November 19, 1999. 

Ross Gorte. 

PREPARED STATEMENT OF MARK HAGGERTY, POLICY ANALYST, HEADWATERS

ECONOMICS, BOZEMAN, MT 

Thank you Chairman Wyden, Ranking Member Murkowski, and members of the 

Committee. I am pleased to join you today to discuss the Secure Rural Schools (SRS) 

and Payments in Lieu of Taxes (PILT) county payments programs. As a policy analyst at Headwaters Economics, I work closely with counties and collaborative groups 

across the West. I appreciate the important role county payments play in supporting 

local government services and rural economies. 

Headwaters Economics is an independent research group based in Montana that 

works with local, county, and state governments to improve economic and community development decisions in the West. 

For a number of years my research has focused on the role of federal county payments in rural economic development. We have developed white papers analyzing 

outcomes of different county payment scenarios based on current law and proposed 

policy options on a county-by-county basis. Headwaters Economics also worked as 

a contractor to the the Forest Service and BLM to develop a free software tool (the 

Economic Profile System-Human Dimensions Toolkit) that generates county level reports on all federal land payment programs, including SRS and PILT. Please refer 

to the appendix for a summary of this work. 

The Opportunity to Reform County Payments 

With SRS already expired and funding for PILT in question, there is a risk for 

counties of returning to a revenue sharing model that has known problems. A revenue sharing approach would reduce overall payments to counties and also would 

expose funding for basic government services to the tremendous volatility that has 

characterized timber markets since the late 1960s. Indeed, the current PILT and 

SRS programs were developed to address the challenges inherent to a revenue sharing approach. 

Faced with the challenges, Congress has an opportunity today to implement minor 

reforms to create a county payment program that advances rural economic development, forest restoration, and conservation goals while avoiding the volatility risks 

associated with direct revenue sharing payments. 

Figure 1*. Key Developments in the History of County Payments 

Combining SRS and revenue sharing with PILT, and making small changes to the 

PILT formula, can achieve three critical goals: 

1. Provide fair, stable, and predictable payments to counties. 

2. Target payments where they can have the most economic benefit. 

3. Reduce costs to federal taxpayers. 

Let me first briefly review the history of county payments, summarized in Figure 

1, which shows the fluctuating value of federal reimbursements to counties along 

with the dates of landmark reforms. 

Congress Has Repeatedly Reformed County Payments to Respond to Changing Needs 

These reforms, made by Congress to respond to changing economic and political 

conditions, demonstrate the long-term flexibility of the program. Today, with the 

SRS program expired and the need to re-appropriate PILT after 2013, Congress 

again is poised to consider reforms to county payments that reflect changing budget 

realities and the fiscal and economic need of local governments with significant 

acres of public lands. 

Payments Originally Linked to Commodity Receipts 

The policy origin of Forest Service payments to counties in 1908 is clear: as compensation for public ownership of the Forest Reserves, the federal government initiated payments to counties in lieu of paying property taxes.1 These payments were 

funded from commercial receipts generated on public lands, and counties could use 

the payments to fund roads and schools.2

61 

3The main difference is that the county government share of payments is not restricted to 

roads but can be used for any governmental purpose. See: O&C Lands Act, Pub. L. No. 74-405, 

tit. II(a) (1937). 4 Revenue sharing payments are estimated from historic timber cut and sold reports from the 

Forest Service at the national level. Source: USDA Forest Service. All values in this paragraph 

are offered in real dollars. 5 United States Public Land Law Review Commission. 1970. ‘‘One third of the Nation’s land: 

a report to the President and to the Congress.’’ Washington, D.C.:273 6 Ibid. 

7Schuster, Ervin G. 1995. ‘‘PILT—its purpose and performance.’’ Journal of Forestry. 93(8):31- 

35 and Corn, M. Lynne. 2008. PILT (Payments in Lieu of Taxes): Somewhat Simplified. Congressional Research Service (CRS) Report RL-31392. 8Gorte, Ross W. Reauthorizing the Secure Rural Schools and Community Self-Determination 

Act of 2000.Congressional Research Service (CRS-R41303). June 2010. Washington, D.C. 

In 1937, the Bureau of Land Management (BLM) began sharing commercial receipts generated on the Oregon and California Railroad Grant Lands (O&C) with 

counties and schools along the same model as the Forest Service.3

The value of initial Forest Service and BLM O&C revenue sharing payments was 

insignificant to most counties for the first 30 years.4 From 1908 to 1942, payments 

averaged less than $10 million nation-wide in real terms. After World War II, when 

commodities from the National Forests and BLM O&C lands helped to fuel the nation’s housing boom, revenue sharing payments provided significant funding to 

counties. From 1945 to 1980, payments averaged $391 million, reaching a high of 

$1.2 billion in 1977. 

Reforms Made to Address Volatility and Incentives Inherent to Commodity Payments 

After WWII, many counties, particularly in the Pacific Northwest, grew to depend 

on timber for jobs and income, and payments to counties supported significant portions of local school and county budgets. As payments became more important, the 

use of commodity receipts as a funding source started to show several weaknesses. 

Volatility in commodity extraction in the 1960s and 1970s made it difficult for 

local government to plan for and provide quality public services consistently on an 

annual basis. In 1970, the U.S. Public Lands Law Review Commission wrote: ‘‘Although they were originally designed to offset the tax immunity of Federal Lands, 

the existing revenue-sharing programs do not meet a standard of equity and fair 

treatment either to state and local governments or to the Federal taxpayers.’’5

The report added that payments based on commercial activities created perverse 

incentives for counties such that ‘‘pressures can be generated to institute programs 

that will produce revenue, though such programs might be in conflict with good conservation practices.’’6 By conservation practices the authors meant the sustainable 

use of public land resources for commercial activities and environmental conservation including new national parks or other land designations that potentially limit 

revenue sharing payments. 

Concerns about stability and predictability eventually led Congress, in 1976, to 

pass Payments in Lieu of Taxes (PILT) in addition to the existing revenue sharing 

payments. 

PILT interacts with Forest Service revenue sharing payments as a shock absorber. When revenue sharing payments decline, counties are eligible for larger 

PILT payments. When revenue sharing payments rise during boom years, the PILT 

formula responds with lower appropriations.7

Yet even with PILT in place, total payments declined by 62 percent during the 

recession of the early 1980s. 

Payments Have Been Decoupled from Commodity Receipts 

More recently, changing economic conditions along with new goals for public land 

management slowed the pace of logging on federal land, lowering revenue sharing 

payments to counties by more than 90 percent in some areas.8 The Northwest Forest Plan that set new management goals for forests in the Pacific Northwest included the first ‘‘transition payments’’ to counties-a recognition that changing management goals that reduce resource extraction also reduce local government payments. The so-called ‘‘spotted owl’’ payments decoupled the link between extraction 

and county compensation by guaranteeing a stable, albeit declining, annual payment funded by federal appropriations. 

The decline in timber receipts felt most acutely in the Pacific Northwest was also 

occurring across the rest of the National Forests. In 2000, Congress passed the Secure Rural Schools and Community Self-Determination Act (SRS) that effectively exVerDate Nov 24 2008 14:04 Sep 09, 2013 Jkt 000000 PO 00000 Frm 00065 Fmt 6633 Sfmt 6621 G:\DOCS\82563.TXT WANDA
62 

9Secure Rural Schools and Community Self-Determination Act of 2000, Pub. L. No. 106-393. 

Payment information is available from the Forest Service website at http://www.fs.fed.us/srs/ 

(last accessed 11/22/10). 10 Under Section 102(a) and 103(a), states eligible to receive Forest Service and/or BLM revenue sharing payments can elect to receive either (1) the Twenty-Five Percent (Forest Service) 

or Fifty Percent (BLM) Payment or (2) the ‘‘full payment amount,’’ calculated as the average 

of the three highest yearly revenue sharing payments from FY 1986 to FY 1999. The SRS payment was tied to the average of the three highest historical payments to each state as a means 

of further reducing the volatility of timber receipts at the county level. Under the 2000 version 

of the SRS Act, funding for payments to states and counties is derived from revenues, fees, penalties, or miscellaneous receipts received by the federal government from activities of the Forest 

Service on National Forest land, and the Bureau of Land Management on revested and reconveyed grant lands (lands returned to federal ownership). Pub. L. No. 106-393, §§ 102(b)(3), 

103(b)(2). To the extent of any shortfall, payments are derived from Treasury funds not otherwise appropriated. 11 U.S. Fire Administration, 2000 Wildland Fire Season, http://www.usfa.dhs.gov/downloads/ 

pdf/tfrs/v1i2-508.pdf (last accessed 3/16/2010). 

tended transition payments to the rest of the country.9 Initially authorized for six 

years, SRS provided optional payments equal to 85 percent of the highest three 

years of revenue sharing payments between 1986 and 1999.10

In SRS, Congress ended the reliance of most counties on commodity receipt-based 

payments that were unlikely to return to historic highs. Decoupling payments from 

commodity receipts reduced the importance of producing commodities in order to 

generate revenue for county payments. It also opened the possibility for new collaborative efforts to address restoration, stewardship, and conservation goals on public 

lands. 

SRS Promoted Economic Diversification and Reflected Costs Associated with Public 

Lands 

In Title II and Title III of SRS, Congress introduced new purposes to the county 

payments program. Title II provided public land managers and communities with 

limited but important resources for collaboration and on-the-ground work such as 

stewardship and restoration projects that create jobs and improve forest health 

(counties that receive more than $100,000 from SRS must allocate 15-to-20 percent 

between Title II and Title III). 

Title II dollars are retained by the federal government and spent on public lands 

activities following the recommendations of Resource Advisory Committees (RACs). 

Title II could fund infrastructure, restoration, stewardship, and other projects on 

public lands. Title II was the first time the county payments program set aside 

funding for the direct purpose of creating economic opportunities in counties that 

have public lands. The funds were also used to improve forest health, aiding in 

transitioning counties away from dependence on commodities by creating new jobs 

in restoration and forest stewardship. 

Title III of SRS represented another important reform: it made explicit for the 

first time the links between federal lands and the direct demands those lands create 

for county emergency services and wildland fire safety. Title III funds could be used 

on special county projects including reimbursement for emergency services provided 

on federal lands and funding for community fire plans and fire-wise activities. 

The abnormally harsh fire season in 2000, described at the time as the worst fire 

season in the United States since 1910, likely influenced Congress to include funding for wildfire preparedness in Title III.11 Whereas the 2000 legislation provided 

funding for projects in six broad areas, subsequent reauthorizations limited funding 

to projects in three specific areas, two concerned with wildfire preparedness and the 

third funding emergency services and search and rescue activities on public lands. 

SRS Reforms in 2008 Adjusted Payments Based on Economic Need 

Congress made other important reforms in 2008 to adjust the SRS distribution 

formula based on the per-capita personal income in each eligible county. The goal 

was to direct relatively higher payments to counties with low per-capita personal 

income. Reforming the distribution formula based on economic need reflected a desire to make payments to counties that need them most. 

Two other mechanisms were incorporated into the 2008 reauthorization to achieve 

a more equitable distribution of payments nation-wide, based on more general concerns about the distribution of payments. The SRS ‘‘base share’’ formula was reformed to include the total acres of federal lands along with historic revenue sharing 

payments, and certain ‘‘covered states’’ (California, Louisiana, Oregon, Pennsylvania, South Carolina, South Dakota, Texas and Washington) were given ‘‘transition 

63 

12 U.S. Forest Service, Title I-Secure Payments for State and Counties Containing Federal 

Land. Pub. L. No. 110-343, tit.VI, § 103. http://www.fs.fed.us/srs/Title-I.shtml (last accessed 11/ 

22/10). 13 It is unclear from the legislative history why certain states were selected to be ‘‘covered 

states,’’ but concerns over equitable distribution of payments likely played a role in California, 

Oregon, and Washington being included. A political motivation also lay behind expanding the 

number of states receiving higher SRS payments as it may increase the likelihood of future authorizations. 14The existing SRS formula is described in an eight-page technical document, ‘‘Calculating 

Payments,’’ available on the Secure Rural Schools website: http://www.fs.fed.us/srs/docs/calculations.pdf (last accessed 11/22/10). Each county’s payment was based partially on historic timber 

receipts and partially on the number of acres of federal land within the county’s boundaries. 

A county’s payment was also dependent on how many of their peers opted into the SRS payment 

formula. The fewer counties that elected to receive SRS payments (opting to receive their revenue sharing payment instead), the higher the SRS payment to each county was, and vice-versa. 15Patricia H. Gude, Ray Rasker, Kingsford L. Jones, Julia H. Haggerty, Mark C. Greenwood. 

2012. The Recession and the New Economy of the West: The Familiar Boom and Bust Cycle? 

In press in the Journal of Growth and Change. http://headwaterseconomics.org/wphw/wp-content/uploads/WesternlCountieslRecessionlPaper.pdf. 

payments’’ pegged to the sums paid to states and counties in 2006 under the SRS 

Act as then implemented.12

The 2008 reauthorization of SRS provided a significant temporary increase in 

transition funding, making payments close to historic highs (on a national level, 

only payments in the years 1977 to 1980 exceeded the FY 2008 payment levels in 

real terms). In essence, the two latter reforms (not based on economic need) had the 

effect of distributing the increased appropriation more broadly to all states eligible 

to receive payments.13

SRS accomplished more equitable distribution through adjustments to the formula.14 SRS payments were based on three factors: a base payment considering 1) 

historic timber receipts and 2) acres of Forest Service and BLM land which is 3) 

adjusted by per capita personal income. 

COUNTY PAYMENT = BASE PAYMENT / PER CAPITA INCOME ADJUSTMENT. 

The pressing issues associated with SRS’s expiration are continued volatility, decreased total revenue, and a return to an inefficient, inequitable distribution of payments. 

Continued Volatility 

The recent national recession made it clear that the boom and bust nature of commodity markets persists and can be especially damaging in resource-dependent 

counties in the West. Headwaters Economics recently analyzed all 413 counties of 

the 11 contiguous western states in the context of the recent recession, and looked 

at how this economic downturn varied from earlier business cycles.15

Four critical findings from this analysis about economic performance during the 

recession are: 

1. The faster a county’s population grew from 2000 to 2007, on average, the 

faster the area tended to lose jobs during the recession. 

2. Counties that were more timber-dependent tended to lose jobs at a faster 

rate during the recession. 

3. On average, counties with higher education rates (based on the percent of 

adults with a college degree) experienced lower rates of job loss. 

4. Higher government employment was also associated with lower rates of job 

loss. 

The study results underscore important tenets of economic development in a modern economy such as the importance of education in the emerging global economy 

and the stabilizing effect of government employment during economic contraction. 

Of particular relevance to the topic of county payments from federal lands is the 

danger of over-reliance on single sectors, in particular those that fluctuate with commodity markets, such as the timber industry. 

Timber-dependent counties received SRS and PILT payments during the recession 

which helped stabilize county finances. These already vulnerable county economies 

could have faced even greater challenges if their payments were dependent on low 

commodity prices, as would be the case in the absence of some form of SRS reauthorization. 

Exposure to boom-bust commodity cycles is a constant hazard for remote rural 

counties in the West. By reforming county payment programs to focus on the longVerDate Nov 24 2008 14:04 Sep 09, 2013 Jkt 000000 PO 00000 Frm 00067 Fmt 6633 Sfmt 6621 G:\DOCS\82563.TXT WANDA
64 

term security of funding for basic government services, Congress can help create a 

buffer against this hazard. 

Inequitable Distribution For Rural Counties 

If SRS is not reauthorized, the decline in total funding will be felt most acutely 

in rural communities. Consider Gallatin County, Montana, where I live, which has 

a prosperous diverse economy anchored by the thriving city of Bozeman. If SRS goes 

away, a $271,000 increase in PILT payments will offset most of this loss. In contrast, Beaverhead County, Montana, is a nearby ranching, timber, and tourism-dependent county with a small population and a budget more dependent on county 

payments. Beaverhead County will not be able to recoup $1.2 million losses because 

of the population limit in the PILT formula. 

The PILT formula places an upper limit on the total payment each county can 

receive based on the county’s population. The population limit effectively limits the 

amount any one county can receive, and lowers the potential cost to the federal 

treasury if revenue sharing payments decline precipitously. 

If SRS is not reauthorized, two things will occur. The reforms in SRS that provided for a more equitable distribution of payments based on per capita personal 

income will be lost. Moreover, utilizing PILT only will mean that rural places will 

experience a disproportionate share of payment losses. Across the U.S., rural counties stand to lose twice as much as metropolitan counties and will receive only about 

one-third of payments if SRS is not reauthorized. 

Single Payment Model Creates Security, Equity, and Efficiency 

Here is how a single payment idea could help resolve long-standing challenges: 

1. Combine SRS and revenue sharing payments into a new PILT formula. 

2. Provide stable and predictable payments by maintaining the decoupling between county distributions and the funding source. 

3. Benefit rural counties by raising the population cap based on acres of protected public lands. 

4. Target payments to counties that have the greatest economic needs. 

Table 1 compares the single payment proposal with current and estimated payments. The single payment proposal reflects the new PILT formula and a reduction 

of about $45 million from FY 2011 payment amounts. 


hag1.eps
65 

* The map has been retained in committee file. 

16We utilized a list of protected lands as defined in the EPS-HDT software as ‘‘Type A’’ lands. 

These include: National Parks and Preserves (NPS), Wilderness (NPS, FWS, FS, BLM), National Conservation Areas (BLM), National Monuments (NPS, FS, BLM), National Recreation 

Areas (NPS, FS, BLM), National Wild and Scenic Rivers (NPS, FS, BLM), Waterfowl Production 

Areas (FWS), Wildlife Management Areas (FWS), Research Natural Areas (FS, BLM), Areas of 

Critical Environmental Concern (BLM), and National Wildlife Refuges (FWS). See http:// 

headwaterseconomics.org/tools/eps-hdt. 17 PILT currently authorizes higher payments for newly acquired Wilderness and National 

Park acres for a period of five years. The additional payment covers lands acquired by the federal government to be included in the National Park system or as national forest Wilderness. 

The law states that ‘‘The Interior Secretary shall make payments only for the five fiscal years 

after the fiscal year in which the interest in land is acquired. Under guidelines the Secretary 

prescribes, the unit of general local government receiving the payment from the Secretary shall 

distribute payments proportionally to units and school districts that lost real property taxes because of the acquisition of the interest. A unit receiving a distribution may use a payment for 

any governmental purpose.’’ P.L. 97-258, as amended Section 6904. Additional Payments. 18The term poverty, as used by the U.S. Census Bureau, is defined at: http:// 

factfinder.census.gov/servlet/ MetadataBrowserServlet? type=subject&id= POVERTYSF3& 

dsspName=DECl2000lSF3&back= update&llang=en (last accessed 9/9/10). 19For the full definition of Median Household Income, see the U.S. Bureau of the Census: 

http://factfinder.census.gov/home/en/epss/glossaryli.html#income (last accessed 9/9/10). 20For the full definition of Average Earnings per Job, see the Bureau of Economic Analysis, 

U.S. Department of Commerce: http://www.bea.gov/regional/definitions/ (last accessed 9/9/10). 

Map 1* in the appendix shows how county-by-county distributions of a single payment change from FY 2011 payment distributions. For example, payments are shifted away from metropolitan areas, including the Puget Sound metropolitan region in 

Washington, the Wasatch Front in Utah, and Phoenix and Tucson in Arizona to 

rural areas in central Idaho, southern Utah, and coastal Oregon, among others. 

*Increasing the Population Limit 

Increasing the population limit for rural counties offers a mechanism for reversing 

the shift of payments from rural to urban counties as total payments decline. Raising the population limit allows rural counties to receive a larger share of appropriated dollars at any given funding level. 

Under the current PILT formula, each county’s PILT payment is equal to the 

number of eligible acres in each county times an entitlement amount of $2.47 in FY 

2012. This combined value is then compared to the population ceiling limitation 

amount, and the final PILT payment is the lesser of the two. 

The single payment proposal raises the population ceiling limitation, but not the 

entitlement amount, for each county. The ceiling is raised by an amount equal to 

the number of acres of protected public lands in each county times the entitlement 

amount of $2.47 in FY 2012.16

Raising the population ceiling limit increases payments only for counties where 

such limits currently apply. As a result, a larger share of payments will go to rural 

counties that have protected public lands.17

Economic Performance Adjustment 

The SRS formula contained an ‘‘income adjustment’’ based on per capita personal 

income. Counties with relatively lower levels of income received a larger share of 

the total appropriated amount. By comparison, counties with relatively higher levels 

of income would receive lower payments. 

The single payment idea retains the adjustment to ensure equity of payments and 

to lower total appropriations by directing payments to those counties that need 

them most. 

While the past SRS formula used just one measure of economic performance, we 

recommend using a set of five variables: percentage of households below poverty,18

median household income,19 average earnings per job,20 percentage of the workforce 

66 

21 Education is one of the most important indicators of the potential for economic success, and 

lack of education is closely linked to poverty. Studies show that areas whose workforce has a 

higher-than-average education level grow faster, have higher incomes, and suffer less during 

economic downturns than other regions. Education rates make a difference in earnings and unemployment rates. In 2009, the average weekly earnings for someone with a bachelor’s degree 

was $1,025, compared to $626 per week for someone with a high school diploma. While in 2009 

the unemployment rate among college graduates was 5.2 percent, for high school graduates it 

was 9.7 percent. For information on the relationship between level of education, earnings, yearround employment, and unemployment rates, see: U.S. Census Bureau’s 2002 publication ‘‘The 

Big Payoff: Educational Attainment and Synthetic Estimates of Work-Life Earnings.’’ http:// 

www.census.gov/prod/2002pubs/p23-210.pdf (last accessed 9/9/10). The wage and unemployment 

effects of education are available from the Bureau of Labor Statistics: http://www.bls.gov/emp/ 

ep—chart—001.htm (last accessed 10/23/10). 22Definitions of county typologies can be found at the U.S. Census Bureau.http:// 

www.census.gov/population/www/metroareas/metroarea.html (last accessed 9/9/10). 23 U.S. Department of Commerce. 2010. Bureau of Economic Analysis, Regional Economic Information System, Washington, D.C. 24The States of Oregon, Washington, and California received the lion’s share of the approximately $2.7 billion of funding distributed under Titles I, II and III of the SRS Act between 2000 

and 2007. Oregon received by far the largest share, with $1.2 billion, while California and Washington received $473 million and $322 million respectively. From one perspective, this result 

was exactly as it should have been. SRS was initially passed to make up for lost timber receipts, 

and so it was only appropriate that the Pacific Northwest, historically a great timber producing 

region, benefitted disproportionately. States that did not have historically high timber harvesting levels were understandably less enthusiastic. The Bush Administration favored revising 

the funding formula to take stock of current economic conditions. Mark Rey, Under Secretary 

of Natural Resources for the Department of Agriculture, testified ‘‘Many now largely urban or 

suburban counties in the west are getting a substantial amount of money... because the formula was a reflection of the historical timber receipts that those counties enjoyed . . . at an 

earlier time. Many of those counties... are pretty vibrant right now.’’ The Administration felt 

that urbanized areas that could generate funds from traditional municipal revenue sources 

ought to do so, rather than rely on federal handouts. As a result, the distribution formula was 

changed in 2008 so that other states realize a more substantial benefit from it. Secure Rural 

Schools and Community Self-Determination Reauthorization Act of 2007: Hearing on S. 380 Before the Subcommittee on Public Lands and Forests, Committee on Energy and Natural Resources, 110th Cong. 1 (2007). 

with a bachelor’s degree or higher21 and county typology (on a continuum: metro, 

metro outlying, micro, micro outlying, and rural).22

These metrics used to assess economic need are widely utilized and well understood. Map 2 in the appendix shows the relative economic performance of counties 

using these measures from best (light blue) to worst (dark blue). 

During the last 30 years many rural counties have experienced a dramatic shift 

in their economies. Counties have diversified into more service-related occupations 

while commodity-related sectors have contributed less than three percent of total 

new jobs from 1990 to 2008.23

Not all public lands counties, however, have been able to create a diverse, robust, 

and resilient economy with a healthy tax base. Poverty, low-paying jobs, lack of education, isolation from markets, and difficulties competing in expanding service industries are persistent challenges for some counties. 

Favoring the neediest counties for relatively higher county payments is consistent 

with the original goal of SRS to help counties diversify economically and to provide 

equity in payments to counties and for federal taxpayers.24

By adjusting the single payment formula to give preferential treatment to the 

neediest counties, the federal payments will serve an important goal of economic development, job creation, and poverty alleviation. In addition, using a broader and 

improved set of criteria to link payments to economic performance and opportunity 

has the advantage of more efficiently targeting payments to those counties that 

need payments the most. 

Benefits for Counties and Rural Economies 

I want to draw your attention to Idaho to show how a single payment model could 

support ongoing collaborative resource management and economic development efforts. 

Founded in 2008, the Clearwater Basin Collaborative (CBC) is an innovative partnership of twenty-one tribal, federal, state, local, industry, and conservation associations in central Idaho united by a shared vision: ‘‘to enhance and protect the ecological and economic health of the forests, rivers, and communities within the Clearwater Basin.’’ The CBC seeks to develop resource management priorities collaboratively among historically often conflicted parties, finding solutions that take all 

stakeholders’ interests into account. 

67 

Diverse stakeholder interests include creating predictability for commercial timber 

supply, improving recreation access, and accomplishing forest restoration and conservation goals, all across a large landscape. The CBC is a progressive approach to 

creating solutions to conflicts. This is the kind of approach that could be thwarted 

in the absence of effective reforms to the county payments programs. 

The (CBC) has considered alternatives to SRS. Analysis of proposals that rely on 

commodity extraction as the main source of revenue-and as the main purpose of 

public lands management-suggest this approach will not provide predictable or sufficient payments to area counties and schools. Current proposals to return to a revenue sharing model and transfer federal public land management to the states 

clearly threaten to alienate some CBC stakeholders. 

If SRS is not reauthorized, Idaho and Clearwater counties will receive $6 million 

less annually than they did in FY 2011. In contract, the single payment proposal 

would allow the two counties to retain similar or higher payments compared to 2011 

levels, even with lower appropriations. 

Equally important, a single PILT payment moves the goals of the CBC forward 

in ways that the status quo cannot. The new single payment formula supports a 

consensus approach to solving shared goals with stronger outcomes for local economies and forest health. In contrast, returning to a revenue sharing model would reentrench the battle lines over federal management and re-expose counties to payment uncertainty. 

Conclusion 

For these reasons, we see a critical role for continued appropriations as part of 

future federal payments to counties. The uncertainty and decreased funding levels 

that accompany a return to revenue sharing are not desirable. The history of the 

program shows that revenue sharing will work only for a handful of counties nationally, and even then will fail to provide certainty year over year. 

By comparison, receipts will rise and economic development opportunities will be 

greatest where payment certainty is provided. Local and regional efforts to create 

jobs and improve forest health will succeed if all sides have greater certainty: certainty and fairness for counties; certainty for industry of increased supply; and certainty for conservation interests for continued restoration and protections, among 

others. 

Maintaining decoupling between the size and relative distribution of payments 

and the source of revenue creates a framework that can accommodate new dedicated 

funding streams from public lands. This basic arrangement provides a path to reducing the need for federal appropriations over rising payments over time, buffered 

from the booms and busts in commodity markets. It also allows new revenue to 

come from anywhere, and ideas range from higher oil and gas royalties, to new leasing fees, to a carbon tax. 

Thank you for your attention to this issue. 

Senator CANTWELL. Thank you, Mr. Haggerty. Yes, we will have 

questions. But let’s hear from Dr. O’Laughlin, our last witness, and 

then we’ll go to questions. 

Thank you. 

STATEMENT OF JAY O’LAUGHLIN, PROFESSOR OF FORESTRY 

& POLICY SCIENCES, AND DIRECTOR, POLICY ANALYSIS 

GROUP, COLLEGE OF NATURAL RESOURCES, UNIVERSITY 

OF IDAHO, MOSCOW, ID 

Mr. O’LAUGHLIN. Thank you, Chair Cantwell, Ranking Member 

Murkowski and members of the committee. 

My name is Jay O’Laughlin. I’m a Professor of Forestry and Policy Sciences at the University of Idaho. For 23 years, full time Director of a Policy Analysis Research Unit created by the Idaho legislature. 

Senator Risch, thank you for your leadership back then. 

For 80 years counties received 25 percent of revenues from Federal lands primarily timber sales. But since 1990 timber sales have 

declined substantially by more than 90 percent in some areas. 

68 

There are good reasons to rejuvenate a Federal timber sale program. Revenue sharing with counties is just one of them. 

My main point here is the triple win from forest management. 

First, improve forest conditions, especially sorely needed wildfire 

resiliency. 

Second, consumer products made from wood and its byproducts 

including renewable energy feed stocks for the full range of applications. Biomass thermal, we heat our campus with sawmill residues. 

Biopower and biofuels, wood products and energy byproducts help 

make our nation more self-reliant. 

Third, jobs in rural communities. 

Some Westerners are so dissatisfied with the current situation 

that they’re calling for changing ownership of some Federal lands. 

But I want to talk about changing the rules, not changing ownership. 

Three ideas for generating more revenue than the current system 

does are No. 1, rejuvenating the Federal timber sale program. 

No. 2, creating a property tax equivalency system. 

No. 3, testing the trust land management model with pilot 

projects. 

No. 1, the timber sale program. The Forest Service believes that 

at least 65 million acres of its lands could be improved with restoration treatments including 12 million acres that need to be 

thinned with logging equipment before fire can be safely restored. 

The Forest Service is mechanically treating about 200,000 acres 

per year and from that providing about 2.5 billion board feet per 

year. 

Rejuvenating the Federal timber sale program is the path to the 

triple win. Some analysts believe that the 1980s level of 12 billion 

board feet per year is sustainable. Instead, I suggest harvesting 

half of that which is the current allowable sale quantity total of 6 

billion board feet per year. 

But price is as important as quantity. Lots of administrative 

rules affect markets and prices. If sold at prices the States of 

Washington and Idaho get for their trust land timber sales the 25 

percent share for counties would match Secure Rural Schools act 

payments. 

No. 2, property tax equivalency system. This would make Federal 

payments to counties equivalent to property taxes as if the land 

were privately owned. This approach may be difficult to design and 

implement, but each of the States has been doing this for a long 

time and fairness issues can be worked out. 

Third, trust land management. School trust lands were granted 

from the public domain at statehood. That’s part of a bargain that 

the States would not tax the Federal lands within their boundaries. 

States were to generate revenues to support public schools either 

by selling the lands or retaining ownership and selling commodities 

from the land, like timber, forage and minerals. 

Trusts work. In the contiguous 48 States, 45 million acres of land 

grants are managed as trusts. They provide billions of dollars for 

education and other public purposes. The trust land management 

model is flexible. It could be adapted to limit land sales and adapted to include our RAC like local advisory committee to work with 

the trust land managers and to make biological diversity one of the 

69 

1 P.L. 106-393, 114 Stat. 1607 (October 30, 2000). http://www.fs.usda.gov/Internet/FSE—DOCUMENTS/stelprdb5260244.pdf 2Gorte, R.W. (2010). Reauthorizing the Secure Rural Schools and Community Self-Determination Act of 2000. Congressional Research Service Report CR41303, Washington, D.C. 14 pp 3 Id 

4 Headwaters Economics (2010). County Payments, Jobs, and Forest Health: Ideas for Reforming the Secure Rural Schools and Community Self-Determination Act (SRS) and Payments in 

Lieu of Taxes (PILT). Headwaters Economics, Bozeman, MT. 96 pp. http:// 

headwaterseconomics.org/wphw/wp-content/uploads/ReformlCountylPaymentslWhitePaperlLowRes.pdf 5 U.S. Forest Service (2012). Increasing the Pace of Restoration and Job Creation on Our National Forests. Unnumbered publication, Washington, DC. 8 pp. http://www.fs.fed.us/publications/restoration/restoration.pdf 

trust missions. It could be organized to provide moneys for that 

purpose. 

In conclusion trust land management is our oldest and most durable resource management model. It is worth testing in several 

different national forests in order to properly gauge the magnitude 

of the triple win from actively managing public forests under a different organizational structure. 

Thank you for this opportunity. I look forward to questions. 

[The prepared statement of Mr. O’Laughlin follows:] 

PREPARED STATEMENT OF JAY O’LAUGHLIN, PROFESSOR OF FORESTRY & POLICY

SCIENCES, AND DIRECTOR, POLICY ANALYSIS GROUP, COLLEGE OF NATURAL RESOURCES, UNIVERSITY OF IDAHO, MOSCOW, ID 

INTRODUCTION

Chairman Wyden, Ranking Member Murkowski, members of the committee and 

staff, it is a great honor to be here today. My name is Jay O’Laughlin. I live in Moscow, Idaho, where I am professor of forestry & policy sciences at the University of 

Idaho and for 23 years, full-time director of a policy analysis research unit created 

by the Idaho Legislature in 1989 and continuously funded since then. Our mandate 

is to provide objective analysis of resource and land-use issues Idahoans care about. 

We care about the federal lands that make up almost 64 percent of the state’s land 

base, a percentage exceeded only by Nevada and Utah. Almost 39 percent of Idaho 

is in the National Forest System; Oregon at 25 percent ranks a distant second. 

Congress enacted the Secure Rural Schools and Community Self-Determination 

Act of 2000 (SRS) as a temporary, optional program of payments based on historic 

revenues.1 These payments compensate counties for the tax-exempt status of federal 

lands, following a policy dating to 1906 that counties receive a percentage of agency 

revenues, primarily from timber sales. Since 1989, however, timber sales have declined substantially, by more than 90 percent in some areas.2 On an annual payment basis, Oregon benefits the most from SRS, followed by California, then Washington and Idaho, with Montana not far behind.3 Based on the percent of the county 

revenue for schools and roads that comes from federal payments, many counties in 

Idaho, Montana, New Mexico, and Oregon depend heavily on these payments.4

According to the U.S. Forest Service, the condition of at least 65 million acres of 

National Forest System lands could be improved with restoration treatments.5 The 

removed woody biomass can be manufactured into useful consumer products and the 

residuals used to produce energy. It takes people to do this work so in turn forest 

restoration helps revitalize our rural communities. 

My main point is that active forest restoration results in a triple-win: first, improved conditions, including wildfire resiliency; second, consumer products and energy feedstocks, both helping make our nation more self-reliant; and third, jobs in 

rural communities. The triple win is related to the county payments programs because a meaningful federal timber sale program with a continued revenue-sharing 

policy would greatly reduce the need for federal land payments. 

In 2011, I was asked by the University’s Research Office to respond to a query 

from one of our two members of the U.S. House of Representatives (Raλl Labrador) 

for information about the Secure Rural Schools Act and the trust land management 

model used to manage school trust lands granted to Idaho, and many other states, 

70 

6O’Laughlin, J., W.R. Hundrup & P.S. Cook. (1998). History and Analysis of Federally Administered Lands in Idaho. PAG Report 16, University of Idaho, Moscow, 125 pp. http:// 

www.uidaho.edu//media/Files/orgs/CNR/PAG/Reports/PAGReport16 7O’Laughlin, J. (2011). Secure Rural Schools Program Reauthorization, U.S. Forest Service 

Timber Sale Program, and Trust Land Management. Issue Brief No. 14, Policy Analysis Group, 

College of Natural Resources, University of Idaho. 16 pp. http://www.uidaho.edu//media/Files/ 

orgs/CNR/PAG/Reports/PAG—IB-14—8-14-11 8 Eyler, R. (2010). Rural Policy: Secure Rural Schools Act Economic Impact Analysis. Economic 

Forensics and Analytics, Petaluma, CA. 6 pp. (Dr. Eyler is Chair, Economics Dept., Sonoma 

State University, CA.) http://www.partnershipforruralamerica.org/pdf/EconomiclImpactlAnalysis.pdf 9GAO (2010). Update on the status of the merchantable timber contracting pilot program 

[under SRS Title II]. Letter of Anu K. Mittal to congressional committees, Government Accountability Office, Washington, DC. March 4, 10 pp. http://www.gao.gov/new.items/d10379r.pdf 10Kusel, J., et al. (2006). Assessment of the Secure Rural Schools and Community Self-Determination Act. Sierra Institute for Community and Environment, Taylorsville, California. 235 pp. 

http://www.sierrainstitute.us/archives/COMPLETElREPORT.pdf 11 Hearing before the Subcommittee on Public Lands and Forests, Committee on Energy and 

Natural Resources, U.S. Senate, on S. 433, ‘‘A Bill to provide for Enhanced Collaborative Forest 

Stewardship Management of the Clearwater and Nez Perce National Forests in Idaho,’’ Washington, D.C. (March 24, 2004). http://www.gpo.gov/fdsys/pkg/CHRG-108shrg94830/pdf/CHRG108shrg94830.pdf 

to support public education. These were not new issues for me,6 so I assembled an 

Issue Brief report for the congressman’s staff and walked them through it.7 Updated 

and more detailed portions of it follow. 

I begin with a Problem Statement, then identify and describe Three Options for 

providing funds to counties: 1) rejuvenate the program for federal Timber Sales and 

Revenue-Sharing, 2) create a Property Tax Equivalency system for federal lands, 

and 3) test the Trust Land Management model with pilot projects in some selected 

areas. My Conclusion is that some kind of action, including temporary extension of 

SRS until something else is developed, is better than no action. 

PROBLEM STATEMENT

Unless reauthorized by Congress, payments to the counties under the SRS and 

Payments in Lieu of Taxes (PILT) programs are history and would have consequences. Some counties will be hard pressed to maintain local roads and schools 

without some form of payment to compensate for tax-exempt federal lands. 

The economic impact of losing the SRS county payments program was presented 

in a 2010 consultant’s report prepared for the Partnership for Rural America: 

The loss of [SRS] money has annual losses for the counties and schools 

currently funded. The losses are not simply to local construction, education 

and conservation services and their allied industries. The industries affected by these changes are far and wide based on how construction workers, educators and conservation services employees spend their money and 

how these rural economies work. The reduction of [SRS] funding not only 

reduces jobs in these directly-affected industries, but also affects industries 

such as medical and dental offices, banking, auto repair, grocery and other 

retail stores, restaurants and bars, and many others. The loss of $467 million of this funding leads to various businesses throughout the United 

States losing almost $1.459 billion in revenues, government at all levels losing over $225 million in tax receipts, and over 11,460 people losing their 

job.8

Also facing its demise is the SRS feature embodied in the collaborative efforts of 

Resource Advisory Committee (RACs) to use SRS Title II funding for a wide variety 

of projects that might not otherwise be funded. Although timber projects can be approved under Title II, very few have been.9 Social scientists who have studied RACs 

in northern California report that most of the Title II funds were used to improve 

roads, wildlife habitat, and reduce invasive weeds.10

The RACs do good work in Idaho, and could do much more. The collaboration between seemingly disparate interests working towards a common interest has proven 

to be a valuable model that could lead to more good things. We wanted to use the 

RAC concept on a larger scale in Idaho and in 2004 a subcommittee of this committee held a hearing on our proposal.11 It developed from a state task force charged 

by the legislature to develop cooperative arrangements with federal managers. After 

considerable time and effort, bills were introduced in the U.S. House and Senate. 

Had the Clearwater Basin Project Act passed, 2.7 million acres of National Forest 

System lands in north central Idaho now would be a pilot project in which a comVerDate Nov 24 2008 14:04 Sep 09, 2013 Jkt 000000 PO 00000 Frm 00074 Fmt 6633 Sfmt 6621 G:\DOCS\82563.TXT WANDA
71 

12 Idaho State Board of Land Commissioners (2013). ‘‘About the Federal Lands Task Force’’ 

webpage. Idaho Department of Lands, Boise, ID. http://www.idl.idaho.gov/LandBoard/fltf.htm 13 According to one estimate, ‘‘it is taking about 70% of the Forest Service’s land management 

budget to comply with planning and environmental review for projects, leaving only 30% for implementation and work on the ground.’’ Partin, Tom, ‘‘Subcommittee to review NEPA cost.’’ 

American Forest Resource Council newsletter, Portland, Oregon, January 23, 2013. http:// 

www.amforest.org/newsletters/browse/afrclnewsl-ljanuaryl23 14 U.S. Forest Service, Increasing the Pace of Restoration and Job Creation (2012, supra note 

5). 

* All figures have been retained in committee file. 

15Source: U.S. Forest Service (note: timber sold data before 1940 are not available). http:// 

www.fs.fed.us/forestmanagement/documents/sold-harvest/documents/1905- 

2012lNatllSummarylGraph.pdf 

16Source data from National Interagency Fire Center, Boise, Idaho. 17GAO (1999). Western National Forests: A Cohesive Strategy is Needed to Address Catastrophic Wildfire Threats. Report no. GAO-RCED-99-65. Washington, DC: U.S. Government Accountability Office, Washington, D.C. 60 pp. www.gao.gov/archive/1999/rc99065.pdf 

mittee patterned after the RACs would work with federal managers on all forest activities, not just special projects under SRS Title II.12

THREE OPTIONS

If there is no congressional action this year, some counties have warned that they 

will face whatever one might call the local government equivalent of bankruptcy. 

The 25 percent revenue-sharing provisions in law since 1908 would remain in place, 

however. 

Some western state politicians are calling for changing ownership of portions of 

federal land holdings. In 2012 several states took action. Utah passed a law promising that if the federal government does not ‘‘extinguish title’’ to a large portion 

of the federal lands and give them to the state, the matter will be pursued via litigation. Similar legislation in Arizona was vetoed by the governor. The Wyoming legislature debated the issues and created a study commission; at this writing Idaho is 

poised to do the same. 

I want to talk about changing the rules, not changing ownership. Unless the rules 

are changed, ownership change would not make much difference. Federal managers 

must follow many rules, and some could be improved, especially the National Environmental Policy Act and National Forest Management Act.13

I address three ideas for generating more revenue that the current system does: 

1) rejuvenating the federal timber sale program; 2) replacing SRS and PILT with 

a property tax equivalency payment system; and 3) testing the trust land management model with pilot projects. 

1. TIMBER SALES AND REVENUE-SHARING

After World War II, returning veterans wanted and deserved the American 

dream-a home of their own. National Forest System lands provided a substantial 

portion of the timber necessary to do that. Building roads and mills to access and 

process timber strengthened rural communities. After Congress passed laws in the 

1970s requiring Forest Service managers to involve the public and analyze environmental impacts, the decision process was opened to judicial scrutiny. In response to 

advocacy demands and court decisions, in 1990 the federal timber sale program was 

ratcheted down (Figure 1*). In the 40 years prior to that, between 1950 and 1989, 

an average of 9.5 billion board feet (BBF) per year were harvested from national 

forests. Between 1990 and 2012, the average dropped by almost two-thirds, to 3.5 

BBF per year. The current administration wants to increase from the current level 

of 2.5 BBF to 3 BBF per year.14

Figure 1. National forest timber sold and harvested, 1905-2012 (sold data not 

available before 1940).15

Coincidentally, after 1990 the number of acres burned by wildfires in the western 

states increased (Figure 2*). In the 40 years between 1950 and 1989, an average 

of 800,000 acres per year burned. Between 1990 and 2012, the average increased 

by a factor of 3.7 to 3 million acres burned per year. This includes a modern record 

of 7.4 million acres burned in 2012. The increase results from the combined effects 

of accumulated fuels and longer, dryer fire seasons. 

Figure 2. Acres burned by wildfires in 11 western States, 1916-2012.16

We cannot do much about the weather, but we can reduce fuels in areas that pose 

high risks to the things people value. Western national forests have an over-accumulation of vegetation that fuels destructive wildfires17. As Forest Service Chief 

Emeritus Dale Bosworth put it, ‘‘We have some 73 million acres of national forest 

72 

18 Bosworth, D. (2003). ‘‘Fires and forest health: our future is at stake.’’ Fire Management 

Today 63(2): 4-11. http://www.fs.fed.us/ fire/fmt/fmtlpdfs/ fmt63-2.pdf#firesand 

foresthealthourfutureisatstake 19 U.S. Forest Service (2005). A Strategic Assessment of Forest Biomass and Fuel Reduction 

Treatments in Western States. General Technical Report RMRS-GTR-149, U.S. Department of 

Agriculture, Forest Service, Rocky Mountain Research Station, Fort Collins, CO. 17 pp. http:// 

www.fs.fed.us/rm/pubs/rmrslgtr149.pdf 20 U.S. Forest Service, Increasing the Pace of Restoration and Job Creation (2012, supra note 

5). 21

22See O’Laughlin, J. (2007). ‘‘Q4. What quantity of timber harvest would match the CraigWyden payments?’’ Pp. 3-4, in, Timber Harvests and Receipts from National Forest System 

Lands in Idaho. PAG Issue Brief No. 10, Univ. of Idaho, Moscow. 13 pp. http://www.uidaho.edu// 

media/Files/orgs/CNR/PAG/Issue%20Briefs/PAGlIB10lnatl-forest-timber-sales.ashx 23SAF (2012). Timber Harvesting on Federal, State, and Other Public Lands. Position Statement, Society of American Foresters, Bethesda, Maryland. 4 pp. http://www.eforester.org/fp/documents/timberlharvesting.pdf 24 E.g., Fedkiw, J. (1998). Managing Multiple Uses on National Forests, 1905-1995: A 90-year 

learning experience and it isn’t finished yet. U.S. Dept. of Agriculture, Forest Service, Washington, DC. 284 pp. 25WGA (2011). Large Scale Forest Restoration. Policy Resolution 11-01, Western Governors’ 

Association, Denver, CO. 4 pp. http://www.westgov.org/policies/docldownload/1390-11-0 

land at risk from wildland fires that could compromise human safety and ecosystem 

integrity. . . . The situation is simply not sustainable-not socially, not economically, 

not ecologically.’’18

Restoration treatments that improve forest conditions by reducing wildfire hazards provide a triple win. As U.S. Forest Service scientists put it, ‘‘Implementation 

of any significant fuel reduction effort will generate large volumes of biomass and 

require the development of additional workforce and operations capacity in western 

forests.’’19

As noted before, there are at least 65 million acres of National Forests System 

lands that could be improved by restoration treatments. The Forest Service relies 

primarily on fire as its tool, treating 3.5 to 4 million acres per year. However, 12.5 

million acres need to be thinned with logging equipment before fire can be safely 

restored. In 2011, approximately 200,000 acres were mechanically treated; timber 

removals amounted to 2.4 BBF of timber. In 2012 that increased to 2.5 BBF, and 

the agency wants to increase the pace of restoration removals to 3 BBF feet per 

year.20

At the current harvest level, the Forest Service is removing about 6 percent of 

the annual growth. Mortality takes 6 times that, or 36 percent of annual growth.21

So each year a large amount of additional wood fiber, some green, and a lot of it 

dead, is added to the forest fire fuel complex. Compare this to the late 1980s, when 

national forest timber harvests peaked at 12 BBF per year. Those harvests were 

equivalent to half of the annual growth, and mortality was one-fourth. The forest 

accumulated a substantial amount of additional timber volume, but not as much in 

more recent years because of reduced harvests. 

How much timber harvest would be needed to provide revenues equivalent to SRS 

payments?22 The reply depends mostly on timber prices, and the answer is, not too 

surprisingly, about 12 BBF. In the late 1980s, national forest timber in the west 

sold for an average of $107 per thousand board feet (or MBF). Adjusted for inflation, 

that is about $206 per MBF in today’s dollars. The most recent price data for national forest timber sales in the west averages about $50 per MBF. By comparison, 

in 2012 the average stumpage price for sawlogs from Idaho state lands was $196 

per MBF, an indicator that perhaps the Forest Service could attain revenues capable of providing SRS payments with 12 BBF per year by rejuvenating a timber sale 

program. 

Many interest groups support federal timber sales, including the Society of American Foresters.23 This is the path to the triple win. Some analysts believe that 12 

BBF per year from the national forests is sustainable.24 The growth to removals 

ratio of 2:1 in the late 1980s was consistent with sustainability standards. There 

is more annual growth today, which can be an asset or liability, depending on how 

forests are managed. Although a revamped timber sale program at 12 BBF per year 

could eliminate the need for SRS payments, other issues remain. The social acceptability aspects of sustainable forest management are perhaps a more difficult barrier to overcome than physical sustained yield and economic viability. 

Because of record-setting wildfires in many parts of the West during the past decade, some groups are advocating forest restoration via large-scale vegetation treatments, including the Western Governors’ Association.25 Professional foresters in 

Idaho, Nevada, Utah, eastern Washington, and western Wyoming support this apVerDate Nov 24 2008 14:04 Sep 09, 2013 Jkt 000000 PO 00000 Frm 00076 Fmt 6633 Sfmt 6621 G:\DOCS\82563.TXT WANDA
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26Society of American Foresters (2011). Restoring and Maintaining Resilient Landscapes via 

Active Vegetation Management at Large Scales Helps Create Fire-Adapted Communities and 

Improve Responses to Wildfires. Inland Empire SAF and Intermountain SAF Joint Position 

Statement, commenting on the Western Region component of the National Cohesive Wildland 

Fire Management Strategy being prepared in response to a requirement of the FLAME Act of 

2009. 9 pp. http://www.usu.edu/saf/position-11-0803.pdf 27 U.S. Forest Service, Biomass from Fuel Treatments in Western States (2005, supra note 19). 28Gorte, Reauthorizing SRS (2010, supra note 2, p. 4). 29 Cook, P.S. & J. O’Laughlin. 2001. Taxing Forest Property: Analysis of Alternative Methods 

and Impacts in Idaho. PAG Report No. 20, University of Idaho, Moscow, 35 pp. http:// 

www.uidaho.edu//media/Files/orgs/CNR/PAG/Reports/PAGReport20 30Souder, J.A. & S.K. Fairfax (1996). State Trust Lands: History, Management and Sustainable Use. University of Kansas Press, Lawrence, KS. 360 pp. 31To be exact, $4.5 billion annually in the early 1990s, according to Souder & Fairfax, State 

Trust Lands (1996, supra note 30). 32Fairfax, S.K. (1999). Lessons for the Forest Service from State Trust Land Management Experience. Discussion Paper 99-16, Resources for the Future, Washington, D.C.; see also Souder 

& Fairfax, State Trust Lands (1996, supra note 30). 

proach.26 As noted earlier, fuel treatments on the scale necessary to reduce hazardous fuels will generate large volumes of woody biomass and substantial additions 

to the workforce.27 This is the path towards the triple win. 

2. PROPERTY TAX EQUIVALENCY

The idea of replacing SRS and PILT payments with a tax equivalency system 

would make federal payments to counties equivalent to what they would be paid in 

property taxes if the land were privately owned. This is not a novel idea. According 

to a Congressional Research Service analyst, this approach ‘‘may be very difficult 

if not impossible.’’28

Consider, however, that the states tax timberlands and it is not particularly difficult. In Idaho, there are 3.1 million acres of private timberlands, taxed somewhere 

between two dollars and seven dollars per acre, averaging out at five dollars per 

acre.29 At that rate, the twelve million acres of National Forest timberlands in 

Idaho, minus about 6 million acres of roadless area timberlands that will never be 

harvested, would provide roughly $35 million to the counties, and BLM’s half-million acres of timberlands another $2.5 million. Idaho receives $27.4 million under 

SRS. Spread across 20.4 million acres of NFS lands, this is $1.34 per acre, but 

spread across the productive 6 million acres of timberlands, it is about $4.50 per 

acre. 

Idaho ranks fourth in revenue-sharing payments, behind Oregon, California, and 

Washington. In 1989, the 25 percent revenue-sharing payments for the entire National Forest System peaked at $361 million, and about $339 million of that came 

from timber production activities. Spread across the 98 million acres of National 

Forest System timberlands, minus 50 million acres of roadless areas for a net 48 

million acres of operable timberlands, that is a payment averaging about $7 per 

acre. But of course, roadless areas, rangelands, and other areas not producing timber would need to pay their way at some rate under this system. 

The states have competent property tax assessors and administrators. If they 

were not taxing forest properties fairly, political outcry and subsequent adjustment 

would surely follow. Given the task, these professionals could devise a fair and 

workable system for the federal lands. Some differences between states would need 

to be ironed out by an oversight commission. 

3. TRUST LAND MANAGEMENT

School trust lands came as grants from the public domain at statehood; part of 

a bargain that states would not tax federal lands within their boundaries. States 

were to generate revenues for supporting public schools, either by selling the lands, 

or retaining ownership and selling commodities from the land, such as timber, forage, and minerals. 

Trusts work, and ‘‘Trust land management is our nation’s most ancient and durable resource policy.’’30 In the contiguous 48 states, 45 million acres of land grants 

to the states are managed under this model. These lands provide billions of dollars 

for education and other public purposes.31 Several solid principles serve as general 

guides for managing land under the trust concept: clarity, accountability, enforceability, perpetuity, and prudence.32 Two leading examples of states that retained 

and now manage timberlands for revenue production are in the State of Washington 

74 

33O’Laughlin, J., S.F. Hamilton & P.S. Cook (2011). Idaho’s Endowment Lands: A Matter of 

Sacred Trust, second edition. PAG Report No. 1, 2d ed., University of Idaho, Moscow, 35 pp. 

http://www.uidaho.edu//media/Files/orgs/CNR/PAG/Reports/ 

Endowment%20Lands%20Report%208-7-11 34O’Laughlin, J. (2000). Trust Concepts Applied to the Federal Public Lands: A New Approach 

for Sustaining Human Communities and Biological Diversity. Paper presented to the Idaho 

State Board of Land Commissioners’ Federal Lands Task Force Working Group, Boise, Idaho. 

11 pp. http://www.uidaho.edu//media/Files/orgs/CNR/PAG/other%20pubs/New/2000ltrust-landmgmt-concepts 35 Clawson, M. (1984). ‘‘Major Alternatives for the Future Management of Federal Lands.’’ Pp. 

195-234, in, Rethinking the Public Lands, S. Brubaker, ed. Resources for the Future, Washington, D.C. (Emphasis added.] 36 Clawson. M. (1975). Forests for Whom and for What? Resources for the Future, Washington, 

D.C.175 pp. 

37 Clawson, M. (1984). ‘‘Major Alternatives for the Future Management of Federal Lands.’’ Pp. 

195-234, in, Rethinking the Public Lands, S. Brubaker, ed. Resources for the Future, Washington, D.C. (Emphasis added.] 38 Idaho State Board of Land Commissioners, ‘‘About the Federal Lands Task Force’’ (supra 

note 20). 

and also Idaho.33 Recently some interest has been expressed in applying the trust 

land management model to selected federal lands. I support that. 

The trust land management model is flexible and could be adapted to promote biological diversity as a trust mission.34 It is not difficult, as portions of revenue from 

commodity sales could be directed into special funds. Ten years ago I was asked by 

the Society of American Foresters to testify before Congress about the Idaho Federal 

Lands Task Force, and specifically about adapting the trust land management 

model for National Forest System lands.35 Information from these earlier writings 

is as relevant today as a decade ago. 

Dr. Marion Clawson is an inspiration to forest policy specialists. He had a long 

and distinguished career before his passing in 1998. In the 1950s he was BLM director. He was a prolific and insightful scholar in residence at Resources for the Future, a pre-eminent think tank in the nation’s capital, and he served as RFF’s president. He wrote Forests for Whom and for What?-still my favorite.36 During the 

Sagebrush Rebellion era of the mid-1980s, Clawson wrote, 

I reject any idea that we today are less imaginative and resourceful than 

men and women who pressed for the establishment of the national forests, 

national parks, and grazing districts. We too can innovate; let us try.37

What should we try? Trusts work. More than a decade ago two parcels of federal 

land were set up as trusts-Valles Caldera Trust on National Forest System lands 

in New Mexico and Presidio Trust in California. Please let us put more trusts to 

work for our rural communities and schools. 

CONCLUSION

As our task force learned and documented in Idaho 15 years ago, the federal land 

management system is broken and needs to be fixed.38 Extension of SRS and PILT 

is appropriate for fulfilling past promises until a more permanent system can be developed, tested and implemented. Rejuvenating a timber sale program provides 

many societal benefits. Given appropriate policy direction, our resource managers 

can and will work with their fellow citizens to figure out what sustainable forest 

management looks like on the land, a better place to do that than in court. For 

lands that do not produce timber, some form of payment from a property tax equivalency system seems a reasonable approach to help alleviate some current fairness 

problems. Last, but not least, trust land management is our oldest and most durable 

model, and worth testing in several places. 

Senator CANTWELL. Thank you, Dr. O’Laughlin. Thank you so 

much for your testimony. I’m sure that Senator Risch appreciates 

you being here today, as I do. 

We’re going to have a round of questions. I think I want to start 

with you, Mr. Haggerty. 

You propose something different but I’m a little concerned that, 

you know, part of our challenge is getting this legislation through 

the Congress. But not all our colleagues understand rural communities or the significant dedication that it takes, you know, from 

transportation, emergency management, fire suppression, roads, 

75 

schools, all of those things. They don’t understand the interrelatedness of having Federal forest lands and those infrastructure needs 

that are necessary to keep them maintained. 

So I wanted—how do you think your proposal would be scrutinized in terms of payments being shifted around as opposed to 

being directly linked as a Federal obligation and then Mr. Pearce 

or Yates, or anybody else who wants to comment on that. 

Mr. HAGGERTY. Senator Cantwell, thanks for the question. I 

think one of the things that we are trying to accomplish with some 

alternative proposals is to make it clear that, you know, the communities have to be first in this. Rural communities are struggling 

across the country. We recognize their plight. 

It’s also true that we need some real solutions for our forests. 

We’ve heard a lot today about the need for restoration from the 

Chief. We certainly have fire issues in the forests. 

But what we’re trying to do is find a way to separate out the revenue requirement in paying counties as compensation for non taxable Federal lands and the work that we need to do in supporting 

rural communities with jobs and treating our forest’s health issues. 

The reason that we’re concerned about returning to a revenue sharing program is that a revenue sharing program is volatile. It’s always been volatile in the past. We expect that it will be volatile 

in the future. 

Counties need money every year. They need to have some certainty that they can take care of services, fund good schools and 

maintain roads. 

So the other part of right now is we need a way to fund the current programs. The current programs have existing problems. The 

biggest problem that we’ve identified is that most of the Secure 

Rural Schools and PILT funding, as appropriations decline, are 

starting to be directed more to urban counties than to rural counties. 

It’s a problem. This is a rural program. Rural counties need 

these payments the most. 

So what we’re trying to do is not necessarily make a statement 

about any one way forward. But we want to offer a proposal to the 

table that tries to meet some goals. 

One, provide predictability and fairness to counties. 

Two, we want to direct payments to the rural communities where 

they can do the most good. 

Third, we want to make sure that we can reduce spending in the 

Federal treasury over time. 

So that’s the nature or that’s the, kind of, goals behind our proposal. The specific components within it I think can be discussed. 

So. 

Senator CANTWELL. Thank you. 

Mr. Pearce or Dr. O’Laughlin or Mr. Yates, any comment from 

that? 

Mr. PEARCE. The conversation with the other parts of the country 

about rural communities, if I heard the question right. 

Senator CANTWELL. About whether—— 

Mr. PEARCE. Yes. 

Senator CANTWELL. Mr. Haggerty’s proposal is somewhat not 

having it. 

76 

Mr. PEARCE. Right. 

Senator CANTWELL. He’s saying have it generally related as opposed to a specific formula. Obviously our challenge is a lot of our 

colleagues don’t understand this to begin with. They think that 

we’re talking about something here that’s some give away to rural 

communities when, in fact, it is part of what is required for management of our national forests. 

If you’re going to have that much land tied up you have to access 

it. 

Mr. PEARCE. Yes. 

Senator CANTWELL. How are you going to access it if you don’t 

have roads? How are you going to have communities that are going 

to be the support system for those national forests if they don’t— 

if they can’t have emergency services or schools or what have you? 

So the notion that you’re going to lock up all these acres and somehow draw a line around it. Say oh, you’re only going to go in every 

so often. 

I think the first panel did a really good job. My 2 colleagues here 

from the Chairman, Ranking Member of talking about what happens to the forest if they don’t have access. So all of this is about— 

this is the support system that goes with our national forest. 

Mr. PEARCE. Absolutely. 

To comment on that. I spoke earlier about just 2 searches, just 2, that were nearly $750,000 when you combined them. We, within 

my county, my home county, we have to run an ambulance service 

in the middle of the forest because of the amount of traffic that 

travels through that portion of the forest. It’s a separate ambulance 

service and they cost $90 to $100,000 per year to manage that ambulance service. 

So you’re absolutely right. One of the issues for us is that PILT 

for better or worse as a payment for in lieu of taxes is a great plan 

if you have a lot of acreage. But as you know on the west side of 

the mountains you have big forests that grow very fast that aren’t 

necessarily large acreages. 

For instance in my county, if I were to trade SRS for PILT, I 

would get less than a million dollars in PILT funding compared to 

an SRS payment even at this last year of over $4 million when you 

bring the schools and so on into it. So we do perform services that 

are much bigger than an ‘‘11,000 person county’’ would normally 

perform. 

Senator CANTWELL. Thank you for that. I’m going to turn it back 

to the Chairman. 

But I’ll just point out I meet so many people who will say, oh yes 

I went—they don’t always know the exact name, but they went to 

the Skamania Lodge which is a national conference area. I meet so 

many people here from DC and they say oh, I went to your State. 

We went to this lodge. I’m not sure the Skamania Lodge would be 

there if you didn’t—it has to have support. It has to have access 

to roads. It has to have a community and all those things are part 

of this resource. 

So, anyway I’ll turn it back over to the Chairman and welcome 

back. 

The CHAIRMAN [presiding]. Thank you, Senator Cantwell. 

Where are we in terms of colleagues? 

77 

Very good, well let’s let Senator Murkowski and Senator Risch 

ask any questions. I apologize to the panel as well because even by 

Senate standards this is a hectic morning. I thank Senator Cantwell. 

Senator Risch. 

Senator RISCH. Mr. Chairman, thank you. 

Thank you, Senator Murkowski for yielding to me. I do have another meeting I’ve got to go to. But I did want to comment briefly 

on this. 

Starting with you, Dr. O’Laughlin, you know, I’ve been to the 

new building where they house the natural resources and forestry 

school. When I went there we actually did walk uphill in deep snow 

to Morrill Hall, which I know you’ve been on. It’s the highest building on campus. It wasn’t nearly as warm and cozy as the new 

school is. 

Thank you for your testimony. I really appreciate that you’re 

bringing a, more of a, standing back and looking at this globally 

as far as the problem is concerned. Because I think most people, 

as has been pointed out, don’t understand the problems we have 

out West, you know. 

They really don’t comprehend that the Constitution said every 

State was supposed to be admitted on equal footing. Turns out 

some States were more equal than others. We wind up with such 

a great swath of our State owned by the Federal Government. 

So as a result of that the government really, the Federal Government, has not been paying its fair share of what it gets out of the 

services from the local communities. They are very substantial, as 

has been pointed out here. 

But I like the idea of rethinking this, of stepping back and having another look at this. When I was Governor we wrote a road less 

plan for Idaho, as you’re probably familiar with. That was the result of doing just what you did here. That is stepping back and 

doing it differently than the way they’ve been trying to do it for 40 

years. 

The result was the collaborative method that came up with rule. 

We have the only rule in the United States today in Idaho. It was 

written by Idahoans and is now administered by Idahoans. We 

have the—Tom, in the Forest Service to thank for that and the Administration for joining us on that. 

You came to the right place because I have found that both Senator Wyden and Senator Murkowski are very good about being 

open minded and re-looking at things from a global standpoint. Although Senator Wyden wasn’t here when you testified, I suspect 

he’s going to be very interested in your testimony as to the 3 new 

ideas you’ve had. I’m sure there’s no pride in authorship. I’m sure 

there’s probably some other ideas that we may have a look at. 

But this need for a stable stream of income for the counties, 

school districts, road districts is so important. You know, it doesn’t 

matter here to the Federal Government. They just borrow money. 

They don’t have it, not a problem. They just go out and borrow it. 

But the cities and counties and the local districts do not have 

that luxury, most are required to balance their budget. So we really 

appreciate that. I think by—if we did step back and have a look 

at some different ways in which we should do this. 

78 

One of the things I found on the road less issue that took me was 

one of the keys was what had been done for 40 years is everybody 

that wrote a rule for road less tried to write a rule that one size 

fits all. To me it was so obvious when I started to look at that that 

this was not going to work. As a result of that, we did it differently, 

as you know, in Idaho. 

I think maybe that may be, as we sit here and talk about this 

today, maybe one of the keys that we get the local States, the local 

units of government involved in this to craft something that works 

there that may not work in another area. Obviously the Forest 

Service is going to have to be in the—it’s going to have to be open 

to this. BLM is going to have to be open to this. 

But if we work together maybe there’s a way to do this to where 

we can get the local involvement instead of a one size fits all since 

that doesn’t seem to work. 

So thank you for your testimony here today. Thank all of you for 

coming today. I think probably, as far as I’m concerned this is been 

eye opening, that maybe we ought to step back. 

You’ve certainly been a pioneer on this, Senator Wyden. We all 

thank you for that. 

Obviously we’ve learned lessons through it. Maybe what we 

ought to do is take those lessons and take a step back and re-look 

at how we’re going to do this from a global standpoint. 

The CHAIRMAN. Senator Risch, thank you very much for those 

kind words. I think your point about stepping back and looking at 

areas where we could come up with some fresh approaches. One of 

the things that’s striking about this debate is there may be some 

new ways to build on some of the approaches that have actually 

worked like these Resource Advisory Committee. I mean these Resource Advisory Committee, we hear. I see Mr. O’Laughlin, I believe is your constituent, you’re from Idaho aren’t you, sir? 

Mr. O’LAUGHLIN. The great State of Idaho. 

The CHAIRMAN. The great State of Idaho. 

Senator RISCH. The great State of Idaho, Senator Wyden. 

The CHAIRMAN. OK. I looked at your testimony. We’ll have some 

things we want to ask. I mean this is something that I think we’ve 

had now for a few years. Industry folks say they like it. Environmental folks say they like it. 

I remember, like it was yesterday, Senator Craig and I having 

conversations about how we would come up with some resolution 

with respect to Secure Rural Schools. Of course any time back then 

people talked about it they talked about sufficiency language. I 

said, bad history on that because we remember all of the litigation, 

the fighting and, you know, the protests. Let’s try to find something as an alternative. 

I remember when we hit on that I said this really looks, just as 

you said, like something that would have a chance to bring people 

together. I think we ought to be trying to do that, you know, again. 

Senator RISCH. You know, you’re right on that, Senator Wyden. 

When we did the road less rule in Idaho we provided in the rule 

for a RAC type committee. It was modeled after this committee. 

They are the ones in Idaho that are actually meeting regularly to 

administer the road less lands and whatever happens in those road 

less lands. 

79 

It is made up of the same type of collaborative group that we had 

that wrote the rule. It really is working. As you say, people who 

are not customarily talking with each other, it has worked very 

well. 

So, thank you, thank you for providing that model to start with, 

but—— 

The CHAIRMAN. We’re going to be working closely with you, Senator Risch. 

Let’s—Senator Murkowski I know has a question or 2 and then 

I’m going to touch on something and we’ll wrap up. You all have 

been very patient. Thank you. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

I do want to acknowledge the work of my colleague on what he 

did in Idaho with the road less rule. We wish that we had been 

able to accomplish the same. Maybe we need to look to collaborate 

a little bit more because we’re so snarled up on road less right now 

in Alaska. 

But that’s a subject for another hearing. 

I want to thank those of you who have participated here today. 

I think that this panel was very helpful just in offering up some 

suggestions out there, helping us think a little bit outside the box. 

I think this is the difference between being within the Administration and saying we can’t say anything about proposals. We’ll talk 

to you later. 

You folks that are—that have put some study into it, some 

thoughts, maybe a little bit of controversy here. Mr. Yates and Mr. 

Haggerty are clearly on opposite sides when you talk about the 

consolidation, if you will, between PILT and Secure Rural Schools. 

But that’s good for us to hear. It’s good for us to look at what the 

options might be. 

Dr. O’Laughlin, I appreciate what you have done in just your assessment, your review of alternate governance arrangements for 

our national forest systems. I think this is critically important for 

us to look at. I would hope or maybe I could just ask you to look 

at what Alaska is proposing and give me your comments on that 

whether you think that that might be something that is workable. 

We think it’s an alternative. The Governor certainly does. His 

task force has put that out. But I’d be curious to know your comments if you would be willing to provide them. 

I wanted to ask you a question, Mr. Pearce. It’s my understanding that it’s your position and that of the Partnership for 

Rural America that you would—you’d say OK, well give up Secure 

Rural School dollars to get forest production. Then it’s not just 

about restoration. It’s about restoring timber production. Is that a 

fair assessment of your views? 

Mr. PEARCE. Not to be contrary, but I would disagree that that’s 

where we’re at. 

Senator MURKOWSKI. OK. Alright. 

Mr. PEARCE. Senator, if I could speak to it for just a moment. 

We are pursuing a collaborative conversation with folks across 

the country from all sides taking the RAC model as a model, as a 

matter of fact, to try to bring organizations together to have the 

same kinds of conversations that RACs are having at the local 

level. Then our principles for pursuing forest health legislation, we 

80 

do in fact feel very strongly there has to be bridge funding. The 

short term bridge funding for counties is absolutely necessary. 

There’s just no question about it. We have counties that—— 

Senator MURKOWSKI. But we also recognize that we’ve been 

doing short term— 

Mr. PEARCE. Absolutely. Thank—— 

Senator MURKOWSKI. Bridge funding for a long time. That bridge 

is getting real long. 

Mr. PEARCE. We agree with you. Absolutely. As a commissioner 

who spent the last 8 years literally half of my time here because 

of that funding. I can tell you that. 

But I think what I would like to say is our mission is long term 

economic vitality for rural communities. It must include legislation 

that requires active, sustainable forest management to achieve resilient forest lands managed by both the U.S. Forest Service and 

Oregon and California forests. We want to see landscape restoration because we know that landscape restoration means timber. 

We know that these monocultural forests that were planted by 

man that are not natural. In order to bring them to a natural State 

will require a very long time to do that. It will require timber production. It will require jobs in our small communities and companies to come into our small communities. 

I would argue that we are really looking at legislation for forest 

management on the broadest possible plane you can find. 

Senator MURKOWSKI. That would certainly include active—— 

Mr. PEARCE. Active. 

Senator MURKOWSKI. Forest management reforms. 

Mr. PEARCE. Absolutely. Yes, ma’am. 

Senator MURKOWSKI. Yes. Yes. Good. 

Gentlemen, thank you all for not only your testimony here this 

morning, but for your efforts as we work to find a more long term, 

sustainable solution. 

I’ll just conclude with a note to Mr. Haggerty. You mentioned 

that if we go to a revenue sharing type of concept that injects volatility. I would suggest that our Federal Government and what we 

do with our budget deliberations on an annual basis is equally 

volatile. We would like to figure out a better path. I think you 

would all agree with us on that. 

So we look forward to working with all of you. 

Mr. Chairman, I suggested when—before the prior panel was dismissed I had asked specific questions of the Chief and of Ms. Haze 

as to what they might provide to the Committee in terms of recommendations. They were politically vague which is not surprising. 

But I did suggest that perhaps we all would have an opportunity 

to sit down with them and pick their brains and that of these individuals again that are focused on some pretty important stuff. 

So, look forward to doing that with you. 

The CHAIRMAN. Let’s do it. 

Thank you, Senator Murkowski. 

I apologize again to all of you for having to be out. I did read 

your testimony last night. I think all of you while having obviously 

differing views were trying to be sensitive to the fact that there is 

a challenge to try to deal with the short term and the long term. 

81 

I think rather than keeping you any longer I just want to say 

we’re going to be reaching out to you more in the days ahead. 

What’s going to be different about this—and essentially we’ve had 

what amounts to 4 reauthorizations, if you kind of look back 

through the history, we are going to make sure that no one tries 

to put the short term and the long term out there as if they were 

mutually exclusive. They are not. 

We need to find a way that intertwines. Whether you call it a 

bridge or what have you, something that ensures that these rural 

communities that have taken such punishing hits in the last few 

years, can keep their doors open while in effect the Congress goes 

through what very often seems like a slow burn when it comes to 

legislation. I think you heard from Senators today a real desire to 

look at some fresh ideas with respect to the long term. 

That’s why I hit for example on the common bonds between all 

the communities where there is Federal land and Federal water. 

Literally when I went to Senator Landrieu’s State and Senator 

Murkowski’s State, I was struck by how the conversations were so 

similar to the ones we have in rural Oregon where you have folks 

from the timber industry who would like to get the cut up, as I 

would, working with folks who are in the environmental community trying to protect some old growth as I would also like to do. 

So I think there is a lot to work with here. As you could see it’s 

not going to be partisan. Having talked to Administration officials 

such as Secretary Vilsack here recently, I think we’re going to see 

the Administration very interested in these conversations. 

So my apologies for having missed a decent chunk of your comments. I want you to know I did read your remarks last night. 

Clearly you all have subscribed to the idea that it’s time for some 

new thinking. That’s certainly all we can ask for. 

With that the Energy and Natural Resources Committee is adjourned. 

[Whereupon, at 12:27 p.m., the hearing was adjourned.] 

[The following statement was received for the record.] 

STATEMENT OF ATHAN MANUEL, DIRECTOR, LANDS PROTECTION PROGRAM, 

SIERRA CLUB

On behalf of the Sierra Club’s 2.1 million members and activists, I am writing 

to support the Committee’s examination of both short and long-term solutions to the 

challenges posed by the much needed payments to local governments, via Secure 

Rural Schools (SRS) and Payment in Lieu of Taxes (PILT). 

As you know, the Secure Rural Schools and Community Self Determination Act 

program is expiring, leaving rural communities across the country in financial risk. 

This program provides important funding for schools, community services, and roads 

in more than 1,900 counties in 49 States, the District of Columbia, Guam, Puerto 

Rico, and the U.S. Virgin Islands. SRS has received broad bipartisan support since 

its original passage in 2000 because it helps the economic stability and sustainability of rural communities. As noted in previous communications with Committee 

members and staff, the Sierra Club encourages a short-term reauthorization of SRS. 

As the nation struggles to support public sector jobs and services during a time 

when the economies of many rural areas continue to struggle, a short-term extension of this program provides an opportunity to maintain support for rural areas as 

we identify a more sustainable long-term solution. 

For more than 100 years, hundreds of counties across the United States have received payments from the federal government as part of a compensation process for 

non-taxable Forest Service and Bureau of Land Management (BLM) lands. By decoupling payments from commodity receipts and introducing new funding for 

projects on public lands, SRS has helped counties with the transition away from 

82 

unsustainable dependence on logging to a more diverse economic base in the face 

of declining timber production on public lands and changing economic opportunities 

related to restoration and conservation. 

As SRS represents only a temporary solution, the Sierra Club is committed to 

supporting the Senate’s efforts to create a long-term solution that identifies alternate funding sources that also protect our nation’s wild places, clean air and water, 

and wildlife. We look forward to discussing ideas and opportunities with staff, and 

continuing to consider how we might best address the needs of rural communities 

while maintaining a healthy environment for all to enjoy in future generations. 

As the Committee reviews various proposals, the Sierra Club would like voice our 

concern regarding any effort that would essentially industrialize or privatize our 

public lands. Such efforts will damage watersheds and pollute drinking water and 

put our western water supply at risk. Our public lands are also our economic engines. The most recent 2012 report from the Outdoor Industry Association confirms 

that the outdoor recreation industry directly supports 6.1 million jobs and contributes over $646 billion annually to the U.S. economy. Similarly, the U.S. Forest Service’s most recent annual visitor survey showed that Forest Service lands attracted 

166 million visitors in 2011, and that visitor spending in nearby communities sustained more than 200,000 full- and part-time jobs. At the local level, according to 

the Bureau of Land Management, in 2010 there were a total of 6,811 jobs on Oregon 

BLM lands associated with recreation, accounting for a total of $662,400,000 in output. Also, the most recent data from 2011 shows about 5.5 million visits were recorded on Western Oregon BLM associated with recreation. Finally, National Parks 

continued to be important economic engines for local communities in 2011, with visitors generating $30.1 billion in economic activity and supporting 252,000 jobs nationwide. 

The Sierra Club supports a dual track approach that both secures the needs of 

rural communities in the short-term, while we examine options for a long-term solution that maintains a commitment to the protection of our nation’s natural heritage. 

We thank the committee for their commitment to this issue and look forward to 

future hearings and discussion on these matters. 

(83) 

1Federal legislation mandated that payments fund county roads and schools, but left to states 

how to allocate the funds between these two services. See Congressional Research Service 

Memorandum, Forest Service Revenue-Sharing Payments: Distribution System. November 19, 

1999. Ross Gorte. (attached to this document as Appendix A.* 

*Appendix A has been retained in committee files. 

APPENDIX 

RESPONSES TO ADDITIONAL QUESTIONS

RESPONSES OF MARK HAGGERTY TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. In your testimony you conclude that continued decoupling of payments 

can lead to new dedicated funding streams from public lands, and you go on to cite 

oil and gas, and leasing fees. I find this confusing in that your testimony focuses 

a great deal on volatility and the boom and bust cycles of commodity-extraction, yet 

why do these extractive uses escape scrutiny? Why does timber get singled out? 

Answer. In our testimony, we reviewed the history of the Forest Service and Bureau of Land Management (BLM) O&C revenue sharing programs to highlight the 

challenges associated with volatility and to help provide context and information 

that could be useful in crafting a long-term solution. 

The boom and bust cycles inherent to commodity markets suggests several things: 

returning to revenue sharing as the basis for providing compensation for non-taxable federal lands will result in lower payments for most communities relative to 

Secure Rural Schools (SRS), that compensation to individual counties will vary dramatically in amount (meaning payments are inequitable for the purpose of tax compensation), and that payments will be highly uncertain from year to year. 

Revenue sharing from oil and natural gas bonus payments, rents, and royalties 

will face similar challenges associated with timber revenue sharing payments. The 

testimony does not exclude these revenue sources from scrutiny, or single out timber. 

If decoupling is important to providing stable, predictable payments for communities dependent on timber, the same will be true for compensation made to counties 

more reliant on oil and natural gas to fund local services and infrastructure. 

In other words, compensation made to counties for non-taxable federal land will 

best serve the needs of counties if these payments are decoupled from annual commodity receipts regardless of the source of those receipts, be it timber, oil and gas, 

renewable energy, or other similar tax, fee, or royalty payment. 

As Senator Murkowski noted during the hearing, continued appropriations are no 

more certain for counties than are payments made from commodity receipts. That 

is why the testimony offered recommendations for reform that will more efficiently 

and equitably distribute payments that could also allow Congress to lower the overall cost of the program. The testimony also offered the observation that decoupling 

allows communities, agencies, and Congress to work together to find ways to identify dedicated sources of funding to reduce or eliminate the need for appropriations 

over time. It is up to Congress to decide how to fund payments in the future, and 

our brief reference to ongoing discussions about potential new revenue sources 

should not be interpreted as funding recommendations. 

Question 2. One of the key purposes of the Secure Rural Schools is funding for 

rural schools. What impact does the expiration of the SRS program have specifically 

on schools? Does that impact on the schools vary by state? Please explain. In your 

explanation please include a breakdown by state and county of the amounts and 

percentage of funds allocated to schools. 

Answer. Payments from the Forest Service through the 25 Percent Fund and the 

expired SRS program are restricted to fund roads and schools. Congress left to the 

states to determine how to allocate Forest Service payments, and each state allocates a different share of payments to schools.1 Vermont allocates 100 percent of 

84 

2 An Inquiry into Selected Aspects of Revenue Sharing on Federal Lands. 2002. A report to 

the Forest County Payments Committee, Washington, D.C. Research Unit 4802-Economic Aspects of Forest Management on Public Lands, Rocky Mountain Research Station, USDA Forest 

Service, Missoula, MT. 3Oregon Department of Education, Oregon State School Fund (SSF). http:// 

www.ode.state.or.us/search/results/?id=168 (last accessed 11/22/10). 

* The map had been retained in committee file. 

Forest Service payments to school districts. Most other states allocate between a 

quarter and three quarters of payments to schools. 

States also differ on how the payments allocated to schools are distributed. A majority of states pass the funds directly back to local school districts based on National Forest acreage in each district, meaning Forest Service payments to schools 

represent additional revenue to those districts that have public lands. Some states 

retain the Forest Service payments and add them to state school equalization funds 

meaning Forest Service payments are distributed to schools across the state with 

no basis in National Forest acreage. States that do not distribute payments directly 

to local schools include: Arizona, Arkansas, Colorado, Louisiana, Missouri, Nebraska, New Mexico, Oregon, Pennsylvania, Tennessee, Vermont, Washington, and 

Wyoming.2

For example, Oregon retains SRS payments in the state equalization fund and 

shares SRS funds with all schools in the state. To put the case of funding for Oregon 

schools in perspective, it is useful to know that SRS payments make up a small portion of the Oregon school budget and that SRS payments are currently paid on a 

declining annual basis. In FY 2009, SRS payments to schools in Oregon amounted 

to $25 million, which was about one percent of the three billion dollar State School 

Fund budget for 2009-2010. If SRS is not renewed and federal land payments revert 

to revenue sharing based on commodity production, we estimate Oregon’s schools 

would receive between four and five million dollars-or about 0.13 percent of the current State School Fund.3

The two important points are that schools with federal lands in others states that 

add payments to equalization formula do not benefit from SRS or the 25% Fund, 

and because they do not benefit, they will not be harmed if Forest Service payments 

decline (if SRS is not reauthorized). In contrast, in states that do return Forest 

Service payments directly to local districts, schools will be exposed to significant 

funding declines if SRS is not reauthorized. 

It is also important to understand that PILT is designed as a safety net that provides certain funding to counties if revenue sharing payments falter. Only county 

governments are eligible to receive PILT, and school districts have no similar safety 

net for declining federal compensation for non-taxable lands. For example, school 

districts in Idaho and Montana are highly exposed to changes in Forest Service payments because schools will not be compensated by PILT, while schools in Oregon 

and Washington will not see significant revenue declines because they are not direct 

beneficiaries of Forest Service payments. 

The attached map* shows how payments change to both county governments and 

school districts only for the county and local share (25% fund, Title I and Title III) 

if SRS goes away and PILT is fully funded. Notice that almost all counties in Washington State will see no change, other than the four counties subject to the population ceiling payment amount in PILT. In Montana and Idaho, by contrast, every 

county that received an SRS payment will see declines, and these declines include 

the impact to school districts. 

RESPONSES OF MARK HAGGERTY TO QUESTIONS FROM SENATOR BARRASSO

Question 1. In your testimony, you make the case county payments should be decoupled from the source of revenue, as this allows new revenue to come from anywhere including higher oil and gas royalties, new leasing fees, and a carbon tax. 

Are you proposing to redirect onshore oil and gas revenues that would otherwise go 

to producing states such as Wyoming, Colorado, New Mexico, Utah, and Montana 

to non-producing states such as Oregon and Washington? 

Answer. Under the recently expired SRS program, payments to each county were 

determined based on a formula that included historic revenue sharing payments, 

the number of acres of federal land in each county, and an adjustment for per-capita 

personal income. SRS payments were funded at a certain level each year that was 

determined by Congress. The full SRS authorization was funded first from receipts 

generated on public lands and then from the federal Treasury. 

If SRS is reauthorized with or without reforms, we do not recommend that the 

basic structure of a formula-driven, predictable payment to counties funded by a 

combination of receipts from public lands and the federal Treasury change. 

85 

We recommend that Congress maintain decoupling between payments made to 

compensate counties for the presence of federal public lands and annual receipts but 

do not make any recommendations to the source of funding. That is for Congress 

to determine. 

Question 2. In general, do you believe higher taxes and additional fees are good 

for economic growth and consumers? 

Answer. The purpose of the hearing was to examine the options and challenges 

related to possible reauthorization and reform of two federal payment programs for 

local governments-the recently expired Secure Rural Schools and Community SelfDetermination Act and the Payment in Lieu of Taxes. 

In our testimony, we review the history of revenue sharing payments to highlight 

the challenges inherent to funding basic local services from a volatile federal payment program. Based on this history, we recommend that a long-term solution to 

compensation for non-taxable federal lands maintain the current decoupling between payments to local governments and annual receipts. 

We do not make any recommendations to how the programs should be funded. We 

only suggest that if federal land payments to counties are reauthorized in a way 

that they are stable, predictable, and equitable, the source of funding is no longer 

important to the performance of the compensation programs and funding could come 

from a wide variety of options. 

Question 3. In your testimony you state County payments should not be tied to 

the boom and bust cycle of commodities such as timber. Would not payments stemming from oil and gas royalties and fees also be subject to the ups and downs of 

markets? 

Answer. Yes. In my testimony, I reviewed the history of the Forest Service and 

BLM O&C revenue sharing programs to highlight the challenges associated with 

volatility and to help provide information that could be useful in crafting a longterm solution. 

The boom and bust cycles inherent to commodity markets suggests several things: 

returning to revenue sharing as the basis for providing compensation for non-taxable federal lands will result in lower payments for most communities relative to 

SRS, that compensation to individual counties will vary dramatically in amount 

(meaning payments are inequitable for the purpose of tax compensation), and that 

payments will be highly uncertain from year to year. 

Revenue sharing from oil and natural gas bonus payments, rents, and royalties 

will face similar challenges associated with timber revenue sharing payments. The 

testimony does not exclude these revenue sources from scrutiny, or single out timber. 

Question 4. How do higher taxes and fees on natural resources such as oil and 

gas bring jobs back to counties rich with timber resources? 

Answer. We recommend that the best way federal land compensation programs 

can aid economic development in rural communities is to provide stable, predictable 

payments as compensation for non-taxable federal lands. 

We do not make any recommendations to how the programs should be funded. 

That is for Congress to determine. 

Question 5. What would be the economic impact of higher taxes, fees, and royalties for county governments where oil and gas is produced? 

Answer. The purpose of the hearing was to examine the options and challenges 

related to possible reauthorization and reform of two payment programs for local 

governments-the recently expired Secure Rural Schools and Community Self-Determination Act and the Payment in Lieu of Taxes. 

We do not make any recommendations to how the programs should be funded, 

that is for Congress to determine. 

RESPONSES OF JAY O’LAUGHLIN TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. Some have suggested that the expiration of the Secure Rural Schools 

program is actually an opportunity to experiment with alternative governance arrangements for national forest system lands. I understand that you have studied the 

state trust land model and believe it can be adapted successfully for national forest 

system lands. 

Can you elaborate on how the state trust land model can be adapted for national 

forest system lands? 

Answer. It is my privilege to do so. Our nation’s oldest, most durable resource 

management model is the trust concept applied to managing lands granted at statehood to support public schools and other public institutions. The trust model is used 

by 22 states to manage 135 million acres of land and creates cash flows of billions 

86 

of dollars for trust beneficiaries, primarily public schools. The trust model is based 

on principles of clarity, accountability, enforceability, perpetuity, and prudence. 

Thus trust land management is capable of attaining sustainable resource management on public lands, and likely more capable than the hodgepodge of overlapping 

statutory mandates, administrative regulations, and case law precedents that characterize the current situation. 

Of the five trust principles, only enforceability is evident on National Forest System (NFS) timberlands. As a result of extensive litigation, mostly regarding procedural failure rather than substantive environmental quality issues, federal courts 

have become de facto land and resource managers. As contrasted with the trust 

principles, NFS objectives are unclear, managers are generally unaccountable for 

their actions, at least 65 million acres of NFS timberlands are in a condition that 

cannot be perpetuated (i.e., an unsustainable condition due to excessive fuel loads), 

and the decision process is imprudent because the National Forest Management Act 

(NFMA) relieves the U.S. Forest Service (USFS) from having to employ efficiency 

guidelines that ordinary businesses follow. 

Trust settlor and trust components.—The creator of a trust is called the settlor. 

For a land management trust on NFS timberlands Congress would be the settlor. 

Trust components are briefly described as follows. The trust corpus is a body of assets placed under trust management, in this case, timberlands. The settlor creates 

a mission statement defining land and resource management objectives, identifies 

the trust beneficiaries, and appoints a board of trustees to set policies and oversee 

trust land managers, who presumably would be federal agency personnel. In essence, the lands in the trust are managed for the beneficiaries rather than ‘‘the public’’ and the trustees have a fiduciary obligation to act with undivided loyalty to the 

beneficiaries. 

Funding the trust.—To make the trust work, funding mechanisms are needed that 

promote prudent businesslike management of the trust’s revenue-producing assets. 

Eventually a timberland management trust could become self-sustaining if it had 

a sufficient amount of timberlands. Given the current county payment situation, 

some bridge funding would be needed until revenues begin to flow into the trust 

fund accounts. To be sustainable the trust must be economically viable and able to 

provide outputs of goods and services consistent with the trust mission as well as 

perpetuate and sustain the trust assets. 

Biodiversity considerations.—Several provisions of federal laws that do not apply 

to state trust lands must be addressed to adapt the trust model to NFS lands. Foremost among them is the NFMA mandate to provide a diversity of plant and animal 

species. As USFS Chief Emeritus Jack Ward Thomas once pointed out in the context of northern spotted owl conservation, the NFMA diversity mandate is more difficult for the USFS than meeting the requirements of individual species protected 

by the Endangered Species Act. The trust model can be adapted to include species 

diversity as a trust mission, and assets and cash flows from them can be dedicated 

for that purpose in a biodiversity trust fund account. 

Valles Caldera Trust.—Application of the trust model to NFS lands is not novel. 

Some NFS lands in New Mexico that have been managed since 2000 as the Valles 

Caldera Trust, a national preserve. Its mission, however, is as vague as that of the 

NFS: protect and preserve the scientific, scenic, geologic, watershed, fish, wildlife, 

historic, cultural, and recreational values of the lands and to provide for multiple 

use and the sustained yield of renewable resources. Although it was designed as a 

revenue-producing trust with a self-sufficiency goal, it is proving impossible to meet 

because the resource base is not substantial enough. 

Mission statement.—State trust lands have more precisely defined missions than 

the Valles Caldera Trust. For example, as per the Idaho Constitution, the lands 

granted from the public domain at statehood must provide ‘‘maximum long-term financial return’’ for trust beneficiaries, mostly the public schools. However, eight 

other public institution beneficiaries also receive monies placed into their trust fund 

accounts, including the University of Idaho. The trust settlor (i.e., Congress) could 

dedicate some of the public lands trust assets to generate monies for a biodiversity 

trust fund, and wildlife advocates could be represented on the board of trustees to 

ensure that the trust assets are used prudently and the revenue-generating capacity 

is perpetuated. Other social concerns such as recreation opportunities could be similarly included in the trust’s organizational structure with its own trust fund account. So, too, could local government officials who have come to rely on federal payments as compensation for not taxing federal lands. 

Collaborative decision-making.—The current NFS governance system works best 

when citizen interest groups collaborate among themselves and recommend actions 

to the land managers. In theory this reduces litigation over project proposals, but 

it is slow and not without its critics. The current model stops short of power-sharing 

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1Wolf, R.E. 1989. National Forest timber sales and the legacy of Gifford Pinchot: Managing 

a forest and making it pay. University of Colorado Law Review 60: 1037–1078. 

between interest groups and managers, which I view as a flaw that probably cannot 

be remedied under current laws and regulations. Under the trust model, a local collaborative management group could be created to not only work with and advise the 

trust land manager, but given power to make decisions with the manager or otherwise hold managers accountable for not implementing the group’s recommendations. 

What about national interests? It is debatable whether there is such a thing as a 

national interest that is not present in an inclusive group of local interests. But if 

there is, then the national interest could be represented on the board of trustees, 

rather than the local collaborative group. 

Question 2. You stated in your testimony that in your view we could sustainably 

harvest enough timber from national forest lands to provide revenues equivalent to 

SRS payments. This conflicts with the testimony of Chief Tidwell of the Forest Service, who stated that the Forest Service would need to cut 16.2 billion board feet to 

meet the SRS payments and that this would be virtually impossible to accomplish. 

Do you agree with the Forest Service that they would need to cut 16.2 billion 

board feet provide to revenues equivalent to SRS payments? 

Answer. No, I do not agree with that statement. Revenues are a function of price 

as well as quantity. Timber price is determined by many things, including market 

demand, timber quality, and contract stipulations timber purchasers must follow 

that add costs to their operations and reduce the price they are willing to pay for 

timber. Market demand is beyond the control of the USFS, but the agency can 

change the quality of timber sale offerings and the administrative rules for timber 

sales. 

How much timber is needed, and at what price, to provide revenues equivalent to SRS payments? In 2009, SRS payments peaked at $438 million. With the 25% 

revenue- sharing policy that has been in place since 1908, revenues of more than 

$1.7 billion would be needed to generate SRS payments. If it would take 16.2 billion 

board feet (BBF) to generate $1.75 billion in gross revenues, then the average timber price is calculated as $108 per thousand board feet (MBF). The question now 

can be reframed: Is $108/MBF an accurate reflection of the value of national forest 

timber? Not necessarily. It could be higher, or it could be lower. In 2011 and 2012 

the average price for NFS timber harvested was $53/MBF and $55/MBF, respectively. By comparison, the price for timber sold from Idaho’s state trust lands averaged $200/MBF in 2012; in Washington state, $330/MBF in 2011, and an average 

of $300/MBF over a ten-year period from 2001-2011. 

Question 2a. Please describe what a sustainable timber program on national forest system lands would look like that would provide revenues equivalent to SRS 

payments. What quantity of timber does this represent? 

Answer. During several years in the late 1980s, national forest timber sales were 

as high as 12 billion board feet (BBF). Some analysts would argue that 12 BBF/ 

year is sustainable; if sold at an average of $142/MBF then the 25% revenue-sharing 

policy would provide monies equivalent to SRS payments at their peak level. Now 

consider that if the Forest Service would harvest its self-determined Allowable Sale 

Quantity (ASQ) of approximately 6 BBF/year at an average price of $292/MBF, that 

would provide for peak SRS payments. 

Is 6 BBF/year sustainable? By definition, the ASQ can be considered sustainable, 

at least in the biophysical sense. When the USFS was harvesting 12 BBF/year in 

the late 1980s, that was equivalent to only about half of the annual growth increment. If the entire annual growth increment were harvested during a year, the volume of timber in the forest would be the same at the end of the year as it was at 

the beginning. So even at 12 BBF/year, the timber harvest level was biophysically 

sustainable, and forest growing stock was increased by a large increment each year. 

With timber sales currently at 2.5 BBF/year, a very large increment is added each 

year. As a result forests are overstocked and trees struggle to compete for the limiting factor on each forest site-usually water in the Interior West and nutrients or 

sunlight elsewhere-and annual tree mortality has been increasing in every inventory 

period since the timber sale program began to wind down rapidly starting in 1990. 

Sustainable forest management must be economically viable and socially acceptable as well as biophysically feasible. According to deceased Congressional Research 

Service analyst and forester Robert Wolf, in the late 1980s the USFS timber sale 

program had not paid its own way in any single year since the agency was created, 

despite USFS claims that the program was profitable. Wolf fixed the blame on a 

USFS failure to fully account for program costs.1 Since then timber sale volumes 

have declined, while procedural requirements have not, so costs are likely even 

higher per unit of timber sold. However, the main reason the federal timber sale 

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2 Brown, G., J. O’Laughlin, and C.C. Harris. 1993. Allowable sale quantity (ASQ) of timber 

as a focal point in national forest management. Natural Resources Journal 33(3): 569-594. 

program now struggles to produce 2.5 BBF/year instead of 12 BBF/year is social acceptability. Segments of society have made it clear that they wanted timber sales 

reduced, if not eliminated, and when they go to court to enjoin a proposed USFS 

timber sale project, they often are successful. 

RESPONSES OF JAY O’LAUGHLIN TO QUESTIONS FROM SENATOR BARRASSO

Question 1. Dr. O’Laughlin, the U.S. Forest Service believes that increasing timber production from our forests to provide revenues equivalent to SRS payments is 

basically impossible. Do you agree with the Forest Service that this is next to impossible? 

Answer. I would stop short of agreeing that it is impossible and say instead it 

is highly unlikely, mainly because of the current set of rules the agency must follow. 

These complicated rules test managers’ patience as well as their ability to make 

scarce budget resources do everything that laws and regulations require. The USFS 

spends half or more of its land management budget on planning and environmental 

analysis documents that are often successfully litigated for procedural failing. It 

may be time to change the rules, as several western states, specifically Utah and 

Idaho, are formally calling for a change of ownership. While those calls are being 

tested in legal venues, some rule changes could be tested on the land. The state 

trust land management model can be implemented on lands that remain in federal 

ownership. This is not a novel idea, as some NFS lands in New Mexico have been 

managed as the Valles Caldera Trust since 2000. 

If the ASQ were harvested, what would the price need to be? Putting aside planning, analysis, and administrative costs for the moment, let us assume that the 

agency has sufficient resources to cut as much timber as it wanted to. The Allowable 

Sale Quantity (ASQ) concept sets a ceiling on what managers feel is a sustainable 

level of timber harvest.2 The current ASQ across all NFS lands is about 6 BBF/year. If that quantity of timber was sold at an average price of $292/MBF, then the USFS 

would have gross revenues equivalent to SRS payments at their highest level. The 

current price is an average of $54/MBF. Perhaps Congress should consider what additional resources the agency needs to harvest the ASQ, which is about 2.4 times 

its current harvest level of 2.5 BBF/year, and require adjustments in agency practices so that higher quality timber could be sold under less onerous rules that would 

attract higher prices for sales. Some administrative rules would likely have to be 

changed to do that, but I do not understand procedural and contractual details well 

enough to make a recommendation. However, I do believe that Congress could improve the current situation and make land and resource management plans more 

meaningful by setting the ASQ as a target, not a ceiling, and specifying how the 

ASQ should be determined so that it is sustainable. If a land and resource management plan fails to do that, it is in my opinion not a very useful plan. 

Question 2. Would linking timber management to revenue generation lead to 

unsustainable logging? 

Answer. No. The trust model used by the states to manage lands granted at statehood for supporting public education generally has a revenue- generating mission 

objective. If the mission is for long-term revenue generation, as in Idaho, then the 

trust land manager must protect and perpetuate the sustained-yield capacity of the 

land or be in violation of the long-term revenue-production mandate. My observations are that state trust lands in Idaho, Montana, and Washington are managed 

sustainably under a revenue-production mission objective. I suggest some pilot 

projects on federal lands to test this question as a working hypothesis. Then arguments could be based on evidence rather than speculation. 

What is meant by sustainable logging? Logging is a forest management tool, and 

sustainable forest management must be biophysically feasible, economically viable, 

and socially acceptable. There are some who will argue that state trust land timber 

harvests are not sustainable, and that the current harvest of 2.5 BBF/year on national forests is unsustainable. Others can be expected to argue that state trust 

lands are managed sustainably. And some might even argue that the 12 BBF/year 

harvests of the late 1980s on national forests were sustainable. The NFMA does not 

require the USFS to practice sustainable forest management, but perhaps it should. 

A starting point would be revisiting the conditions under which timber harvest is 

permissible, and the NFMA partially addresses that question by restricting harvests 

to ‘‘mature trees’’ as defined by the non-economic criterion of culmination of mean 

annual increment, which falls at a much older age than the cutting age of forests 

managed for revenue production. Third-party certification of sustainable forest manVerDate Nov 24 2008 14:04 Sep 09, 2013 Jkt 000000 PO 00000 Frm 00092 Fmt 6601 Sfmt 6621 G:\DOCS\82563.TXT WANDA
89 

agement has been tested on NFS lands. Whether certification should be a requirement under the current system has been debated and the answer was no. Although 

certification is costly, it has public relations value and could be a useful approach 

to test as a feature of trust land management pilot projects. 

Biophysical feasibility—The annual forest growth on all NFS timberlands is about 

6.5 billion cubic feet, or roughly 32 BBF, with annual mortality representing about 

11 BBF. That means if the centuries-old sustained-yield rule of thumb - don’t cut 

more in a year than the forest grows-were the guideline, then the national forests 

could provide a sustainable timber harvest of 32 BBF based on gross growth or 22 

BBF/year based on net growth. That means if 22 BBF were harvested in a year, 

there would be the same amount of live green forest growing stock at the end of 

the year as at the beginning. A legitimate set of questions that I do not believe have 

ever been asked would be, what is the appropriate growing stock volume for NFS 

timberlands, and what should the annual net growth increment be? (After gross 

growth has been reduced to account for mortality and removals by timber harvest 

or other forest restoration activities.) Determining a sustainable ASQ implicitly relies on replies to these questions. 

Economic viability—Given the high administrative planning and environmental 

analysis costs incurred by the USFS to comply with NFMA and the National Environmental Policy Act (NEPA)-some analysts estimate it to be more than half the 

agency’s land management budget-then the timber sale program probably is not economically viable. As noted in the reply to an earlier question, the USFS has never 

been able to demonstrate that the timber sale program was profitable. 

Social acceptability—Although society has not deliberated the question of what a 

sustainable NFS timber harvest level would be, segments of society have used planning and environmental laws to sue the Forest Service seeking to stop timber sales. 

Courts have often interpreted the laws in the plaintiff’s favor. 

Question 3. In your testimony you talked about changing the rules as a way to 

increase timber production while also addressing our wildfire/forest health problem. 

Will you further explain what rules and how they must be changed? 

Answer. Yes, gladly. The question addresses two parts of what I described as the 

triple-win from active forest management: improved conditions and useful products. 

The third part is creation of family-wage employment. Before responding directly to 

the question of rule changes that could advance the triple-win concept, a brief digression provides a description of and a prescription for the wildfire/ forest health 

problem that may provide useful context. 

Wildfire/forest health problem. Western forests evolved in the presence of fire, 

thus are what ecologists call fire-adapted. By excluding fire from forests for a century through very effective fire suppression activities, the fuel complex has been altered. Fuel loads are at unprecedented high levels and wildfires have become larger 

and less controllable than at any time in a century. Ways to improve the situation 

are well known: Either return fire to the landscape at something approximating the 

historic fire regime, or where that is too dangerous or not socially acceptable, use 

a fire surrogate to reduce hazardous levels of fuel-i.e., remove woody vegetation 

using logging equipment. Even if it is desirable to restore fire everywhere, the USFS 

points out that at least 12 million acres need mechanical treatments, i.e., logging, 

to remove vegetation before restoring fire would be considered reasonably safe. The 

agency is doing about 250,000 acres of mechanical treatments per year and producing 2.5 BBF/year. At that rate it will take 48 years to do the mechanical treatment part of restoration, and because vegetation grows back the mechanical treatments will need to be repeated to keep fuel loads below hazardous levels if fire does 

not return as expected soon after fuel treatments. If the ASQ of 6 BBF/year were 

harvested only from these 12 million acres of lands needing mechanical treatment, 

then the program of restoration work would take 20 years instead of 48. 

The trust model—It seems foolish to wait any longer to begin a program of accelerated restoration; however, the federal budget situation is tricky, to put it mildly, 

and sustainable forest management must be economically viable. The idea that revenues from timber sales should be dedicated to fund forest restoration work may be 

a heretical non-starter for some people, but those with open minds should consider 

that the principles underpinning the trust land management model do not necessarily mean that linking timber revenues to specific programs, whether it be county payments or forest restoration work, creates an unsustainable situation. Based 

on her important and insightful book on State Trust Lands, Sally Fairfax, professor 

emeritus of the University of California-Berkeley, concluded that the trust land 

management model was more likely to attain sustainability than the current system. 

Rule changes—If trust land managers had to deal with all the same rules that 

NFS managers must comply with today, society should not expect outcomes that are 

90 

much different than what the NFS lands are currently providing for society. I would 

describe that as overstocked forests waiting to burn in unprecedented large and uncontrollable wildfires, like those in 2000, 2006, 2007, and 2012, each successive year 

topping the previous record of acreage burned in the west while the average number 

of wildfires per year has remained relatively constant for the past three decades. 

Tens of millions of timberlands are in an unsustainable condition and managed passively rather than actively. 

Redo the NFMA statute. The USFS has tinkered with NFMA regulations numerous times and still failed to provide a sustained yield of multiple goods and services 

while forest conditions have worsened. The NFMA diverts scarce resources to creating planning documents that are chiefly useful for the maps that designate dominant-use areas where timber can be harvested and motorized recreational vehicles 

can go. Pay careful attention to the NFMA diversity mandate. Redefining the ASQ 

mandate and a new set of criteria describing where and when timber can be harvested would help. 

Put land managers in charge of land management, not courts. These changes 

would help: Reduce the need for land managers to shuffle papers in the office and 

get them out on the land where they can improve landscape resiliency by removing 

hazardous fuels. Healthy Forest Restoration Act mechanisms should be used more 

widely. 

NEPA requirements are burdensome and expensive. Administrative approaches to 

NEPA reform have not made much difference. Some instructions from Congress 

could help. Create categorical exclusions for fuel treatment projects designed to improve wildfire resiliency across large landscapes. If there are to be such things as 

NFMA land and resource management plans, exempt them from NEPA analysis. 

These planning documents describe dominant use areas as guides to actions across 

multi-million acre planning units, not decision documents for taking action. Such actions are proposed in smaller-scale projects, but wisdom currently emerging on NFS 

lands in South Dakota and Arizona is that NEPA analysis needs to be done at the 

scale of hundreds of thousands of acres, which is at least an order of magnitude 

greater than more customary project size of several thousand acres. The wildfire/ 

forest health problems are large-scale and so must be the creative approaches to improve problem situations. 

Conclusion—I appreciate the senators’ questions and the opportunity to respond 

to them thoughtfully. I hope some of these ideas will improve the way NFS lands 

are managed. That is a common interest shared by citizens across the U.S., but especially in the western states where the NFS dominates the landscape, and in no 

other state as much as Idaho. Trust land management works, and today’s managers 

are just as innovative as those who initiated the federal land management systems. 

If managers were freed from expensive administrative burden they would be able 

to demonstrate the good things they are capable of doing. Try some pilot projects 

with the trust model, and do it at a large scale. A ranger district here and there 

will not be enough, as the Valles Caldera Trust demonstrates. A four million acre 

area, such as the Clearwater-Nez Perce NF planning unit in north-central Idaho, 

or the Boise-Payette-Sawtooth NF unit in southern Idaho, is the right scale. So are 

the Fremont-Winema, Okanogan-Wenatchee, Tongass, Medicine Bow-Routt, and 

Uinta-Wasatch-Cache. And there are many others. 

RESPONSES OF PAUL PEARCE TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. Do you agree with the assertion that Secure Rural Schools payments 

have promoted economic diversification? Has recreation or other public land uses 

been able to replace the loss of the timber economy in your experience? 

Answer. We do not believe that SRS payments have promoted economic diversification in most of the counties receiving it. Economic diversity requires long range 

planning and land base available for infrastructure. Many of these counties are just 

holding on and look to the forests to be the economic engines they were intended 

to be and once were. Sustainable forest management is the only way they will 

achieve economic diversification 

We do think that projects under Title ll have contributed to the economy of local 

communities. However they do not even scratch the surface that is required to have 

healthy and resilient forests. 

Recreation on the forest and tourism in general cannot replace the economy that 

existed prior to the agencies decisions to stop managing these lands. We say in 

Skamania County that when the Skamania Lodge was built (private-county-federal 

partnership) that they eliminated family wage jobs in the forest and created service 

wage jobs at the lodge. Clearly this was backwards. 

91 

Question 2. You testified that although you and your organization want to see 

more active management of the forests on federal lands you also want to see secure 

rural schools payments continue as a bridge. 

What kind of forest management reforms does your organization support and 

want to see implemented in forests on federal lands? What is your organization’s 

definition of ‘‘bridge’’ funding? How many years of secure rural schools payments are 

an adequate ‘‘bridge’’, when some counties have received payments for more than 

two decades? 

Answer. The counties did not make the decision to stop managing our public 

lands. My organization has proposed, since its inception in the late 90’s, that we 

must restore the economic engine that these forests represent. Our principals on 

what we need in forest management legislation are attached to my written testimony and I repeat them here; 

• Improving the efficiency for planning and implementation will reduce total 

management costs and leverage funds to accomplish more forest restoration. 

• An investment in forest health restoration, which is an investment in rural 

economies, can save millions of dollars in state and federal funds by creating 

jobs and avoiding costs associated with wildfire suppression, social service programs and unemployment benefits. 

• Efforts to accelerate the pace of forest health projects must include watershed 

scale projects that provide for less expensive and faster planning. 

• Partners in planning a forest health project should be able to assume certain 

technical assistance roles in project planning. State and tribal forestry departments can play a role in project delivery. This could include parts or all of restoration, forest health, silviculture and harvesting; (application of Good Neighbor Authority). 

• Stewardship contracting should be extended and include the requirement that 

Counties and Schools receive shared revenues on the gross project value as is 

required on any other receipts. 

• There should be the necessary authority to pursue markets and investments to 

utilize forest restoration byproducts as part of watershed level and larger forest 

health projects. 

• Allow third parties to pool funding and prepare the NEPA review for watershed 

level and larger projects. 

• Increase involvement among environmentalists, forest products industry, counties and the federal land managers to create the agreement for NEPA to be protected against appeals and litigation. 

• The Healthy Forests Restoration Act, which passed Congress overwhelmingly in 

2002, should be applied more broadly. 

Bridge funding should be continued until the Agencies meet their obligations to 

these communities. As you’re questioning of the Chief proved, even with a specific 

forest plan, requiring specific deliverable’s, the Forest Service somehow falls short. 

Imagine that same conversation over the nearly 20 years since the NW Forest 

Plans’ adoption, the deliverables of which have never been met on any forest with 

the plans scope. We are absolutely prepared to work with congress to end the senseless gridlock that has the land locked up. As Gifford Pinchot promised ‘‘with shared 

revenues no community will suffer for hosting these lands’’ which of course is no 

longer the case. 

RESPONSES OF PAUL PEARCE TO QUESTIONS FROM SENATOR BARRASSO

Question 1. Do you see NEPA and other environmental laws as impediments to 

active forest management in terms of forest restoration and commercial timber production? 

Answer. We believe that the use of Environmental Assessments’ and Categorical 

Excemptions’s, as well as expanding the use of the Healthy Forest Restoration Act 

are available now but are not used by the Agencies even as they were envisioned 

in legislation. 

Question 2. Do you and the Partnership for Rural America support reform of 

NEPA and other environmental laws as part of an SRS reauthorization? 

Answer. We would be willing to engage with the committee in a review of what 

is working and what is not, and we think we could be very constructive in finding 

greater efficiencies while delivering equal or better environmental analysis. 

Under the ESA we would argue that US Fish & Wildlife should have to do an 

all species evaluation when listing a species as threatened or endangered. The current ‘‘one species at a time’’ approach is clearly not good science. 

92 

We would also note that the USFW now has a new rule, which they pushed 

through, which allows that on critical habitat designation they never again have to 

do a full Environmental Impact Statement but instead will only have to do an Environmental Assessment. If that authority exists in rule making we would argue that 

the same could be done for Forest restoration projects include commercial harvest. 

Question 3. In your testimony, you highlighted the issue of reauthorization of 

stewardship contracting authority and that it was important to have a conversation 

about impact on revenue sharing before it is reauthorized. Are you concerned that 

receipts from stewardship contracting are not currently subject to be shared with 

counties? 

Answer. My members are very concerned about stewardship contracting with no 

receipts. The reason has a great deal to do with Congress questioning the need for 

bridge funding or SRS and that Counties should return to 25% receipt driven revenue sharing. 

To have Congress say we should return to revenue sharing through receipts while 

at the same time authorizing Stewardship Contracting which allows the local District Ranger or Forest Supervisor to keep all proceeds from the contract for 

‘‘projects’’ on the forest is at best a mixed message to these communities. 

Question 4. Would your organization support a reauthorization of stewardship 

contracting authority without addressing revenue sharing with respect to stewardship contracts? 

Answer. We are not in support at this time. My members are concerned about actual costs and revenue sharing potential. This would be facilitated by greater transparency—through the use of reporting by the Forest Service of the monies or goods 

received for the contract and the ‘‘project’’ costs associated with it. Currently in an 

actual timber sale the Forest Service reports the ‘‘profit’’ from the sale after reporting ‘‘costs’’ associated with it. This includes a line item for infrastructure. Using the 

same reporting process might solve the issue in that my members would then have 

the ability to assess the real impacts of these contracts. There is a second concern 

that the Forest Service will eventually be doing nothing but Stewardship Contracting timber sales. 

RESPONSES OF RYAN R. YATES TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. If mandatory spending for PILT ends and is not continued and you 

once again become dependent on annual appropriations; which program is more important to your organization and the counties: PILT or Secure Rural School payments? 

Answer. Funding for both the Payment in Lieu of Taxes program and the Secure 

Rural Schools and Community Self-Determination Act reflect a longstanding federal 

obligation to counties encumbered by the presence of federal land within their jurisdictional boundaries. As both programs are critically important to local governments-and fundamentally different (in intent, application and regional impact)- 

NACo is not in a position to pick and choose which Federal commitments the government should honor. 

NACo supports the full funding of the PILT program at its yearly authorized level 

and supports legislative and/or administrative efforts to modify the program to 

make payments to counties on a basis equitable to both the federal and local taxpayer that are non-discriminatory in nature. 

Counties must share in the benefits of economic activity on public lands through 

statutory formulas, which guarantee a percentage of all gross receipts to be returned to the counties where the activity occurs. NACo opposes any attempts to 

lessen the revenue sharing receipts. 

Question 2. Headquarters Economics proposed combining secure rural schools and 

other revenue sharing with PILT as part of a single payment that would be paid 

to counties. At the hearing you indicated that the National Association of Counties 

does not support combining PILT with SRS. Please explain why the National Association is opposed to combining PILT and SRS into a single payment program. Does 

that opposition extend to combining PILT with other revenue sharing programs/activities (e.g. oil and gas production), why or why not? 

Answer. As PILT is not a revenue sharing program, NACo opposes the combination or consolidation of PILT with other federal resource based revenue sharing programs. The basis for annual PILT payments is federal ownership of lands that are 

not subject to local taxation. Additionally, unlike most revenue sharing programs, 

PILT funds are used by local governments as general fund dollars to be used for 

any governmental purpose. Typically, revenue sharing program funds are earVerDate Nov 24 2008 14:04 Sep 09, 2013 Jkt 000000 PO 00000 Frm 00096 Fmt 6601 Sfmt 6621 G:\DOCS\82563.TXT WANDA
93 

marked for a specific use tied to a resource activity (i.e. SRS Title I funds can only 

be used for county road projects). 

One of the primary reasons for the creation of the PILT program was the passage 

of the Federal Land Policy and Management Act-which specifically established that 

disposal of public lands would largely cease. Annual PILT payments reflect the 

United States governments’ commitment to local governments to make payments in 

lieu of local property taxes. If annual PILT payments are unable to be funded by 

Congress, other options for the U.S government to consider could include: 1) direct 

invoices from local governments based on actual property tax rates, and 2) the disposal of federally owned property to private ownership (which is subject to local 

property taxes) 

The consolidation of PILT and other federal revenue sharing programs would also 

politicize an otherwise apolitical and straightforward program by tying resource extraction activities - which have become politically contentious in recent years-to a 

tax equivalency program. 

RESPONSE OF RYAN R. YATES TO QUESTION FROM SENATOR MANCHIN

Question 1. Like many of my colleagues, I understand the importance of PILT and 

SRS to local and county governments in West Virginia and across the United States. 

Today the Committee has heard a number of proposals to reform both programs. 

I want to know what you, as a representative from the National Association of 

Counties, think is the single most important reform measure we can make in Congress to these programs. 

Answer. In terms of the SRS program, the most important reform would be to 

couple future forest payments to counties and active natural resource management 

to provide for the stability and well-being of forest counties and communities. NACo 

urges a new direction in the management of our federal forests, for the very health 

of the forests themselves, and for job opportunities and social and economic sustainability in rural America. 

While some form of ‘‘bridge funding’’ to maintain solvency in our counties will be 

required, particularly given the dominance of federal forest presence in many counties, it is essential that Congress mandate active sustainable forest management to 

achieve necessary revenues (for counties and the taxpayer) and resilient forest lands 

managed by the United States government. 

For the PILT program, NACo supports the elimination of population caps from 

the formula. The use of population caps discriminates against rural counties with 

small population and fails to accurately demonstrate the actual population of people 

being served by the county government. 

Additionally, Congress should eliminate the use of ‘‘prior-year payment’’ reductions from the formula. The government should not reduce its tax obligation to county governments, solely because of other land management revenue agreements between governments. 

RESPONSES OF RYAN R. YATES TO QUESTIONS FROM SENATOR BARRASSO

Question 1. The National Association of Counties has stated in the past that the 

federal government has failed to effectively manage our federal lands. Does the National Association of Counties still believe this is the case? If so, in what ways has 

the federal government failed to effectively manage our federal lands? 

Answer. Management activities on the USDA Forest Service 193 million acre estate have steadily declined over the past two decades. Forest Service revenues from 

management activities (including grazing, timber, minerals, recreation, power, and 

special-use permits) have declined from total revenues of $1.385 billion in FY1990 

to $186.4 million in FY2010. 

Due to the agency’s loss of productivity, Congress has had to make mandatory 

payments to counties (via the Secure Rural Schools program) in lieu of sharing revenue at a cost of roughly $350-500 million / year. Additionally, local forest communities have suffered from steep economic declines from the loss of resource-based 

employment which has led to increases in unemployment rates, declines in state 

gross domestic product, and in many cases-population reductions in rural communities. 

Additionally, NACo is concerned that while Congress has struggled to manage the 

federal estate while meeting longstanding financial obligations to states and counties, the government continues to seek to enlarge the federal estate and limit public 

access and use through special use designations. 

NACo opposes federal land management agency actions that limit access and multiple use of lands that otherwise would be available to the public (i.e. defacto wilderness). NACo opposes Executive Branch efforts to designate de facto wilderness, or 

94 

federal restrictions not explicitly enacted on use of public or private lands in proximity to a designated wilderness or a Wilderness Study Area without congressional 

approval. NACo supports amending the Antiquities Act to provide transparency and 

accountability in the designation of national monuments. Federal consultation with 

state, county, and tribal governments should be required prior to the development 

and designation of any national monument. 

Question 2. Does NACo believe that the relationship between forest management 

and revenue for counties creates a perverse incentive to advocate for unsustainable 

logging on our public lands? 

Answer. No. NACo maintains that Federal forest payments to counties should be 

coupled with active natural resource management. NACo supports the relationship 

between sustainable natural resource management and the stability and well-being 

of forest counties and communities. 

Question 3. Does NACo support re-linking receipts and forest management? 

Answer. While counties are deeply grateful for the financial lifeline of the Secure 

Rural Schools & Community Self-Determination Act (SRS), NACo urges a new direction in management of our federal forests, for the very health of the forests themselves, and for job opportunities and social and economic sustainability. While some 

form of ‘‘bridge funding’’ to maintain solvency in our counties will be required, particularly given the dominance of federal forest presence in many counties, it is essential that there be a new direction in federal forest management. 

Legislation that provides bridge funding to forested counties and school districts 

while economic vitality is restored in these communities is vitally important and essential. Also, for there to be economic vitality, Congress must mandate active sustainable forest management to achieve resilient forest lands managed by the United 

States government. 

RESPONSE OF RYAN R. YATES TO QUESTION FROM SENATOR HELLER

Question 1. In your oral testimony, you indicated that the National Association 

of Counties would oppose the combining of the PILT and Secure Rural Schools programs. Could you please elaborate on the rationale behind NACo’s position? 

Answer. As PILT is not a revenue sharing program, NACo opposes the combination or consolidation of PILT with other federal resource based revenue sharing programs. The basis for annual PILT payments is federal ownership of lands that are 

not subject to local taxation. Additionally, unlike most revenue sharing programs, 

PILT funds are used by local governments as general fund dollars to be used for 

any governmental purpose. Typically, revenue sharing program funds are earmarked for a specific use tied to a resource activity (i.e. SRS Title I funds can only 

be used for county road projects). 

One of the primary reasons for the creation of the PILT program was the passage 

of the Federal Land Policy and Management Act-which specifically established that 

disposal of public lands would largely cease. Annual PILT payments reflect the 

United States governments’ commitment to local governments to make payments in 

lieu of local property taxes. If annual PILT payments are unable to be funded by 

congress, other options for the U.S government to consider could include: 1) direct 

invoices from local governments based on actual property tax rates, and 2) the disposal of federally owned property to private ownership (which is subject to local 

property taxes) 

The consolidation of PILT and other federal revenue sharing programs would also 

politicize and otherwise apolitical and straightforward program by tying resource extraction activities—which have become politically contentious in recent years—to a 

tax equivalency program. 

RESPONSES OF THOMAS TIDWELL TO QUESTIONS FROM SENATOR WYDEN

Question 1. Thank you for showing your support at the hearing for both Secure 

Rural Schools and for getting the timber cut up. I understand your point that the 

Forest Service could not sell enough timber today to replace County payments, and 

that is why I am advocating for a two-pronged approach: a short-term extension of 

County payments while we rejuvenate the Agencies’ timber programs. In your testimony, you pointed out that 16.8 billion board feet is the amount of timber that 

would need to be sold today to fund County payments in FY 2014. In the entire history of your Agency, has the Forest Service ever sold in a single year that much 

timber? What is the most amount oftimber the Forest Service has ever sold in a 

year? During the period when the Agency was conducting its highest years of timber 

harvesting, what was the average annual volume of timber offered for sale? 

95 

Answer. The agency sold 19.5 BBF (billion board feet) in 1969. 8 BBF ofthis 

amount was in one long term contract offering in Alaska. Between 1970 and 1988 

the average volume of timber offered for sale was 12.6 BBF and the average sold 

volume was 11.0 BBF. 

Question 2. Chief Tidwell, I appreciate your sharing my commitment to get the 

timber cut up. I know there are a number of ideas circulating about ways to accomplish that, but one idea that seems like a no brainer to me involves the Forest Service’s appeals and objection process. Over a year ago, you started to update the Agency’s regulations concerning the use of its pre- decisional objection process. When will 

you finalize these regulations, enabling restoration projects to be expedited and the 

role of public involvement to be firmed up? 

Answer. The final rule was published in the Federal Register on March 27, 2013 

at https://www.federalregister.gov./articles/2013/03/27/2013-06857/project-levelpredecisional-administrative-review-process. 

Question 3. Dr. Jay 0’Laughlin, a witness from the second panel, testified that 

placing National Forests lands into trusts could be an effective way to achieve more 

harvests and revenues, citing the Valles Caldera as an example. I understand the 

trust was created from a private ranch and was created to protect the ranch and 

be self-sustaining. Is the Valles Caldera the only example of the Forest Service operating its lands through a trust? For what purposes was the trust created and how 

does it differ from the purposes of state trust lands and other Forest Service lands? 

Answer. The Valles Caldera Preservation Act provided for the acquisition of the 

88,900 acre Baca Ranch in the Jemez Mountains ofNew Mexico into the National 

Forest System. The purpose of the Valles Caldera National Preserve (VCNP) is to 

protect and preserve the scientific, scenic, geologic, and other resource values of the 

Preserve, and to provide for multiple use and sustained yield of renewable resources 

and. to be a working ranch. It was established as a demonstration area for an experimental management regime, which incorporates both public and private administration elements. The Act also established the Valles Caldera Trust (VCT) to provide 

administrative and management services, establish and implement policies, to receive and collect funds from private and public sources, and to cooperate with other 

Federal, State, Tribal, and local governmental units. The VCT provides administrative and management services for the VCNP. The VCT is managed by a Board of 

Trustees that consists of the Forest Supervisor of the Santa Fe NF, the Superintendent of Bandelier National Monument, and seven presidential appointees. This 

is the only such trust within the National Forest System. 

VCNP differs from the purposes of other National Forest System lands in that it 

is managed by the Valles Caldera Trust and overseen by a Board of Trustees. In 

addition, the Valles Caldera Preservation Act has some specific provisions for the 

VCNP to continue as a working ranch and preserve the unique values of the area. 

Most significantly, the Act requires that the VCT work toward the goal of financial 

self-sustainability within 15 years after the date of acquisition (e.g. sufficiency by 

2015) or become part of the National Forest System. 

In general, state trust lands are required in state constitutions to be managed for 

the sole purpose of generating revenue for public schools and other public institutions in western states. These state trust lands have a very different mandate than 

National Forest System lands, which are managed for multiple uses and sustained 

natural resource benefits such as water quality, forest health, and wildlife habitat. 

Question 4. Has the Valles Caldera National Preserve been successful at producing enough revenues to offset its need for appropriation-as was originally intended? 

Answer. No-while revenues have increased since creation of the Preserve, they do 

not complet ly offset the need for appropriations. The table below summarizes total 

appropriations and revenues generated for Fiscal Years 2001-2012 

96 


tid1.eps

Year 

21111' 

2002 

200J 

",,1'11 

2,)0_, 

2006 

201)7 

20118 

:>onq 

2U Ii> 

~u 1 1 

2G 12 

, 

I 

Appropriation-s from CongrL",' 

~'i0n_O')fJ 

$~joo,ooo 

$3,131'100 

S3.111,1% 

S3.5"~.~n 

~5.G7'I.n 1 

~:; jl)OP10 

,------

S3 ,691 ,50-('---

$4,UOU.COO 

$3.500.000 

$:_\n~_~OD 

-S3.421;.~C9 

Total ReI rnues Generated 

$535.1-;5 

~466.-)71 

$~~1n,<l,; I 

~548J)27 

$56:;,3')') 

$6Y~ ·1)3 

~~7~ .iii; 

S6~3_B~ 

$7T;,~4S 

S922,7,,; 
97 

In addition, the Santa Fe National Forest provides additional financial support 

and donates work to Valles Caldera for a variety of activities and services, outside 

of the direct appropriation from Congress. Some of these activities include fire prevention, suppression, post fire rehabilitation, one half of all law enforcement costs, 

budget and finance related services, payments, accounting adjustments, travel, internal audits, acquisition, and grants and agreements. 

The VCT is making measured progress toward the attainment of the goals put 

forward in the Valles Caldera Preservation Act of2000. They have either met, exceeded, or are making strides toward all the goals articulated in the enabling legislation-including the financial self-sufficiency. To date the VCT is recovering 30 percent of its total operating costs through fees and donations. In addition, 50 percent 

of the ecological restoration costs are recovered through the Collaborative Forest 

Landscape Restoration program which is funded by Congressional appropriations 

specifically for restoring forest ecosystems on National Forest System lands nationwide. Much of the remaining costs for restorations have been recovered through 

grants secured through partnerships and a host of other universities, agencies, and 

organizations. The recreation programs are either profitable, breaking even or are 

closing the gap. 

Question 5. What are the total collections ofthe Forest Service for each of the last 

5 fiscal years? For each fiscal year, please by type of receipt (timber, recreation, etc.) 

and state. 

Answer. As was agreed to by the Committee staff, since the amount of data requested here is very large, it is most efficient to use the website at www.fs.usda.gov/ 

pts. Once at the Secure Rural Schools website, go to the ‘‘related links’’ on the right 

side, and choose ‘‘annual payment information.’’ This will take you to a listing of 

the many reports available; scroll down until you find the ASR 13-2 Report for each 

year that you are interested in the receipts. 

RESPONSES OF THOMAS TIDWELL TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. I have heard from counties and other stakeholders all over the country that we need to more actively manage our forests both for forest health and for 

commercial timber production. Yet even where there is stakeholder agreement on 

what needs to be done, the Forest Service is not getting the job done. Can you explain why the Forest Service is having such a difficult time increasing the work 

being done on our national forests both in terms of forest restoration and commercial timber production? What role does litigation and environmental compliance requirements play? 

Answer. We agree that more restoration work needs to be done on the national 

forests. Over the last few years the Forest Service has increased timber volume sold, 

achieving the target of 2.64 billion board feet in 2012. The FS exceeded a number 

of restoration targets in 2012, such as moving 9 watersheds to an improved condition class (target was 5 watersheds); decommissioning 2,103 miles of road (target 

was 2,028 miles); and restoring/enhancing 3,704 miles of stream habitat (target was 

2,670 miles). 

The FS continues to explore new and existing tools to become more efficient; collaboration is helping. Across the country a multitude of collaborative efforts are reducing polarization and leading to increased outputs. The Forest Service continues 

to reach out to groups that find themselves hesitant to collaborate in an effort to 

reach common goals. 

Litigation and environmental compliance requirements affect the quality and 

quantity of our work. Meeting environmental compliance requirements adds value 

to our decision making and public involvement, but it also adds time. We are working to make these processes more efficient and effective. 

Litigation affects the work in two ways-projects are put on hold either under court 

order or under the threat of potential litigation. Approximately two percent of the 

decisions made each year are brought to litigation. While this is a small percentage, 

the threat of potential litigation often adds to the workload by increasing the data 

collected and analyzed in order to lessen legal vulnerability. 

Other factors are involved in the amount of restoration work that can be done. 

Staffing within the agency has shifted to reflect an increased focus on fire. Since 

1998 fire staffing within the Forest Service has increased 110 percent. Over the 

same time period, National Forest System staffing has decreased by 35 percent and 

Forest Management staffing has decreased by 49 percent. 

Fire transfers occur when the agency has exhausted all available funding from the 

Suppression and FLAME accounts. Six times from FY 2002 to FY 2012, the Forest 

Service has made fire transfers from discretionary, mandatory, and permanent accounts to pay for fire suppression costs in amounts ranging from $100,000,000 in 

98 

FY 2007 to $999,000,000 in FY 2002, and totaling approximately 2.7 billion. Of that 

total, $2.3 billion was eventually repaid but the transfers still led to disruptions 

within affected Forest Service programs. In FY 2012, the Forest Service transferred 

$440 million to the fire suppression account for emergency fire suppression due to 

severe burning conditions and increasing fire suppression costs. Projects at all levels 

of the organization were deferred or cancelled as a result of the transfers. 

Each time the agency transfers money out of accounts to pay for fire suppression 

there are significant and lasting impacts across the entire Forest Service. Not only 

do these impacts affect the ability of the Forest Service to conduct stewardship work 

on national forests, they also affect our partners, including local governments and 

tribes. 

Question 2. You testified at the hearing that the Forest Service would need to cut 

16.2 billion board feet a year to provide the revenues needed to meet the current 

Secure Rural Schools payment levels. It is my understanding that to reach that 

number the Forest Service included prices for personal use firewood, sale of decked 

logs from road construction, and other nonconvertible products like Christmas trees, 

floral greens, and other things not really considered timber. What sale level would 

be required if your volume accomplishment reporting only counted commercially valuable sawtimber, pulpwood and biomass where markets exist? 

Answer. The calculation of 16.2 billion board feet did not include the value of nonconvertible products, such as Christmas trees, floral greens, and other things not 

really considered timber. It did include the value of firewood, posts, poles, nonsawtimber, and ties in the current program. If only the value of sawtimber, pulpwood and biomass were used in the calculation for the additional volume needed to 

cover the payment, then an additional 11.3 billion board feet would need to be 

added to the current program for a total of 13.9 billion board feet. 

Question 3. I am told that the Forest Service spends $100 or more per million 

board feet (mbf) to prepare and implement a timber sale while a state sale on average costs only $25 per mbf. Why do federal timber sales cost so much more? 

Answer. Currently, the Forest Service national average for preparing and implementing (administering) timber sales is about $90 per MBF. This varies considerably by region from a low of $55 per MBF to just under $180 per MBF. These costs 

include all timber sale related costs at the regional, forest and district offices. It also 

includes the cost of surveys, inventories, environmental analysis and disclosure 

(NEPA), sale layout, volume and value determination, contract preparation and 

award, and sale administration. In addition, costs associated with appeals and litigation, rework of timber sales, and administration of personal use for firewood and 

special forest products are included. 

The statutes and regulations that govern state timber sales are different than 

those for federal timber sales. Most states are mandated to generate revenue for 

schools from their state trust lands. This usually results in states selecting the larger and more valuable trees to harvest resulting in higher volumes per acre and 

lower unit costs. Federal timber sales are integrated with other resource objectives 

under their multiple use mandates. 

The agency has been implementing measures to reduce the cost of preparing and 

implementing timber sales. The unit costs per MBF have decreased by approximately 23 percent since 1998 when adjusted for inflation. 

RESPONSE OF THOMAS TIDWELL TO QUESTION FROM SENATOR MANCHIN

My state of West Virginia is home to about 1 million acres of SRS eligible land 

and 1.2 million acres of PILT eligible land. 

In 2012 alone, West Virginia received nearly $3 million in PILT payments and 

more than $1.7 million in SRS payments. 

West Virginia is also a largely rural state and the expiration of the SRS program 

will have a greater impact on us than it will more populated states. 

Question 1. In the second panel today, we will hear from Mark Haggerty with 

Headwaters Economics. Are you familiar with his proposals for a single payment 

model and his proposal to increase the population limit for rural counties? If so, 

what is your opinion on these proposals? 

Answer. The United States Forest Service has not analyzed the Headwaters proposal and does not have an opinion at this time. 

RESPONSES OF THOMAS TIDWELL TO QUESTIONS FROM SENATOR BARRASSO

Question 1. The Forest Service has stated that IRR reduces unit costs. What evidence can you provide the Committee to verify the statement particularity as it relates to timber production? 

99 

Answer. The Forest Service is evaluating the operational efficiencies of IRR in 

several ways: Regional Annual Reports which include case studies from each region 

documenting accomplishments, successes and challenges; reviewing performance 

measures to identify or develop those that help measure restoration outcomes; and 

contracting a third party evaluation of IRR. The Agency has initiated a third-party 

monitoring of IRR with Colorado State University and the University of Oregon; it 

will begin June 2013 and be completed by March 2015. 

IRR is a budget consolidation tool designed to help promote restoration activities 

on NFS lands. IRR aligns funding with program and policy direction from the Secretary of Agriculture reinforcing the agency’s commitment to accomplish work more 

efficiently through collaboration and an ‘‘All Lands’’ restoration approach. IRR facilitates and supports an integrated approach to land management that maintains, enhances, or restores watersheds at the landscape level to improve their resilience. 

Through this alignment of funding, the Forest Service expects to gain administrative efficiencies which will increase our ability to accomplish more on-the-ground 

work, enhance outcomes, and contribute, enhance, and maintain restoration related 

jobs with IRR. 

IRR is only a part of our effort to gain efficiencies. We are pursuing other avenues 

as well, such as by gaining efficiencies through our NEPA and timber sale preparation program. When adjusted to inflation, funding has been reduced by 185 million 

dollars since 1998 and staffhas been reduced by 49 percent. But during the same 

time we’ve had to reduce our unit costs for a thousand board feet by 23 percent. 

We want to be able to continue to do that work and IRR could help the Forest Service to gain more efficiencies. 

Question 2a. Region 1 has seen a higher amount of collaboration efforts that you 

spoke about at the hearing. The region also enjoys Stewardship Contracting, and 

is an IRR pilot region with several CFLRA pilot projects. Can you explain to me 

why nearly half the timber volume they offered for sale was enjoined in 2012? 

Answer. There are a handful of environmental groups that constitute almost all 

of the recent litigation in Region 1. These groups do not appear to have an interest 

in collaborating. The current and past Regional Forester and other Forest Service 

personnel have reached out to several of these groups. The response is that they 

do not support commercial timber harvest on National Forest lands, and suggest 

that commercial harvest activities should be separated from the activities they support, e.g., road decommissioning, fish passage work- even in a stewardship contract 

where the sale of timber would likely increase those restoration activities with goods 

for services, and/or through the use of retained receipts. 

Question 2b. With Stewardship Contracting, collaboration efforts, and an IRR 

pilot, why does Region 1 have the lowest attainment of timber output in the lower 

48 among Forest Service regions? 

Answer. The region has prepared sufficient volume for offer, but litigation is currently affecting the Region’s ability to meet timber volume sold targets. Seven 

projects have been the subject of litigation and the Region is in the process of working with the respective Forests, OGC, DOJ and the Washington Office to move forward with advertising, bid opening and award. 

Question 2c. Why do they have the highest unit cost per unit of wood produced? 

Answer. If the Region had achieved its target, unit costs would be comparable to 

neighboring regions; however, it was unable to sell everything it had prepared due 

to litigation. The overall expenditure for planning/NEPA is estimated at approximately 60-70 percent of the funds allocated for the program. Because of the litigious 

environment a large amount oftime is spent in analysis and documentation in order 

to prevail in legal challenges, even prevailing on 11 out of 12 issues can still result 

in injunctive relief or further delays, as evidenced in a recent decision (Colt Summit). The remaining 30 percent of funds covers sale preparation, sale administration, etc. 

The region has gained efficiencies through the use of the timber sale strike teams 

for which unit costs are nationally competitive. In addition, in order to increase success in litigation, the region has implemented a host ofNEPA efficiency initiatives. 

Question 3. With more of the timber sale program being sold through Stewardship 

contracts there is less revenue being returned to the counties where it was generated. Understanding from the hearing that every little bit of funding helps counties, and with an eye towards renewing stewardship contracting, how do you see the 

relationship between Federal lands and their neighboring units oflocal government 

evolving under Stewardship contracting? 

Answer. Stewardship contracting allows the receipts from the timber to pay for 

restoration activities in the sale area, generating more work on the ground and providing more local jobs. The Forest Service is committed to increasing the pace of restoration and job creation, with available resources. The Collaborative Forest LandVerDate Nov 24 2008 14:04 Sep 09, 2013 Jkt 000000 PO 00000 Frm 00103 Fmt 6601 Sfmt 6621 G:\DOCS\82563.TXT WANDA
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scape Restoration Program, which relies heavily on stewardship contracting, created 

and maintained an estimated 3,375 part- and full-time jobs during 2011 and 4,574 

part- and full-ime jobs during 2012. The FY 2014 budget proposes to achieve an output of2.38 billion board feet of timber volume sold, 2,000 miles of road decommissioned, and 3,100 miles of stream restored predominantly in timber dependent counties. The Forest Service is also creating jobs by expanding markets for forest products. The FY 2014 President’s Budget also proposes to allocate $10.5 million to 

Wood to Energy Initiatives which support wood energy project design, pre-construction activities and construction. 

RESPONSE OF PAMELA K. HAZE TO QUESTION FROM SENATOR WYDEN

Question 1. What are the total collections (royalties, rentals, bonus bids, fees, and 

other payments) made by the Department of the Interior for each of the last 5 fiscal 

years? Please provide a chart displaying the amount and type of each the collection. 

With respect to payments relating to minerals, please specify the collection by type 

(e.g., OCS oil and gas bonus bids; Federal onshore oil and gas royalties, etc.). 

Answer. A historical table showing Department of the Interior receipt collections 

for 1982-2013 est. is provided which displays the source of the receipt by type. 

Question 2. What payments are made by the Department to the states? To counties? Please specify the source of the payment (e.g. State share of Federal coal receipts; PILT payment; County share of Federal geothermal receipts). Please specify 

total payment by state and where relevant, by county. Please provide this information for each of the last five fiscal years. 

Answer. State and county receipt information for mineral, grazing and timber revenue payments is provided in the table State and County Disbursements 1999-2012. 

More detailed information regarding State by State disbursements from Federal on 

and offshore oil and gas production are provided in the tables on Federal Onshore 

and Offshore Oil and Gas. 

State information on PILT payments, which are derived from the General Treasury rather than receipts, is provided on the PILT State Reports 1978-2012. County 

specific information for BLM Secure Rural School payments in years 2000-2011 are 

available on-line at http://www.blm.gov/or/rac/ctypaypayments.php. 

RESPONSES OF PAMELA K. HAZE TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. Alaska is the largest state in the United States. It has approximately 

229 million acres of land in federal ownership, more than any other state in the 

country. As a result, PILT payments make up the largest percent of federal land 

payments in Alaska. Yet Alaska has the lowest average per acre payment in the 

country. What changes would have to be made to the PILT formula to correct this 

inequity and ensure that Alaska counties get compensated fairly for the impacts federal lands have on the tax base and their local economies? 

Answer. The Department of the Interior computes Payments in Lieu of Taxes payment amounts using the formula that is dictated by statute. Section 6902 of the 

Payments in Lieu of Taxes Act (P.L. 97-258) directs the use of the greater of two 

alternatives that consider the number of acres of qualified Federal land in the county (or local jurisdiction) and considering a population ceiling limitation and prior 

year revenue payments retained by the county. The population ceiling factor provides a higher allowance for more highly populated counties. Alaska’s payments reflect this effect, whereby less populated counties receive a lower allowance. 

Modification of the formula would be necessary to change the allocation to less 

populated jurisdictions. Congress would need to enact legislation in order to modify 

the formula. 

More information on the PILT program can be found at http://www.doi.gov/pilt/ 

faqs.cfm 

Question 2. In your testimony you describe the calculation for PILT payments and 

that certain federal land payments received by a county or local jurisdiction in the 

preceding year are counted against future PILT payments, thereby reducing the 

PILT payment. What federal land payments count against future PILT payments 

and is this uniform for all counties receiving PILT payments nationwide? 

Answer. Certain Federal payments are considered in the calculation of PILT entitlement amounts. The prior year payment amount made under the authority of 

these programs is deducted in the derivation of the PILT entitlement for the current 

year. Not all Federal payments are considered, only those that are specifically 

named in the PILT Act, including the Refuge Revenue Sharing Fund, the National 

Forest Fund, the Taylor Grazing Act, the Mineral Leasing Act for acquired lands, 

the Federal Power Act, and the Secure Rural Schools and Community Self-DeterVerDate Nov 24 2008 14:04 Sep 09, 2013 Jkt 000000 PO 00000 Frm 00104 Fmt 6601 Sfmt 6621 G:\DOCS\82563.TXT WANDA
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mination Act of 2000. All counties are treated equitably in the application of this 

reduction. The PILT Act requires the governor of each state to report the payments 

retained by counties or other local jurisdictions in the state to DOI each year. 

RESPONSES OF PAMELA K. HAZE TO QUESTIONS FROM SENATOR MANCHIN

Question 1. My state of West Virginia is home to about 1 million acres of SRS 

eligible land and 1.2 million acres of PILT eligible land. In 2012 alone, West Virginia received nearly $3 million in PILT payments and more than $1.7 million in SRS payments. 

West Virginia is also a largely rural state and the expiration of the SRS program 

will have a greater impact on us than it will more populated states. 

In the second panel today, we will hear from Mark Haggerty with Headwaters 

Economics. Are you familiar with his proposals for a single payment model and his 

proposal to increase the population limit for rural counties? If so, what is your opinion on these proposals? 

Answer. The Department and the Administration support reauthorization of the 

Secure Rural Schools and the Payments in Lieu of Taxes programs. Changes to the 

population ceiling used in the PILT Act would modify the allocation of PILT funds, 

benefitting some jurisdictions and disadvantaging others. As part of the reauthorization process, the Department would be available to evaluate the impacts and outcomes of specific legislative proposals. Speculation about the impacts, the pros and 

cons, and the benefits of one proposal is premature without a full understanding of 

the exact changes proposed and how they would be implemented and funded. 

RESPONSES OF PAMELA K. HAZE TO QUESTIONS FROM SENATOR LANDRIEU

Question 1. Can you provide a breakdown, program by program, of all money collected by the Department of the Interior over the course of FY2012? 

Answer. A breakout of the Department’s FY 2012 receipts is provided in the accompanying historical table of Department of the Interior receipt collections. 

Question 2. Can you provide a state-by-state breakdown of these funds, i.e. Texas 

contributed X in onshore oil and gas revenues- again, for every program from which 

the Department of the Interior collected revenues, including offshore oil and gas development? 

Answer. The information for FY 2012 is included on the following historical tables 

provided: State and County Disbursements 1999-2012; Federal Onshore Revenues 

by State 1999-2012; and Federal Offshore Revenues by State 1982-2012. The Federal Onshore and Offshore tables provide greater detail of the payments in the State 

and County Disbursements table. 

Question 3. Can you provide historic data, for each individual program, beginning 

with the enactment date for each respective program, of all funds collected by the 

Department of the Interior? i.e. - from 19XX, when revenue collection for onshore 

oil development began, the Department of the Interior has collected the following 

amounts: $XXXX in 1920, $YYYYY in 1921, etc. 

Answer. Provided is a table showing the historical data for the Department’s receipts collections dating back to 1982. Data prior to that point is not readily available. 

Question 4. Can you provide this historic data on a state by state basis? 

Answer. The historical data on a state by state and county basis for mineral, grazing and timber revenue payments is provided in the table State and County Disbursements 1982-2012. More detailed information regarding State by State disbursements from Federal on and offshore oil and gas production are provided in the 

tables on Federal Onshore and Offshore Oil and Gas. 

Question 5. Can you provide a list of the legislation that created or defined each 

revenue generating program? 

Answer. A full list of the statutory authorities for the Department’s mineral revenue and disbursement accounts is provided. 

With regard to BLM payments to Oregon and California grant lands counties, 

under the Oregon and California Act of 1937, BLM paid 50 percent of receipts from 

Federal activities on O&C lands (mainly from timber sales) to 18 counties in western Oregon. Over time, these revenues decreased since due to changes in Federal 

timber policies. 

The Secure Rural Schools and Community Self-Determination Act of 2000 (P.L. 

106-393) was enacted on October 30, 2000, to provide a predictable payment to 

States and counties, in lieu of funds derived from federal timber harvests. Payments 

were based on historical payments, adjusted for inflation. The Department of the 

Interior administers payments for the O&C grant lands only and the majority of the 

program is administered by the U.S. Forest Service. 

102 

Under P.L. 106-393, payments for a fiscal year were made in the following fiscal 

year through 2007. The payments have been extended three times. P.L. 110-28 extended payments for 2008. Section 601 of Public Law 110-343, provided an extension 

of payments to the O&C Grant Lands and the Coos Bay Wagon Road counties 

through fiscal year 2011 (with final payment to be made in 2012). Congress enacted 

Public Law 112-141, providing an extension of payments to the O&C Grant Lands 

and the Coos Bay Wagon Road counties through fiscal year 2012 (with the final payment to be made in 2013), 

Question 6. Can you provide, for each of the following years, a heatmap (assigning 

a color for each county on the basis of revenues collected- i.e. white = $0, while 

purple= $maximum) of all revenues collected by the Department of the Interior on 

per-county basis (including OCS revenues, attributed to the respective coastal zone)- 

2012, 2002, 1992? 

Answer. Provided are heatmaps showing State revenue disbursements for 2012 

and 2002. 

Question 7. Can you provide a breakdown, program by program, of all payments 

from Department of the Interior to states, and an explanation of what each program 

pays for? 

Answer. Detailed information regarding the programs making payments to states 

from Interior’s revenue activities is provided. Historical data on a state by state and 

county basis for mineral, grazing and timber revenue payments is provided in the 

table State and County Disbursements 1982-2013. More detailed information regarding State by State disbursements from Federal on and offshore oil and gas production are provided in the tables on Federal Onshore and Offshore Oil and Gas. 

Question 8. Can you provide a breakdown, state by state, of all payments from 

Department of the Interior to states? i.e.- Texas received X amount under PILT, Y 

amount for onshore oil development revenue sharing, etc. 

Answer. The historical data on a state by state and county basis for mineral, grazing and timber revenue payments is provided in the table State and County Disbursements 1982-2013. More detailed information regarding State by State disbursements from Federal on and offshore oil and gas production are provided in the 

tables on Federal Onshore and Offshore Oil and Gas. 

PILT payments by State, which are derived from the General Treasury rather 

than receipts, are provided on the PILT State Reports 1978-2012. County specific 

information for BLM Secure Rural School payments in years 2000-2011 are available on-line at http://www.blm.gov/or/rac/ctypaypayments.php. 

Question 9. Can you provide historic data of all payments to states from the Department of the Interior, beginning with the date of enactment for each respective 

payment program? 

Answer. A breakout of the Department’s receipts is provided in the historical 

table of Department of the Interior receipt collections for years 1982-2013. 

Question 10. Can you provide a state by state breakdown of this historic data? 

Answer. The historical data on a state by state and county basis for mineral, grazing and timber revenue payments is provided in the table State and County Disbursements 1982-2012. More detailed information regarding State by State disbursements from Federal on and offshore oil and gas production are provided in the 

tables on Federal Onshore and Offshore Oil and Gas. 

Question 11. Can you provide a list of the legislation that created or defined each 

revenue generating program? 

Answer. A full list of the statutory authorities for the Department’s mineral revenue and disbursement accounts is provided. 

Question 12. Can you provide, for each of the following years, a heatmap of all 

payments made by the Department of the Interior on per-county basis (including 

OCS revenues, attributed to the respective coastal zone)- 2012, 2002, 1992? 

Answer. Provided are heatmaps showing State revenue disbursements for 2012 

and 2002. 

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