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81–363 PDF







JULY 18, 2002

Serial No. 107–20

Printed for the use of the Committee on Agriculture
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LARRY COMBEST, Texas, Chairman
    Vice Chairman
RICHARD W. POMBO, California
NICK SMITH, Michigan
FRANK D. LUCAS, Oklahoma
JOHN R. THUNE, South Dakota
BOB RILEY, Alabama
DOUG OSE, California
ROBIN HAYES, North Carolina
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SAM GRAVES, Missouri
MARK R. KENNEDY, Minnesota
——— ———

    Ranking Minority Member
GARY A. CONDIT, California
CALVIN M. DOOLEY, California
EVA M. CLAYTON, North Carolina
TIM HOLDEN, Pennsylvania
MIKE McINTYRE, North Carolina
BOB ETHERIDGE, North Carolina
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KEN LUCAS, Kentucky
BARON P. HILL, Indiana
JOE BACA, California
RICK LARSEN, Washington
MIKE ROSS, Arkansas
RON KIND, Wisconsin
RONNIE SHOWS, Mississippi

Professional Staff

WILLIAM E. O'CONNER, JR., Staff Director
STEPHEN HATERIUS, Minority Staff Director
KEITH WILLIAMS, Communications Director

Subcommittee on Department Operations, Oversight, Nutrition, and Forestry

BOB GOODLATTE, Virginia, Chairman
RICHARD W. POMBO, California
    Vice Chairman
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EVA M. CLAYTON, North Carolina,
    Ranking Minority Member
TIM HOLDEN, Pennsylvania
RONNIE SHOWS, Mississippi
BRENT W. GATTIS, Subcommittee Staff Director


    Clayton, Hon. Eva M., a Representative in Congress from the State of North Carolina, opening statement
    Goodlatte, Hon. Bob, a Representative in Congress from the Commonwealth of Virginia, opening statement
    Rehberg, Hon. Dennis R., a Representative in Congress from the State of Montana, opening statement


    Bosworth, Dale, Chief, Forest Service, U.S. Department of Agriculture
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Prepared statement
    Browscombe, Brett, conservation director, Hells Canyon Preservation Council, La Grande, OR
Prepared statement
    Burchfield, Jim, director, Bollee Center, School of Forestry, University of Montana, Missoula, MT, representing the Clearwater Stewardship Contracting Monitoring Committee
Prepared statement
    Daly, Carol, president, Flathead Economic Policy Center, Columbia Falls, MT
Prepared statement
    Jungwirth, Lynn, executive director, Watershed Resource and Training Center, Hayfork, CA
Prepared statement
    Leahy, Mike, natural resources counsel, Defenders of Wildlife, Washington, DC.
Prepared statement
    Loucks, Andrea Bedell, program associate, Pinchot Institute for Conservation, Washington, DC.
Prepared statement

Submitted Material
    Cromley, Christina, American Forests, statement


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House of Representatives,  
Subcommittee on Department Operations,
Oversight, Nutrition and Forestry,
Committee on Agriculture,
Washington, DC.

    The subcommittee met, pursuant to call, at 10:07 a.m., in room 1300 of the Longworth House Office Building, Hon. Bob Goodlatte (chairman of the subcommittee) presiding.
    Present: Representatives Rehberg, Putnam, Clayton, and Holden
    Staff present: Brent Gattis, subcommittee staff director; Callista Gingrich, clerk; Anne Hazlett, Ryan O'Neal, Kellie Rogers, and Quinton Robinson.


    Mr. GOODLATTE. Good morning. This hearing of the Subcommittee on Department Operations, Oversight, Nutrition and Forestry to review stewardship contracting will come to order.
    Stewardship contracting pilot projects are an innovative mechanism that allows the Forest Service to manage our national forests. These pilot projects permit the Forest Service to conduct work more efficiently, test different funding mechanisms and most importantly involve local citizens in constructive solutions.
    Stewardship contracts do not constitute local control, a license to log or a wholesale suspension of environmental laws. Opponents of managing our national forests constantly hurl these untruths. I would like to believe these critics are lacking knowledge on proper forest management rather than blatantly attempting to construe an outrageous agenda based on emotions rather than factual science.
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    The fiscal year 1999 Omnibus Appropriations Act originally granted the Forest Service the authority to conduct stewardship contracting pilot projects utilizing a variety of authorities to improve the efficiency and effectiveness of ecosystem restoration. To date, Congress has approved 84 projects to treat nearly 675,000 acres. These contracts help the Forest Service meet land management goals on the national forests and the needs of local and rural communities. Under stewardship contracting authority, the agency is authorized to contract with private companies or other public entities to conduct management and restoration activities.
    From an ecological perspective, stewardship contracts provide a means of improving forest health, forest composition and structure, wildlife habitat and forage and water quality. Also, these contracts can be used to conduct thinning and hazardous fuels reduction activities to reduce the threat of wildfire.
    In forests across this country, we are seeing an unnatural accumulation of dense fuels threatening not only the stability of our national forests, wildlife habitat and watershed health, but threatening people and communities with the devastation of uncontrollable wildfire. The appropriations committee recently approved $700 million in funding for emergency fire fighting activities. Clearly, we have to pay these costs but it is frustrating to write blank checks for putting out fires and be criticized for every attempt we make at trying to prevent them in the first place. Managing for healthy forests is the only way to stop these fires from consuming our nation's forested treasures and threatening neighboring communities.
    When we discuss stewardship contracting as a means to implement the National Fire Plan, we are criticized for moving too quickly and for providing perverse incentives for the Forest Service. On this particular issue, I believe we must move quickly. Wildfires are not going to stop and wait for us to catch up. We need to act thoroughly, yet swiftly to prevent catastrophic wildfires. However, the Forest Service submitted a report to Congress that suggests they are so mired in paperwork and administrative processes that they cannot accomplish work on the ground. In the budget documents submitted to Congress the Forest Service claims it takes up to 8 years to produce a simple management action. Of the 84 Congress-approved projects only 22 have made it through the NEPA process. In the meantime, our forests are going up in flames and frankly I am disgusted with the backlog that is plaguing our forest policy.
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    I disagree that stewardship contracting leads to perverse incentives. Critics of stewardship contracting claim that the Forest Service will gain value from the products or services enticing the agency to exploit the projects in efforts to do other management activities on national forests. These critics are afraid the Forest Service will cut big trees in order to reduce the risks of wildfire. This simply is not true. Any actions the Forest Service takes with its stewardship contracting program must be consistent with the forest plans and will continue to be subject to environmental laws and administrative processes. We should strongly welcome opportunities to reduce wildfire proliferation while providing forest dependent communities with economic opportunities. By lessening the potential for catastrophic wildfires, we give the citizens living and around national forests security and value. Within the surrounding communities, stewardship contracts are capable of promoting local involvement in national forest management, while also strengthening local economies for the diversification of available jobs and the development of new and expanded markets. Further, there is a savings from a reduction in fire fighting costs associated with diminishing wildfires as a result of sound forest management.
    Unfortunately, the real perverse incentive is to maintain the status quo, point the finger and watch disastrous wildfires burn. The campaign to keep people out of the forest with a hands-off philosophy is dangerous to the very existence of our forests. There are groups that claim the catastrophic wildfires are natural and that we should just let them run their course. Wildfires like this are not a natural part of our ecosystem. They are not cleansing or beneficial to the forests. These are dangerous and destructive. This is not how we take care of our forests and it is certainly not natural. Our forests deserve better. We must actively work to prevent these types of fires from occurring.
    If we want to protect our firefighters, our communities and our forests, we must work to create healthy sustainable ecosystems through good stewardship. Teddy Roosevelt once said, ''We must conserve the forests, not by disuse but by use, making them more valuable at the same time that we use them.'' Stewardship contracting is just one tool in a multitude that Forest Service can utilize in carrying out conservation methods. Today, the subcommittee is very interested in hearing from our witnesses about the role stewardship contracting can provide in achieving proper forest management.
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    It is now my pleasure to welcome the ranking member of the committee, the Honorable Eva Clayton of North Carolina.

    Mrs. CLAYTON. Thank you, Mr. Chairman. Thank you for holding the hearing, and I look forward to the testimony of the witnesses. Preservation of our natural treasures of our national forests certainly is in the interest of all of us. And we want to look at a variety of tools to do that. We also are concerned and threatened by the reality that the forest fires are ranging now and so we want to make sure as we examine all the things that we are doing as private citizens, as agencies, and as the tools that we have before us that they are working. So it is, indeed, appropriate to look at the stewardship contracting as one of those tools to see how effective that tool can be used in reducing the threat of fires, but more importantly, how it can be used in the preservation of our national treasures.
    It is an experimental project. It is a project, as the chairman has said, has had 84 projects thus far approved. It is one that was implemented in 1999 so it has about 3 1/2 years of experience. So we need to find as much information about it. So I welcome this opportunity to put on the record what is happening but also want to have this put on the record in context with a variety of things that we can do.
    It is a fact that we don't know how effective stewardship is. There has been a GAO report ordered in terms of how the Forest Service has been well managed, in particular on fires. And there are some issues that are valid that they have raised and certainly we want to make sure that all of us have an opportunity to examine the full context of it. And sometimes there is a propensity or a likelihood or sometimes a temptation to scapegoat. When we have a tragedy among us, the scapegoat entities or agencies or certain groups as responsible for. I think we have all a shared responsibility in looking at what works or doesn't work, what we can do differently and how we are evaluating as we go forth.
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    So thank you, Mr. Chairman, for holding the hearing. I will look forward to the testimony of the participants.
    Mr. GOODLATTE. Thank you, Mrs. Clayton. I wonder if either of the other members would like to make an opening statement? The gentleman from Montana.


    Mr. REHBERG. A brief comment, Mr. Chairman, to welcome those who will be speaking to us who have a history in Montana, Chief Bosworth and Carol Daly. Carol, thank you or traveling all the way from Montana. And to you, Mr. Chairman and Mrs. Clayton for keeping this issue out in front of the American public and Congress. So I just left a meeting of the HEAT Group, which has to do with interview policy. And one of the things that people were saying around the table is why do we never get an energy policy. Well, the issue sometimes is in the minds of the public and other times it is not. It seems to be when the price of gas goes up everybody gets interested.
    It seems to be the same way when it comes to natural resource management. When we have catastrophic fires, people around this country seem to care about forest management. And then their interest wanes when those fires go away and we are left picking up the pieces. Unless we have a reasonable plan to solve the apparent management problems within our forest ecosystem these fires will return. My first recollection of catastrophic fires were in Montana in 1988. I was in the legislature. We asked the Federal Government to establish a policy to see that that didn't happen again. We didn't want to lose Yellowstone Park at that time. The year 2000 rolls around and we burn almost a million acres in Montana. We had more air problems in Montana than the Clean Air Act can ever fix because of catastrophic fires. As Mrs. Clayton said, this is a tool. Tools are good. Fire is a tool. Controlled fire is. Catastrophic fire is not a tool. And I just thank you, Mr. Chairman, and I mean that, for keeping this issue out in front of Congress. It is hard to hold a hearing where one or two or three congressional members attend the meeting. But you have done this continually over the course of my brief time here in Congress. And I think you are on the right track. I will keep coming to these meetings because shame on me as a congressman if we have another season in Montana like we did in 2000 and in 1988 and still have not come up with some kind of a plan to better manage our forests so we don't have those kind of catastrophes. And I think you will hear from Carol Daly about one of the success stories that is so important not just to our economics of our community but to the ecosystem as well. Thank you both for these hearings.
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    Mr. GOODLATTE. Very good. I thank the gentleman. The gentleman from Florida.
    Mr. PUTNAM. I love you all too, Mr. Chairman.
    Mr. GOODLATTE. I am overwhelmed. I thank the gentleman.
    We are now pleased to invite our first panel to the table, Mr. Dale Bosworth, Chief of the U.S. Forest Service, U.S. Department of Agriculture, and Ms. Andrea Bedell Loucks, program assistant for the Pinchot Institute for Conservation, Washington, DC. I would like to welcome both of you; tell you that your statements will be made a part of the record. And Chief Bosworth, we will start with you. Welcome. We are honored to have you with us today.


    Mr. BOSWORTH. Thank you, Mr. Chairman. I really appreciate the opportunity to be here today and talk about this important subject, stewardship contracting. But first, I would like to thank you also for your support for stewardship contracting throughout some of the discussions that took place in the farm bill. This subject is one that I think has lots of potential to help manage the national forest lands and so I think it is very good to have that obvious support.
    This pilot program really has provided the Forest Service and the local communities with some really good opportunities to work collaboratively to find common ground and to focus on what is left on the land rather than having all the discussion and debates about what we take from the land. The comments that I am going to have today reflect our experience throughout this project implementation.
    Now, Congress first authorized the pilot stewardship program in section 347 of the 1999 Interior appropriations act. And then subsequent authorizations have increased the number of projects. The first one was a 28 and then it is increased the next 2 years to 84 projects. Establishment of the Pilot Stewardship Program in 1999 was really a culmination of a lot of work that had been going on the part of the Forest Service, a lot of community groups, non-governmental organizations, the forest products industry, and lots of other people to try to find some new ways, effective ways of accomplishing the needed vegetation and other kinds of resource treatment on the land. Shifting philosophies from management and forested vegetation, the number of acres and needed treatment, changes in types of products that are being utilized decreases in the sizes of trees that were targeted for removal and lower values realized for the material all indicated that our processes and our procedures and some of the tools that we had that were appropriate a few years ago may no longer be appropriate or at least be suitable for achieving some of the desired goals that we have today or from us even achieving some of the desired resource conditions that we have today. In addition, residents of some of these rural communities I think increasingly have expressed their desire to participate with the Forest Service at the local level in developing and implementing projects that would both help the stability of the community as well as help the health of the land.
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    Furthermore, the severe fire seasons of the last few years have emphasized the need to reduce the risk on Federal lands and have really underscored the need to find new ways of doing business. Fifty-four percent of the 84 projects under the pilot program have a hazardous field reduction component or objective.
    The pilot projects are testing a number of contractual and financial authorities, things like exchange of goods for services, receipt retention, best value contracting, and results contracting, multi-year contracting. These new authorities allow us additional tools to achieve land management goals that include fuel reduction activities for the national forests that meet local and rural community needs. It was our expectation that the various new authorities would increase our flexibility in managing the national forests. Now, Andrea Bedell Loucks for the Pinchot Institute is going to talk about some of the multi-party monitoring results in her remarks. And I am looking forward to hearing those. But we expect that increased flexibility is going to enhance our ability to sustain ecosystems throughout the restoration and management activities.
    Another expectation of the pilot program is to improve our work efficiency. The authorities that we have been testing increase the contracting and financial methods that are available to accomplish program goals and to consolidate land-management activities into few contracts, reduce multiple entries and therefore reduce land disturbance. It will help us to meet management goals in a shorter period of time and afford us opportunities to conduct some of the necessary resource work over a larger area than what historically we have been able to do.
    And third, the Stewardship Pilot Program will really help foster stewardship in communities and with contractors and with workers. It is encourages local participation, collaboration and investments, and these can empower individuals and groups as they become more involved in managing the resources that their communities depend upon. Relationships between the Forest Service and the communities can improve the building of trust and credibility.
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    To date, approximately 22 pilots have been awarded accomplishing some of the on-the-ground work in forest health and fuel reduction, repairing area restoration, road management and recreation facility improvements.
    I think we can make several inferences from these projects. Community and individual collaboration in the pilot projects is building the trust and the credibility and support by focusing on the end result. Economic benefits are taking place mainly in the form of employment. Most of the firms who have been awarded some of these contracts have been small businesses. And finally, by testing the authority to exchange goods for services, we can accomplish work that we might not have been able to otherwise accomplish. A majority of the stewardship pilots that are testing the authority to exchange goods for services are testing the retention of receipts from the products that are sold.
    And I would like to just give quickly an example. It is an example called the Dry Wolf Stewardship Project. It is on the Lewis and Clark National Forest in Montana. I am somewhat familiar with this project. But this is a project where working together closely with the community we decided that we wanted to do some commercial thinning up on the land there to open it up a little bit. It would help from a fire standpoint, but the trees were of sufficient size, although small, to be of commercial value. At the same time they were able to go to a campground—this is near the town of Stanford, MT—to go to this campground near the town of Stanford and improve the campground by replacing the old dilapidated outhouses that were there, by making all of them handicapped accessible, by putting in trails in the campground where wheelchairs could use it, and by putting a fishing bridge in or fishing pier in over the stream so that it was also handicap accessible. And then this stream was a stream that had been straightened out back in the mining days and were able to put the meander back in the stream. It helps the riparian areas. It helps the wildlife and fish. And the people of the area are just thrilled with their participation with that projects and what is happening. It is just a small project but it is just an example of the kinds of things that we can do through stewardship contracting.
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    We welcome the opportunity to work with members of this subcommittee in evaluating these projects and assessing their benefits for forest management. So that concludes my statement. I would be really happy to answer any questions. And thanks again for the chance to be here.
    [The prepared statement of Mr. Bosworth appears at the conclusion of the hearing.]
     Mr.GOODLATTE. Thank you, Chief Bosworth. Ms. Loucks, welcome.


    Ms. LOUCKS. Thanks. Mr. Chairman and members of the committee, on behalf of the numerous partners and contributors that collectively implement the multiparty monitoring and evaluation process for the Stewardship Pilots, I want to thank you for the opportunity to speak with you today. My name is Andrea Bedell Loucks and I am a program associate with the Pinchot Institute for Conservation.
    In July 2000, the Institute was awarded a contract by the Forest Service to design and implement a multiparty monitoring and evaluation process for the pilots. This morning I would like to highlight some of our recent findings and also touch upon some of the lessons we have learned to date. I would like to begin by discussing project status, which I have summarized from the 2001 annual report that was submitted for the record.
    By the close of close of fiscal year 2001, 56 projects were authorized by Congress for implementation by the Forest Service. These pilots are widely distributed geographically with every Forest Service region supporting at least one project. Of the 56 pilots approximately 31 have completed NEPA and 13 have encountered an appeal or litigation.
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    Approximately 22 of the projects have developed contracts and 11 have been awarded to successful bidders. In general, the majority of these pilots are utilizing bundled contracts for implementation. And by this I mean timber sales with services included or service contract with product removal included.
    We also collected preliminary information on funding sources for the pilots and the costs associated with implementation. According to our collected data, funding is largely being provided from appropriated dollars with a small number of projects relying on the exchange of goods for services, receipt retention or cooperative contributions to date. With regard to cost, a cursory review of the provided estimates is helping shed light on which project parameters have a higher cost associated with them. And these largely were service contracts or NEPA and planning processes.
    Of the many innovations that the stewardship pilots are testing the issues of expanded authorities offers the most insightful and sometimes controversial dialog. Of the new authorities, goods for services with 47 pilots and best value contracts with 30 pilots are the most heavily used with many projects utilizing a mix. Our most recent reviews have found that these authorities are providing local Forest Service units with more options and greater flexibility in meeting objectives, for example, allowing for more comprehensive ecosystem treatments, few entries onto a site, and a reduction in the overall contract and administrative costs. With regard to accomplishments, few projects by close of fiscal year 2001 had actually reached the implementation stage.
    However, it is important to note that the pilots are addressing a number of ecosystem management objectives in their operations, many targeting multiple objectives within the same project. These highlighted objectives include habitat restoration, both terrestrial and aquatic, fuels management, road management and maintenance, environmental education and forest product removal. Specific details on these activities can be found in the 2001 report.
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    We are also witnessing an increase in both the numbers and diversity of stakeholders involved in project planning, implementation and monitoring. These participants represent a wide array of interests including a mix of public and private organizations and those concerned with commodity and non-commodity issues.
    Finally, early monitoring results indicate that the stewardship pilots are contributing in various ways to local economies. These benefits primarily come in the form of employment opportunities and enhanced skill sets.
    An important role for us in monitoring and evaluating the impacts of the stewardship pilots is identifying key issues and trends. And the first of these that we have witnessed is institutional culture. Local, regional and national teams have identified numerous internal policies and agency practices that pose significant barriers to project implementation. These include budget cuts, personnel transfers, the narrow disciplinary focus of some staff, poor communication channels, and a reluctance to take marginal professional risk for innovative or creative approaches.
    NEPA requirements are also a key issue for the pilots. Inefficient compliance and consultative processes were identified as principle barriers to project implementation. As we reviewed project level reports, however, it could not be determined at this time if the NEPA related delays were isolated to the pilots or whether process problems were exacerbated by the nature of these projects.
    Funding is also a critical issue. Pilot coordinators have stated that the Federal budget process provides for at best a 2-year funding certainty, a time during which watershed restoration and many of the other stated goals cannot be fully achieved.
    We are beginning to see some numerous positive trends emerging from community involvement. To date, community involvement in the pilots has resulted in improved landscape level management, facilitated site selection, increased trust and support for agency projects, increased economic opportunities and enhanced local workforce capacity.
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    And finally, we have witnessed concern over the expanded authorities. Many environmental groups are cautious of goods for services and receipt retention authorities because of the perceived perverse incentives associated with linking restoration and timber sales. Additional concerns also surround designation by description.
    In closing, I would like to stress the need for prudence as we consider the applicability of permanent authority extension. By being responsive to stakeholder concerns and involving diverse interests in the multiparty process, we hope we are building accountability and trust in promoting learning. However, to realize the true potential of this it is essential that future actions be based on what we learn. Therefore, I would like to suggest that we remain cautious in discussions of permanency until we compile more detailed results and can confidently attest to the usefulness and efficiency of the new processes being tested. Thanks.
    [The prepared statement of Ms. Loucks appears at the conclusion of the hearing.]

    Mr. GOODLATTE. Thank you, Ms. Loucks.
    Chief Bosworth, given your experience so far do you support permanent authority for stewardship contracting?
    Mr. BOSWORTH. Well, Mr. Chairman, I have been a supporter of stewardship contracting now for probably 12 or 14 years since I observed the first experiment back in the late eighties and saw the potential for that. I strongly support the continuation of stewardship contracting. But I think that these 84 projects that we have right now we have a lot of opportunity to learn from these. And because our processes are very slow in terms of working our way through NEPA and working our way through consultation and whatnot, it has been slow in getting these projects implemented on the ground. But we are learning from them.
    We have a wide array of different kinds of projects that as they come to completion I think we are going to learn a lot. And so it seems to me that these pilots are going to tell us a lot about the timing in terms of permanent authority as well as how permanent authority might be crafted.
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    Mr. GOODLATTE. What kind of shortcomings have you found in the current structure which authorizes the contracts on a year-to-year basis now?
    Mr. BOSWORTH. Well, probably the biggest problem associated with the current approach would be that a lot of—some folks don't want to get into it because they don't know whether there is a lot of uncertainty about its future. And that is both, I think, internal to the Forest Service as well as the potential outside for communities or for outside contractors to want to learn how to make proposals on these contracts and how to be effective. So some people are willing to take that risk but others are not willing to take that risk until they at least perceive that it is going to be something that is going to continue for a longer period of time.
    Mr. GOODLATTE. Do these contracts, in your opinion, provide a ''perverse incentive'' to cut timber in our national forests?
    Mr. BOSWORTH. Yes. I just do not believe that. It is just not the case. And let me tell you why I think that. In fact, I think it is just the opposite. I will give you an example of the fuels problem we have in the national forests. We have a lot of places, 70 million acres of moderate and high risk of catastrophic fire. Some of these areas are places where at one time they had—150 years ago maybe they had somewhere between 15, 20, 30, 40 large trees per acre. Now some of those areas have something like as much as 500, 1,000 trees per acre. And so we have got these latter fuels that when a fire starts, the fire goes up, the smaller trees into the crowns of big trees, you get a little bit of wind and you destroy the whole thing. So we need to remove some of those smaller trees.
    We only got two ways of doing that. We try to do it prescribed fire but that is too risky when you have that much fuel. So you are going to have to remove the fuel. You can either do that with a timber sale contract or you can do it with a service contract. The service contracts, in some cases, cost us anywhere between $500 and $1,000 an acre. If, on the other hand, you can sell it, then you know you are actually getting something for the product. But most of those areas you cannot get a viable timber sale because there is not enough value there. So there is an incentive under timber sale to add a few of the bigger trees, maybe more than what you really should in order to make the timber sale viable so it will sell.
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    Under stewardship contracting, we can supplement the cost with the appropriated dollars. We can retain the value of that material, add some appropriated dollars to it for the contractor so we can remove that material and there is no incentive to cut the bigger trees unless that is what is needed to be left on the land.
    Mr. GOODLATTE. But you can still derive some economic value from the trees that are harvested.
    Mr. BOSWORTH. That is correct. You still derive some economic value. So instead of costing $1,000 an acre maybe it is only going to cost us $100 an acre to achieve that and there is no incentive to be taking some of those larger trees.
    Mr. GOODLATTE. Chief, a couple of years ago I had the opportunity to visit the national forest near Mt. Shasta in northern California. And I don't know whether that is the Shasta National Forest or another national forest, but in there there was a ranger district called, I think, the Gooseneck Ranger District. In there they had a demonstration project on a substantial amount of land. I think it was a couple of thousand acres in which they have the native species being ponderosa pine, but beneath that have grown up enormous fir trees. The pines are, in many instances, over 100 feet tall. The fir is 60, 70, 80 feet tall and on the ground, because they fought forest fires for a century, is an enormous amount of debris and undergrowth and dead wood and so on. And I think this is the type of situation you find in much of the west where when a fire does start it does stair step right up into the crown of those trees and destroys the whole forest. They contracted with a local timber company to come in and take out just the fir trees; don't touch any of the ponderosa pine; just take out the fir trees. And then after the firs have been removed introduce fire on the ground and come as close as I think man can to restoring that natural state in an area where you have to fight forest fires and therefore you have to have some management to address the lack of the natural process. Is that the kind of project that we are talking about here? And in that case, what struck me was the bid from that company to just take out the firs for 2000 acres was $6 million. You know a substantial economic benefit to the community, a substantial improvement in the health of the forest, protecting the environment and having a healthy local economy are not two things, in my opinion, that collide with each other.
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    Mr. BOSWORTH. That is exactly some of the kinds of projects we are talking about. And a lot of the land in the interior west particularly doesn't have—the smaller trees don't have that same economic value; don't grow as big as the ones that are there on the Shasta, Trinity National Forest, and so you have to supplement it because you don't have the same value.
    There is one other thing about this perverse incentive I would like to say. And you know, it just doesn't make sense to me that people would go out and do damage to the land so that they can take the dollars and do good somewhere else. I mean that doesn't make sense to me. Those dollars are not funding the Forest Service. If it were, then maybe somebody could argue that there was some kind of a perverse incentive, but it is inherently contradictory to me to be thinking that people are going to damage the land here so they can do good on the land somewhere else.
    Mr. GOODLATTE. Thank you. Mrs. Clayton.
    Mrs. CLAYTON. Thank you. A couple questions. Help me to understand the tools we now have. You said there is the service contract. Would you describe the service contract as opposed to the stewardship contract?
    Mr. BOSWORTH. OK. The service contract is a tool that we have had for years and years and an example would be that we will use fuel fire fuels as an example that we want to clear out some of that small diamond of material and reintroduce fire in a controlled manner. We may let a service contract in the lowest bidder gets the bid and we will pay that person so much per acre to go out, cut those trees and either remove them or let them lay there or whatever. Then we may come in with our Forest Service crews and do some prescribed burning. Under the stewardship contract, we would use a best value.
    In other words, it is not the low bid that we go for. We take the best value and we take the best proposal that would achieve the end results that we have agreed upon in a collaborative way that would achieve those end results. Now, that proposal may be on that they would be willing to do it for a really good price because they are going to be able to keep the material and sell that to a sawmill or someplace else, you know, put it into chips or whatever use they might find. So they would redeem some value from that material therefore their proposal is going to be less costly to the Forest Service.
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    Mrs. CLAYTON. And I guess I set up the analogy to raise the continuation of discussion about the incentive. And the question I think is though the—and I agree, I don't see why anyone would want to do that, but the question are the elements in the stewardship contract sufficient to give the right incentive so that people wouldn't be perceived as having to make up the differences for low bidding on the lack of compensation in the value of the timber that they removed? And I am assuming that the same entity who could be eligible for your service contract can also be eligible for your stewardship contract. Are they different kind of providers?
    Mr. BOSWORTH. No. My belief would be they would be many——
    Mrs. CLAYTON. They are the same.
    Mr. BOSWORTH. They are the same people.
    Mrs. CLAYTON. So these are the people you work with and the difference in the scenario is that in the recognition, as I understand it, is that the end result in the stewardship contracting is that you are dealing with some of the same individuals and they would come and implement this prescribed agreement. And part of their compensation is that the value, whatever that is, X value, and I think you mentioned that you took out—you gave some examples of taking trees out and they raised a question in my mind of their value. But the scenario that the chairman set up about the stair steps of fire kind of explains some of that, but I am trying to discern how the stewardship contract, in your mind, is you cannot do some of the same things with your service contract if you have the same providers and the same incentives. Is it because they get value for this or if they are eligible for your service contract, what is it you want to achieve through—I like the stewardship contract but what are we trying to achieve through the stewardship that we can't achieve through the existing authority of either the service contract or the agency itself doing? Is it because we need more capacity and we don't have enough resources staff-wise and we need to add this new tool for contracting so we can accelerate the removal of the dangers on the brink? Help me understand why you think that is necessary.
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    Mr. BOSWORTH. Well, one of the things that we can do under this authority is exchange goods for services, which we don't have the authority other than through this pilot project. And what I mean by that, in other words, is the value of the material that is there, we can exchange the work being done on the ground.
    And there is another authority, which we refer to as receipt retention authority. And there is example of a pilot that is taking place on the George Washington and Jefferson National Forest in Virginia where we are experimenting with separating the logger. In other words, we are contracting to have some logging done. And then we are selling the material, the logs, out of the log deck so that we don't have the person that is receiving the logs be the same person that is doing the logging. So by separating that, we are trying to find out whether or not we can get better work done, you know, a higher quality of work done. Then we have taken the receipts that we get from those logs and transferring those to the North Carolina to the national forest there to a stewardship project there so that they can do the same thing. And then those receipts are going to be taken to do another project in North Carolina to do some other kinds of stewardship activities, you know, some watershed restoration, I believe, is one of the things that will happen. So that is an authority that we wouldn't be able to do without this. So we are ending up meeting the objectives that we had to start with but we are able to do it over a much larger area and the cost is basically almost even. In other words, we have accomplished the need. We have these other things accomplished on the ground and we have done it in two different states, two different national forests, and we haven't had to put a lot of appropriate dollars into it.
    Mrs. CLAYTON. Let me ask you just a little bit about receipt retention in the light of full transparency. Are you concerned about that?
    Mr. BOSWORTH. Well, it is a part of this experiment that I think is worthwhile but we need to watch it very carefully and make sure that it is being used correctly. We need to make sure that we have all the appropriate safeguards in place to make sure it is being done appropriately. So you know, it wouldn't be correct for me to say I don't have any concerns about it at all because I have got some things that I just want to make sure that we have the tools in place to start that.
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    Mrs. CLAYTON. Mr. Chairman, I do have another question of Ms. Loucks but my time has expired so if there is another round I will ask.
    Mr. REHBERG [presiding]. I assume there will be another round but go ahead and ask your question.
    Mrs. CLAYTON. I wanted to ask a question of Ms. Loucks.
    In the end of your testimony you raised the issue that we ought to learn more before we move immediately to permanency and I think that is what the chief also indicated, but just on the issue of authority walk through with me the various authorities and your evaluation of that. Did you indicate that you made some comparison as to the infancy of the different authorities that are existing now in your report?
    Ms. LOUCKS. We were just talking about the extended authorities, the goods for services receipt retention designation by description.
    Mrs. CLAYTON. So you didn't make one between service contracts and stewardship contracts and other things?
    Ms. LOUCKS. No. All we did reflect upon is that it is allowing the Forest Service to have increased flexibility extend where they can do management on the land comprehensive treatments involving communities in ways that they may not have been able to under existing authorities.
    Mrs. CLAYTON. Your contract is to evaluate this. Right?
    Ms. LOUCKS. Yes. To design a framework and to implement it for a 5-year period.
    Mrs. CLAYTON. For a 5-year period?
    Ms. LOUCKS. A 5-year period.
    Mrs. CLAYTON. So this is an interim review since it was in 1999. When did you start your evaluation?
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    Ms. LOUCKS. We produced our first report, I believe, in 2000. We have 2 more years to go. We produced a report to the Forest Service and to Congress on an annual basis.
    Mrs. CLAYTON. OK. Now, my understanding this was implemented in 1999.
    Ms. LOUCKS. Yes. But we were awarded the contract in——
    Mrs. CLAYTON. Ahead of time?
    Ms. LOUCKS. Yes in July 2000.
    Mrs. CLAYTON. OK. Thank you.
    Mr. GOODLATTE. Thank you, Mrs. Clayton.
    The gentleman from Montana.
    Mr. REHBERG. Thank you. And I apologize. I was listening intently until the chairman came back in. And so if I ask the same question she just asked I apologize.
     You designed the monitoring program for the multiparties based upon a contract you received from the Forest Service. So your organization then went out to all the various other parties that would be interested in monitoring and you coordinated them or you coordinated the monitoring with the Forest Service for the projects?
    Ms. LOUCKS. The framework that we established wasn't just the Pinchot Institute. It was created in collaboration with a number of regional partners.
    Mr. REHBERG. Who would those partners be?
    Ms. LOUCKS. Those partners would be Carol Daly, Lynn Jungwirth and Carla Harper from Colorado and Carol is from Montana, Lynn is from California, and also some assistance from American Forests here in Washington, DC.
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    Mr. REHBERG. And those parties then helped you establish the monitoring for all 84 projects or any project that if it had been 150 projects you would have established the multiparty monitoring program for all the projects.
    Ms. LOUCKS. That is correct.
    Mr. REHBERG. Then do you, as a group, specifically monitor or do you contract with them to do the monitoring?
    Ms. LOUCKS. We subcontract with them to help with regional technical assistance. The monitoring is actually—the framework we have established is three-tiered. You have local teams. You have regional teams. And you have a national team. Every pilot is required to have a local team in place that is supposed to be multiparty so very diverse in interests and membership. They are required to meet—actually, we have not set a guideline on how often they have to meet but they need to produce a report every year basically answering a criteria package with a set of questions.
    Mr. REHBERG. OK. And let me ask you the question in your caution of making this permanent is the problem that creates the caution in your mind created by the legislation the Congress passed or by the individual areas that you have identified? Maybe NEPA doesn't meld with this. Maybe the funding wasn't sufficient for this. Do we need to fix—and I believe in the philosophy of plan, monitor, control and re-plan? And it doesn't seem like we ought to throw it out. It seems like we ought to make it permanent but fix the problems that keep it from working correctly. And so I guess my question is what is creating the caution in your mind?
    Ms. LOUCKS. The caution is because most of the pilots have encountered some form of delay so we haven't really gotten to a point where the majority of the pilots are at implementation and we can really see how the extended authorities are working, specifically goods for services received retention destination by description.
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    Mr. REHBERG. So is the delay created by the legislation or by the balls that you have to juggle?
    Ms. LOUCKS. Yes. It is basically the balls you have to juggle and some of the things I highlighted in my testimony. Some of it is internal culture. Some of it is NEPA. Some of it is funding.
    Mr. REHBERG. Can we change the culture if we don't have the structure, if we don't have—see. The permanency gives the participating partners the assurance that is still going to be there. I am not going to want to begin a 10-year pasture renovation project with the USDA unless I know that they are going to be there in 10 years if they pull the funding. And I think that is what chief Bosworth was kind of saying was one of the reasons why a lot of people haven't participated is they don't know if it is going to be around. And if we don't create the permanency that unsettledness, if that is a word, will exist and it is almost doomed to fail then. Do you agree or not?
    Ms. LOUCKS. I partially agree.
    Mr. REHBERG. Chief Bosworth, your response.
    Mr. BOSWORTH. Well, again, I think that there is a lot to be learned from these pilot projects. And we are going to continue to struggle in getting people to really buy into all this until we have something for some folks is going to have to be something that is going to have be around for a while in order to really tackle it. I am mostly concerned, frankly, about the availability of outside contractors. It is not an easy process for people to learn because the people that we normally deal with, they know how to do timber sale contracts; they know how to do service contracts.
    This is a whole different kind of thing. And so it is more difficult for them to know how much to estimate their costs are going to be and how to put together their proposals because we go out with a request for proposals instead of a bid prospectus, which is different. And so some of them are willing to tackle that and willing to take the risk and move forward. Others are going to hold off and wait and see what happens and wait and see whether there is going to be something around for a while before they are going to invest their time and energy on it.
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    Mr. REHBERG. Thank you, Mr. Chairman.
    Mr. GOODLATTE. Thank you. We will do another round. Ms. Loucks, you described a number of the current projects that were under appeal. I think 13 out of 56 had encountered an appeal or a litigation. Generally speaking, who are the litigants in these appeals?
    Ms. LOUCKS. We found through our review that the majority of the litigants are national environmental organizations that basically want to stop timber harvesting on the national forests.
    Mr. GOODLATTE. That basically what?
    Ms. LOUCKS. Want to stop timber harvest on the national forests.
    Mr. GOODLATTE. Even under the stewardship projects where the bottom line doesn't necessarily have to be the basis for undertaking an effort to improve the health of the forest?
    Ms. LOUCKS. An interesting fact that you should also keep in mind is that some of the appeals and litigations weren't directed at the pilots but were part of larger environmental analysis for let us say a certain area of the national forest so either through forest planning processing or something. It wasn't necessarily always directed towards the pilot.
    Mr. GOODLATTE. But these got swept up in them nonetheless.
    Ms. LOUCKS. Yes. Correct.
    Mr. GOODLATTE. Are these groups filing these appeals participants in the multiparty monitoring?
    Ms. LOUCKS. Off the top of my head I can't recall if they are. I would be happy to look into it when I get back to the office this afternoon.
    Mr. GOODLATTE. In multiparty monitoring and the evaluation process how is the information collected?
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    Ms. LOUCKS. Basically we have a criteria package that is a set of questions that we ask of each of the pilots on a local level. And they respond to that. Regional teams and national teams also analyze those results and try to whittle out regional trends or national policy issues.
    Mr. GOODLATTE. And how is the information being used to adapt the program to address concerns and issues that arise?
    Ms. LOUCKS. There are a number of ways. One, when these concerns arise, it helps us prompt whether or not we should increase diversity of the local teams. Actually, all the local teams, regional teams and national teams are mandated to be multiparty and very diverse. And so by involving a group of people who have very different perspectives we hope that through the reporting process and discussions we are addressing some of those concerns.
    We also have structured outreach with our help with our partner American Forests where we have educational listening sessions, gaining a better understanding of what the concerns are. And finally, every year we modify the criteria package to address some of the emerging concerns and some of the emerging trends. We want to be sure that we are collecting information that is relevant and that is useful.
    Mr. GOODLATTE. So you have what appears to be a good working process to address problems and concerns that may arise from all of the parties involved. Whether they are local governments, environmental groups, the timber industry representatives involved in participating, whatever interests, recreational users of the areas and so on, they all have an opportunity to participate in this internal monitoring process that is designed to provide a mechanism to solve these problems as the program moves forward. Is that not correct?
    Ms. LOUCKS. Absolutely.
    Mr. GOODLATTE. Notwithstanding that, nearly a quarter of the projects that you have been monitoring have been subject to an outside appeal that has caused extended delays of the effort to undertake improvements to the health of the forest.
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    Ms. LOUCKS. Correct.
    Mr. GOODLATTE. And I take it that the Pinchot Institute would not be involved in this process if it were not for the purpose of undertaking good conservation practices that improve the health of our forests as opposed to in some way harm them.
    Ms. LOUCKS. Yes.
    Mr. GOODLATTE. It is a leading question.
    The gentlewoman from North Carolina. Thank you.
    Mrs. CLAYTON. If I have any leading softball questions—but taking from your testimony as well, and I was interested in just understanding a little bit more about the bundling. And the bundle contracts you said provide multiple benefits but also there were some complications in it. Just walk through that for me and what the concept is and how it works.
    Ms. LOUCKS. Do you want to do it as a tag-team?
    Mr. BOSWORTH. I will start by just explaining sort of the concept behind the bundling. If you take a piece of land, often there will be different kinds of projects. We may want to close some roads or decommission some roads, do some watershed restoration, habitat improvement. There may be some thinning for fuels treatment. I mean I am must giving some examples. And we often do those project by project, either contract by contract or with Forest Service crews and then a contract. With this bundling, we can—and through the stewardship contracting part of the concept, we bundle these projects together under one proposal, one contract, and we—it is sort of one entry. We get the work done and we focus again on what condition we want to put the land into and do that all at one time so we don't have to have repeated entries, which has repeated impacts. So that is sort of the concept behind the bundling. I will let Andrea refer to the rest of it.
    Mrs. CLAYTON. Well, you said approximately 22 or 39 percent of the projects had developed contracts with that. And I gather the perceived benefit if I was the provider in that I would have a comprehensive—well, because you want to address the comprehensive need of that tract of land, if I am contract on that I would have maybe a stewardship piece in addition to closing the roads, in addition to other. Is that how it works?
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    Mr. BOSWORTH. Well, all those parts are part of the stewardship.
    Mrs. CLAYTON. That is what I am saying.
    Mr. BOSWORTH. The closing the road, the habitat improvement, the watershed restoration, those would all be part of the stewardship contract.
    Mrs. CLAYTON. Right.
    Mr. BOSWORTH. And so those would all be the activities that the person who has the contract would be expected to complete on that piece of land.
    Mrs. CLAYTON. So doing multiple service, removing the timber for value then is not—it applies to all of the service, not just the removal.
    Mr. BOSWORTH. No. The value of the timber then can be used to offset the cost of the road decommissioning, of the habitat improvement and the other kinds of projects that would take place on that piece of land.
    Mrs. CLAYTON. Right. And again, that has worked more effectively, you think, than the service contract? I gather you bundle the service contract the same way. The same entities, right?
    Mr. BOSWORTH. In some cases we would do some bundling with service contracts but not nearly as often, partly because again there is not timber removal under a service contract, at least if there is a value to it that can be recovered normally. And so this tool gives us some options that fit together better. And I don't want to imply that there is not still a role for service contracts. There are places where service contracts would be the right tool and there are places where timber sale contract, like we have used for the last 50 years, is the right tool.
    Mrs. CLAYTON. Are you finding more contractors responding—you had a challenge or concern of having the availability of contracts to do the work. Are you finding a lack of response to your service contract? Are you finding a lack of response to your stewardship or are there plenty for all kinds of——
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    Mr. BOSWORTH. I think that the only problem with the stewardship contracting is that it is new and it is difficult for people to know exactly how to place their proposals, their bids, how much to charge, and so we don't have as many people that would compete so there is not—at this point in some places there is probably not as good of competition as we might get if some time in the future when people are more used to it and there is more competition.
    Mrs. CLAYTON. People have been trained for the service contract and specialized in burning or a timber contract. Is that right?
    Mr. BOSWORTH. Well, they have done that kind of work and they know how much it is going to cost when they submit their bid. They know what kind of a price that they can—what kind of bid they can submit and be pretty sure that if they get the contract that they will make a profit. They are not quite as sure under stewardship because they have never done it before. They don't know how much the cost of all these different things are going to be. If they don't have the skills to do some of the work, they are going to have to subcontract that. They may not know for sure how much that is going to cost them. So there is just some uneasiness in knowing how to work their work their way through in some cases.
    Mrs. CLAYTON. I can understand that. My husband is a country lawyer and sometimes people paid us in eggs and chickens. And it does make a difference if you know what the value of the dollar is.
    Mr. BOSWORTH. Yes.
    Mrs. CLAYTON. But my last question to you, Chief, is you indicated the community value of the stewardship. And I am always interested in developing the community capacity. Speak where you see—describe that community value you think comes from steward contract that perhaps didn't come from service contracts or other services you have.
    Mr. BOSWORTH. Well, first my belief is that any tool that is an incentive for collaboration and working together is good for a community because the more that we work together with the community and with the very viewpoints that the community come together to try to collaborate in a positive way that that enhances the ability of that community to be responsive and for us to work with them and whatnot. And I think this tool does that.
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    By its nature, it focuses on the condition you want to have the land in and it causes people or at least it encourages people to work closely together. We also, through this process, have the ability to select the best value to the government instead of the high bid or the low bid. There are other kinds of contracts we can do that in as well.
    But that is one of the concepts behind the stewardship contracting. And one of the things we can take into consideration is local employment. So as we are looking for that best value and we set the criteria up for what we are going to base the contract award on, one of the things that we can tell prospective bidders would be that if they are going to do a certain amount of local employment that that would be a plus in terms of our analysis of their different proposals. And that also enhances some of these small rural towns that have had some pretty significant effects in terms of employment in the last few years.
    So there is a number of those kind of things that I think help. It also increases the local capacity to do different kinds of work that maybe they haven't been doing in the past. Like the example I gave of the Dry Wolf project near Stanford, Montana where a small local contractor is doing the commercial thinning, is fixing outhouses, is going to get the meander put back in the stream, those are kinds of work that some of those local contractors haven't done in the past. But by this approach, it is enhancing some of that local ability to start becoming skilled at doing different kinds of work in the woods that what they have done in the past.
    Mr. GOODLATTE. Thank you. The gentleman from Montana.
    Mr. REHBERG. One last question. I am not going to enjoy next session nearly as much because I won't be able to hide under being a freshman when I ask a dumb question that is pretty obvious to everyone else, but I will give it a go. What is the difference or is this complimentary to a charter forest? I guess I don't get it. Isn't that what we were talking about in another committee, the Resources Committee and the Subcommittee on Forests that this same kind of thing is going to happen in a charter forest? Are we setting up something that is duplicative or complimentary or maybe you can explain that? I just don't get it.
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    Mr. BOSWORTH. Well, I see some differences. And under the charter forest proposals we—of course, at this point the concept behind charter forest is really a pretty—it is a skeleton that doesn't have a lot of flesh added to the skeleton yet. So under the charter forest concept we are looking for suggestions and ideas. But under the charter forest, you take a national forest or ranger district and experiment with different ways of doing business, such things as maybe some advisory groups in a different way than what we have done in the past. We use the Vias Calderas, as an example, in New Mexico of something that we might try under the charter forest concept.
    I think that stewardship contracting could be one of the things that may be done under the charter forest. That would be the thing that we should consider as we come up with proposals for charter forests. But under this stewardship contracting, we are doing it on 84 different proposals around the country and it is really—to me the stewardship contracting is a tool that can be used wherever it best fits, where the charter forest approach is identify a few forests in the national forest system where we would experiment.
    Mr. REHBERG. Well, then will the charter forest authorization fix the problems that Mrs. Loucks is talking about that cannot seem to be overcome specifically with this program?
    Mr. BOSWORTH. It is difficult for me to answer that. I think that—because it depends so much on what the final configuration of a charter forest would be. I think that there would be potential to fix some of those problems that we have identified in the monitoring. But again, it would depend on whether or not we identified them correctly and we were able to put some things in place that would help solve that problem. And since we haven't gotten anything in place yet it is hard to really make that kind of a judgment.
    Mr. REHBERG. Mrs. Loucks, are you involved in the charter forest concept or have you or your organization taken a position?
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    Ms. LOUCKS. No. Not at this point. No.
    Mr. REHBERG. You have no position then?
    Ms. LOUCKS. No.
    Mr. REHBERG. Thank you. Thank you, Mr. Chairman.
    Mr. GOODLATTE. Thank you, Mr. Rehberg. I want to thank our panelists as well. You have been both very helpful in answering our questions and bringing us up to date on the status of this program, which I hope we can continue to improve and increase and move along so that a lot more of the forest that needs this kind of help can get it.
    At this time, we will welcome our second panel. Mr. Mike Leahy, Natural Resources Council, Defenders of Wildlife, Washington, DC. We will start with Dr. Burchfield. Again, I will remind all of the members of the panel that your full written statement will be made a part of the record. And we would ask that you would limit your oral statement to five minutes. Dr. Burchfield, welcome and you can start.


    Mr. BURCHFIELD. Thank you, Mr. Chairman. And I wish to thank the subcommittee for the opportunity to testify on this important innovation in the management of our national forests. And I also want to thank the other members of the Clearwater Stewardship Contracting Monitoring Committee, John Manz, Jack Copps, Mary Mitzos, Jim Stone, Sterling Miller, Tim Love and Carol Daly for their assistance in bring me here to Washington.
    In my view, stewardship is the simultaneous nurturing of land and people. It should go without saying, but it is worthy to emphasize that the maintenance of the ecological functions and processes within our national forest is the foundation of the benefits they provide to the American people. Thus, stewardship is fundamentally about sustaining the ecological well being of our forests and from this flows the tangible and intangible benefits that support our lives.
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    Based on my experience with the Clearwater Stewardship Contracting project on the Seeley Lake District of the Lolo National Forest, stewardship contracting has demonstrated benefits in three areas, in the ecological condition of the forests, in the business management environment within the Forest Service and the social environment in rural communities. Allow me to provide a few illustrations. The Clearwater Stewardship Contracting project addresses a common problem within western forests that has been recognized by this committee, an abnormally high density of trees within a fire-adapted ecosystem. A major activity of this project is to thin several of these dense forest stands approximately 418 acres to reduce the risk associated with both high intensity wildfire in windthrow. This is what is commonly referred to as the goods side of the stewardship contract.
    The Clearwater project also allows the application of prescribed fire to reduce forest fuels on 160 acres, the spot spraying obnoxious weeds on an estimated 37 miles of roads, the improvement of aquatic systems and improvement of water quality and sanitation through the replacement of old-style pit toilets with eight Aspen-style concrete vault toilets. Now, these services are typically called the service side of the contract.
    Now, there have been several comments here today about the exchange of goods for services creating perverse incentives for the Forest Service to harvest forests aggressively and inappropriately to allow the agency to supply new elements of infrastructure within the national forest. A shibboleth for this phenomenon is sometimes called ''trees for toilets.'' And it is fascinating that ''trees for toilets'' exchange actually occurs on a Clearwater Stewardship project. But in this case, each project stands independently as a beneficial activity for the ecosystem. Now, I wish to state clearly that I find it inappropriate to allow a ''demand pull'' for infrastructure improvements such as better toilets to mandate commercial harvest of trees on national forests. The need for density reduction must be the driving force behind forest harvest activities and not the need for infrastructure. But in the case of the Clearwater project, but needs coexisted and the attributes of the stewardship contract, the capacity to exchange goods for services allowed for an efficient, coordinated and rapid solution to two ecological problems. In my view, this is a good thing.
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    Another area where stewardship contracting has potential for positive change is in the social environment in rural communities. The direct benefits of the Clearwater project of Seeley Lake, Montana are quite straightforward. A local family-owned wood products facility, Pyramid Mountain Lumber, was the successful bidder on the contract. It has consciously hired a series of local-based subcontractors to accomplish much of the project work.
    To me, however, the indirect benefits of the Clearwater project are far more interesting. The creation of a citizen-based, multiparty monitoring committee has made clear a commitment on the part of the agency to engage in active deliberations on the most rational and responsible ways to manage our national forests. The long-term consequences of this process to encourage trusting, mutually-reinforcing relationships are difficult to estimate but they could be profound. Stewardship contracting appears to be one of the most effective tools to continue a trend towards agency integration into community affairs. It may help promote a social environment in rural communities that is far less polarized and position oriented than it has been in the past.
    In closing, it is my belief that stewardship contracting is an important method for addressing management opportunities within national forests, but the stewardship program needs to be bounded by three principles. First, stewardship contracts should always have their operations focused on improving ecological processes and functions. There should never be a perception of trading valuable ecological resources such as old-growth forests, for public services. Second, stewardship contracting is best served when the scope of its operations remain relatively small compared to the larger scale programs involved in managing forests. I believe our system of government display great wisdom by safeguarding the expenditure of Federal capital through the congressional appropriations process. By keeping stewardship contracts small, they can focus on targeted significant ecological problems and restoration needs, keeping public engagement focused on priority issues and building confidence with attainable comprehensible objectives.
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    And lastly, the ability to evaluate how these projects differ from traditional contracting or management procedures will require serious time, serious measurement, which implies costs. If the Forest Service wishes to improve the climate in the social environment, it cannot abandon its commitment to citizen-based evaluation and learning and it must dedicate the necessary resources to do so. Thank you for this opportunity to speak before the committee.
    [The prepared statement of Mr. Burchfield appears at the conclusion of the hearing.]
    Mr. GOODLATTE. Thank you, Dr. Burchfield. We will now hear from Ms. Daly. Welcome.


    Ms. DALY. Thank you very much, Mr. Chairman, members of the subcommittee. I am really delighted to be able to be here. There we go.
    The Flathead Forestry project in Columbia Falls or in Flathead County, Montana was originally started by a couple of independent logging contractors who were tired of seeing loggers being blamed for all of the problems with the woods, tired of being outside of the process while others fought about it and people who wanted to bring their concerns, their expertise and their practicality to the table and to the forest. They made the approach to the environmental community and to others in the community and said we should be able to sit down together and figure out some ways to deal with this problem. In their sort of practical way of thinking, they figured six months of people of good will working together ought to be able to do that.
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    We are now, unfortunately, going into our ninth year of trying to get something done and some people are disappointed by the slowness of the process. What we were concerned with at that time back in 1994 were the things that we have been talking about right along, a concern that the needs of the land need to be the foremost concern of this project; that the community and the whole public need to be involved in making some of those decisions, making the input onto what is going to happen, bringing their viewpoints and their knowledge to bear on it and then trying to work out solutions together; that you need to get the very best people to do the work on the ground and that you need to focus on what is going to be left when you are done, not on what it is that you are taking off the land. And as Jim said, they were also concerned that there needed to be a stream of smaller projects coming out that everything seemed to be driven into very large projects because NEPA is very expensive. And so if you are going to do an analysis, obviously you are going to analyze the big project, and they felt that as a result, small projects were being displaced in the system.
    We have, since we began, done seven demonstration projects. Five of them we did trying to use existing authorities and two of them now using the authorities that were created through this demonstration project. One of the things that we found in problems was using the existing authorities was timber sales, for instance, didn't allow us to use best value. They didn't allow us to use designation by prescription and so forth.
    Service contracts would work only if we had the money to pay for it. And the Forest Service in our area didn't have the money to put into service contracts. In order to try that mechanism, we went out and raised money from a foundation to pay for doing a service contract, doing the work the way we thought it needed to be done. The problem then was when the product was sold, all of that money went to the treasury. Didn't come back to the community. It didn't, as far as I know, even necessarily come back into the Forest Service. And then the other thing—that is one reason we wanted to see receipt retention so that the money could be retained.
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    Are we ready for permanent authorities now? We don't think so and the reason is is because we are still learning what works and what doesn't work. We, for instance, have not used goods for services in any of our projects. We used the receipt retention authority exclusively. And we have found just in how that proceeds there have been some issues that we have found raised and we have needed to find out, OK, a roadside sale didn't work very well so what we need to do is pre-sell it on the stump. So therefore, we need to redo the system. So we have had to study it, evaluate it, find out what is not working and then redesign. And in that the monitoring and evaluation process has been very helpful.
    We also need time, as the chief mentioned earlier, to build the experience and capacity in the contracting pool. Right now we don't have a huge bunch of contractors ready to just leap right into this. They are learning as we are learning as the project goes along. One of the concerns that we have is that stewardship is not a one size fits all project; that every site needs to be treated differently. And so one of the concerns, if we go too early into legislation, is that the legislation will be driven by specific concerns over people wanting legislation that you can only cut a certain size of tree or that you can only use a certain type of person to do it or that such and such has to be done this way. We want to maintain the flexibility and the experiential nature of this long enough to be able to find out what really works best before we codify it into language that gets very hard to change. We need time for the lessons learned. And as Andrea mentioned earlier, we are just starting to get those going.
    Sometimes we just look at projects in our own area and think maybe that is the way it is every way. But I was recently at the meeting of the regional monitoring team in our area and it is brought up of a diverse groups of people from three states working with projects in three different Forest Service regions and their key messages about stewardship turned out to be very much the same as the ones that we have been having locally. First of all, it is about the ecosystem and the needs of the land. That is the primary thing. Two, it is site specific. Three, people are the key; people within the agency; people in the community willing to work together, and people who are going to be doing on-the-ground implementation.
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    We need commitment to the project. We need to know that it is going to be around; that there are going to be people here committed to do this work within the agency and on the ground; that the benefits of it should be retained locally to support the local ecosystem and the community; and that the learning process is incredibly important not only for helping us do better on the land but also for helping us to learn to trust one another again. And that has been a real problem in forest management for some time. Thank you very much.
    [The prepared statement of Ms. Daly appears at the conclusion of the hearing.]
    Mr. GOODLATTE. Thank you, Ms. Daly. Ms. Jungwirth, we are pleased to have you with us as well.


    Ms. JUNGWIRTH. Thank you, Mr. Chairman, and thank you for holding this hearing. And it is wonderful to have at least two other members here who think this is important. I come from a little timber town. It was a timber town 10 years ago in the middle of the Shasta Trinity National Forest. It is now an ecosystem management town. We have had the Dwyer decision, which shut the forest down to timbering in 1990 to save the spotted owl and then we have been under President Clinton's plan for the recovery of that spotted owl ever since. So my community has been very interested in stewardship for a very long time.
    And I just want to give you that perspective. Carol is right. Stewardship contracting is an elephant and we are blind people stumbling around saying—the Forest Service is saying, well, is this a way to be more efficient administratively and to get some money into places we need it, and communities are saying, is this a way to get a restored forest and get some jobs, and the timber industry is saying, is this a way to get some product, and the environmental community is saying, is this a way to really do rehabilitation on new graded landscapes? So we are all sort of patting on that beast trying to figure out what the heck is this and will it work to get what we want? And that is a community approach and we all need to admit that we are a little blind here and stumbling.
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    But I want to tell you why we are very interested in this. When the spotted owl decision came down we had millions of acres in the Pacific Northwest whose purpose was habitat—wildlife habitat. That was the purpose of that plan. In our area, roughly 19 percent of the land was left for timbering. In the Forest Service budget, my ranger had over $200,000 to do industrial timbering on that 19 percent of the land and $5886 to do what wildlife enhancement. In charge of 700,000 acres, her job was to recover the spotted owl and the late seral specials and to get that habitat in shape and to protect that habitat and she had $5,000 a year to do it with.
    ESA changed the driver on public lands. The Forest Service budget has not changed. So we did what any community would do. We said, OK, how do we help them do this restoration? Well, what we found out is we trained up to do that restoration and there was no money to fund it because that appropriated dollar wasn't there. And Congresswoman Clayton is quite correct. If that appropriated dollar was there, we could do restoration on public land. It is not.
    So you have no money for restoration. That is a problem we have to solve. We also had another problem. There is no feedback loop. So is the owl habitat getting better? Are there more owls? I challenge you to ask that question, find out where that data is. It is very hard. That kind of monitoring isn't being done but the Forest Service will spend $20 million a year on monitoring the implementation of their plan but they do not spend money and you don't spend money on monitoring the outcomes of the implementation of their plan. So there is no feedback loop. That is a big problem. How do you steer if you can't tell if you are going in the right direction?
    The third problem that we were trying to address with stewardship is that we are broke. These small timber dependent communities were devastated with the change to managing for biodiversity. It was a very abrupt change. They turned off the light switch. So we said to ourselves jobs. Restoration needs to happen. Monitoring needs to happen. Why don't we learn how to do that and build some sustainable systems here? Stewardship contracting can do that. It can help build local jobs and local expertise in the long-term sustainability of those systems.
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    And finally the fourth problem we had was gridlock. You got gridlock here in a way bad way. Well, we had it at the local level. And when we finally just gave up and said, you know what we found out? We had great projects. The environmental community asked great questions about what we are trying to accomplish and they have great idea about how to accomplish that. And the timber industry and those people who are those business people figure out how to do it cost effectively and we need them both at the table. And we need them to help us solve this problem because the forest is in a degraded condition. If what your goal is habitat, we are burning it up, we are losing it to bugs. We don't have the money to do the stream restoration so we have to save the fish. Go out and save the fish but gee, I am sorry, we don't have money for culvert replacement; we don't have money for fish barrier route replacement. So help us—what we want to do is experiment with this, see if we can figure out can we do rehabilitation; can we help restore the forest, and in helping restore those forests restore those local economies and build that stewardship ethic into our system.
    My written testimony gives you a lot of detail on some of the projects that we have monitored and you will be able to look there. But I wanted to give you the rationale from people in the Pacific Northwest who have been dealing with spotted owl recovery now for 10 years. Thank you.
    [The prepared statement of Ms. Jungwirth appears at the conclusion of the hearing.]

    Mr. REHBERG [presiding]. Thank you. Mr. Leahy.


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    Mr. LEAHY. Mr. Chairman and members of the committee, thanks for the opportunity on behalf of the members and supports of Defenders of Wildlife to testify on this issue which has potentially profound impacts on how national forests are managed.
    If implemented broadly, stewardship contracting represents nothing less than what the congressionally mandated report on the issue calls a major reinvention effort of the Forest Service. Unlike previous reinvention efforts, however this one has the potential to fundamentally alter how the Forest Service does business by changing its funding structure from one largely dependent on congressional appropriations to one that is partly or largely dependent on trees. This will compound the agency's existing problems with accounting and accountability and its dependence on money-losing timber sales as a source of funding.
    Stewardship projects themselves are also not individually all small or innocuous projects. One project encompasses 180,000. One costs over $7 million. Another trades away over a million dollars of trees. So these are large projects potentially.
    We see promise and peril in stewardship contracting. We support the basic idea behind stewardship contracts to comprehensively manage a tract of public land for a wide range of benefits with a lot of community involvement. Conservationists have long urged that lands be managed from a broader, more comprehensive perspective, offering a number of project simultaneously in one area can accomplish multiple objectives quickly and decrease entries and environmental impacts. Managing for overall objectives rather than outputs also makes sense. Finally, we strongly support best value contracting and any community benefits that might arise from stewardship contracts.
    Unfortunately, we feel that stewardship contracting has been burdened and weighed down with unnecessary and controversial provisions. If these new provisions are tested on a limited basis in a limited number of projects, we all retain the opportunity to critique, correct, and possibly reject them before they become entrenched. However, many proponents are pushing hard to expand the new powers to near permanent status before receiving feedback on whether or not they work. Conservation groups have been rebuffed in their attempts to limit the number and size of projects and to test authorities that we support, which leads us to question some of the motives behind stewardship contracting.
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    The worse new power is ''goods for services,'' which allows the Forest Service to pay for services with trees. A few years back, Congress canceled the similar Purchase a Road Credit program in which trees were used to pay for roads because it led to massive subsidies, environmental degradation and a loss of oversight. Goods for services reinstates this failed approach for all forestry activities. Goods for services would give the Forest Service unprecedented autonomy over some of the budget and programs allowing the agency to raise a potentially unlimited portion of its budget with trees and pay for whatever programs and projects it wants rather than having to go through the appropriations process and take direction from Congress on its programs.
    Goods for services also makes possible unlimited and untracked logging subsidies from timber sales tucked into stewardship contracts without their individual costs being ascertained. Goods for services would make Forest Service non-timber programs even more dependent on timber sales than they already are by eliminating any separation between timber sale proceeds and other programs. This incentivises forest managers to offer unnecessary timber sales to fund their projects and also perpetuates a never-ending loop of paying for forest restoration with timber sales that will create the need for future restoration. It does not require much foresight to see that goods for services could likely become a standard operating procedure for the Forest Service if authorized to any significant extent and potentially come to dwarf the timber sale program. Already nearly all stewardship contracts authorized to date are taking advantage of this authority. It makes no sense to give this power to any agency, particularly one with a long and continuing history of fiscal accountability problems.
    We are also concerned about designation by description due to high potential for abuse and fraud. The Forest Service is required by law to design and supervise timber sales and mark most trees to be cut. Forest Service wants to hand these responsibilities over to logging companies. We think that these safeguards were put in place for a reason and they should be kept there.
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    We are concerned about receipt retention. We think it decreases the ability of Congress and the public to oversee how its money is spent and its public lands managed. We are concerned about multi-year contracting because past long-term contracts have proven to be very abusive and they haven't had the benefits that stewardship contracting proponents hope for them.
    Some of the benefits of stewardship contracting won't necessarily occur. Communities don't necessarily benefit from larger contracts that they might not be able to handle. Stewardship contracts do not necessarily improve efficiency either. Community and consensus groups are notoriously resource intensive. And finally, cost saving from fewer larger projects are really just shifted to the contractor who has to unbundle and subcontract the individual parts.
    So I would like to make the following recommendations. We don't think that any more stewardship contracting legislation is needed. We think the Forest Service should use existing authorities to implement the goals and objectives of stewardship contracting, which it already can do. We think that to the extent stewardship contracting will be used to address fuel loading and fire concerns, the agency should simply ask for funding to carry out this work rather than trying to pay for it with trees. We think that individual contracts for timber sales should be maintained even when they are offered in conjunction with service contracts. We would like to see log decking fully tested. And at least half of the stewardship contracts try out that authority. And we think that no new stewardship contracts should be authorized until feedback is received on existing projects. We strongly support maintaining multiparty monitoring. And finally, it appears that the main driving force behind stewardship contracting is funding, specifically regarding goods and services and receipt retention. We think a better approach is a dedicated source of funding, a separate line item, for forest restoration.
    In conclusion, another timber program is not what is needed. We already have the commercial timber sale program. Forest restoration program is needed. Stewardship contracting could become such a program and it is something we could support if our concerns are addressed. If not, we are concerned that the program will become just another way to get the cutout, and worse, another wasted opportunity to build a widely supported Forest Service program. Thank you.
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    [The prepared statement of Mr. Leahy appears at the conclusion of the hearing.]
    Mr. REHBERG. Thank you. Mr. Brownscombe.


    Mr. BROWNSCOMBE. Mr. Chairman, members of the committee, thank you for the invitation to testify.
    I live in a place that is far different from here. It is the heart of the Blue Mountains in northeast Oregon. It is dominated by small towns, generally less than 17,000 people, expansive public landscapes on the Wallowa-Whitman National Forest. I could spend a considerable amount of time in a county with no stoplights. I have to drive four hours to the nearest major airport. And wearing a suit around those places doesn't necessarily come natural. But I coordinated with Lynn Jungwirth before the hearing. We decided that I would wear the suit.
    Ms. JUNGWIRTH. He lost.
    Mr. BROWNSCOMBE. Has stewardship contracting actually lived up to its billing? This is what I feel is the critical question and the one that is most relevant to the issue of whether stewardship authority should be authorized on a permanent basis. My answer is no. My reasons follow, but in short, it is too early to permanently authorize a program that was intended as an experiment, where the program is still in the experimental stage, where the results of ongoing pilots remain unknown and where serious concerns over stewardship authorities themselves still exist.
    On the Wallowa-Whitman National Forest where I work a total of three stewardship projects exist. I have been directly involved in two of them. I am currently serving on the multiparty monitoring teams for both. These projects are the Buck Vegetation Management Project and the Sprinkle Restoration Project.
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    I would like to talk to you about those projects and the controversial actions that from my perspective impede restoration. First, commercial logging of 3.5 million and 6 million board feet respectively of trees up to 21 inches in diameter. Restoration motivations do not exist to support the logging of larger fire resistant trees such as larch and ponderosa pine. They are the most resilient to fire. Trees of 20 inches of diameter, however, including ponderosa pine and larch are part of Buck's 3.5 million board feet and 6 million feet on Sprinkle, part of the goods in the goods for services authorities used. The removal of these trees occurred in order to give the projects enough monetary value to cover the costs of the services. This illustrates the tension that is inherent in the goods for services authority. If you have an objective of fire-risk reduction, the objective is not met when fire resilient trees are removed. In fact, because slash created by logging along with removal of fire resilient trees of this type, logging has the potential to actually increase a fire risk.
    Second, although the Buck Project occurred in an area that was adjacent to an inventory roadless area with poor existing soil conditions. First, logging for fire risk reduction should be prioritized within the urban wild land interface. No structures were at risk within the Buck or Sprinkle Project area. Thinning for fire risk reduction within our adjacent roadless areas has not proven to be effective in reducing fire risk. Second, soil protection is essential to future productivity of the forest. The Buck Project proposed placing heavy machinery known to compact soils on top of already damaged soils from past logging. By law, logging should not have happened on these units but it did. And despite the retraction and modification of the project pursuant to an appeal, the logging occurred. Mitigation measures have been developed to allow the logging to proceed, but given the admission by the Forest Service in its environmental assessment that soils were recovering naturally that shows us a demonstration that the priority was to log, not to let the soils self-heal.
    Second, road reconstruction and construction. Reconstructing approximately seven miles of road on the Buck Project and over eight miles of road reconstruction or new and permanent, temporary or permanent road building on the Sprinkle Project for the sole purpose of completing the logging. These actions provide little to no restoration benefit. Despite high road densities impacting wildlife and water quality across the national forest, the Buck Project decommissioned no roads. The environmental assessment for the project admitted that the watershed in which the project was located was at risk for road density, not properly functioning with respect to temperature, functioning at risk, vis--vis sediment. And so despite the touted benefits of retention receipts, that authority which was used on the project, keeping the dollars local in order to address local restoration needs, did not ensure that local road densities were addressed to comply with the forest plan and restore the area.
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    On the Sprinkle Project, the majority of the area is within the summer and winter range for elk. And despite the projects effort to close several miles of road the competing demand for road reconstruction or construction for logging prevented this restoration effort.
    Some of the things that I have learned and I think have become apparent through the process there are conflicts between some of the stewardship authorities and resource restoration needs. Goods for services remains controversial. Relying upon removing commercially valuable trees is the primary mechanism for restoring our national forests promotes a counter productive incentive from a restoration perspective. The only justification, and I think we have heard this today, is that restoration dollars have to come from somewhere. The potential for restoration jobs exists, but what is clearly needed is a separate allocation of funds to cover the cost of legitimate restoration work that cannot pay for itself. Congress should take up this call. Second, designation by description without clear sideboards, this authority becomes a loggers choice program. I have seen examples of large, incredibly valuable, from a habitat perspective, snags removed because of their monetary value. And this occurred despite the fact that the logger technically complied with the Forest Service's description of how many snags to leave per acre. And the reason for this is that when the choice of what snags to retain is left to an operator, the operator still has monetary incentive, a monetary desire in mind. It is now surprise which snags remain standing at the end of the day. Not every operator, although some can be trusted because their paycheck still depends on the value of the trees they cut and for this reason this stewardship authority has pitfalls.
    To sum up, stewardship projects should be restoration projects planned from scratch rather than slightly tweaking and railing existing timber sales. Both the Buck and Sprinkle Projects were initially timber sales that were reauthorized as stewardship pilots when it was realized that they had no viable commercial value as a timber sale. Early involvement of all public stakeholders in the project planning process is critical. Third party monitoring, this is vital piece of the stewardship contract program. And finally, enough stewardship projects exist. Let us learn from what we have done and we have authorized already. Now is the time for learning from the 84 stewardship projects on the national forest lands. Basic reason for that is before Congress, the Forest Service, and all those involved can make an educated choice or have an educated debate on whether or in what form authorized stewardship contracting, the results of the experimental phase of the program, which we are still in, have to be known.
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    My experience overall is that the pilot projects that I have been involved in are more of an evolved form of a timber sale. It is my belief that while stewardship contracting offers some promise beyond a timber sale contract, conflicting incentives still exist and Congress must ultimately fix this by providing stand-alone funding allocation for costly restoration work.
    Finally, just to tie it up here—I know I am over time—firmly authorizing the stewardship contracting program is not prudent right now and I would analogize it to permanently authorizing flights on Orville and Wilbur Wright's first airplane without first having required that it be test piloted on a number of occasions, monitored, and then refined based on the results. So thank you for the invitation to come to Washington and welcome to answer any questions.
    [The prepared statement of Mr. Brownscombe appears at the conclusion of the hearing.]

    Mr. REHBERG. Thank you. Dr. Burchfield, welcome. Nice to have you here.
    Mr. BURCHFIELD. Thank you.
    Mr. REHBERG. Doctor must mean something. So tell me what your background is and then I will ask my questions. But just a little flavor for why you are interested in doing what you are doing in working with the Center.
    Mr. BURCHFIELD. I am a forester by training. I worked as a field forester for the Forest Service for quite a few years. I left the Forest Service to become involved in research and education involving participation by human communities and forest management decisions and I am currently the director of the Bolle Center for People and Forests at the University of Montana, which is dedicated to understanding how people can coexist harmoniously in a forest environment.
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    Mr. REHBERG. OK. So your background is one that I really respect. People don't really realize my background is one of ranching, but in my little ecosystem I deal with holistic resource management. And Alan Saver—you are probably familiar with Alan or some of the concepts. And we look at the whole and talk about our energy cycles and our water cycles. And I don't really give a hoot how many livestock I have out there. I see them as a tool. And so I try and perceive myself as a well-balanced manager of an ecosystem and I think your resume shows that as well.
    But you have heard a fairly strong indictment from at least Mr. Leahy about a project that you are involved in. Is that true? I mean is there just no way to bring a holistic approach to our forest management based upon the structures that Congress is trying to provide the flexibility for a Center like yourself to actually go out in the Clearwater and do something? Is it just not possible?
    Mr. BURCHFIELD. I don't believe the experience of the Clearwater has demonstrated that it is not possible. I think the contrary is true that it has demonstrated there are efficiencies that can be gained, that there are benefits that can be accrued locally and that there is learning that can occur. I also think that Mr. Leahy gave some good testimony in terms of understanding that there are some benefits to stewardship contracting. He talked about the simultaneous entry, for example. He talked about his favor of a multiparty monitoring. So I think he gave a rather sophisticated piece of testimony, but he makes some assumptions that there are some failed approaches, I think he said, in terms of goods for services.
    And that has not been the case in the stewardship project on the Clearwater on the Seeley Lake district because each of the activities stood on their own as positive ecological benefits to the forest. As I mentioned, the thinning project, the activities to improve water quality, the activities to treat noxious weeds all have a benefit to the forest that I think will improve the long-term diversity and sustainability to forests for both wildlife and human benefit.
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    Mr. REHBERG. So perhaps if you looked at it from a narrow perspective of one entity or one interest group you might be able to say it is perhaps a failure from their perspective but not from the whole. I use as an example timber. If you wanted the Clearwater to be a timber production resource, then the timber industry would say it is a failure. If you wanted to look at it from the grazing perspective of a rancher that had a lease there, they would not be able to maximum their AUM's so they may see it as a failure. But from the whole, you believe it is a success?
    Mr. BURCHFIELD. Yes, I do, Congressman. And I think that the Forest Service for quite a few years has been looking at the concept of multiple use and now kind of transformed the ecosystem management of not focusing on a single use but trying to understand what kinds of balance of activities can provide the greatest benefits for the ecosystem and for the American people.
    Mr. REHBERG. Then I guess my question becomes does the project itself provide the framework for a number of different groups to get together to actually try and create a healthier ecosystem. Does it do that or do we have to change specifics of the pilot project itself legislatively to accomplish the goal because Congress creates the framework, the umbrella, and then we turn it over to the agency to create the right kind of rules around it? And frankly, I would differ with you, Mr. Brownscombe, Orville and Wilbur would never be able to invent what they did if this government existed then. It just wouldn't happen. So my question is what needs to be changed in the framework of the authorizing legislation to fix the problems or is it just something that is going to have to eventually fix itself within the framework that already exists?
    Mr. BURCHFIELD. Within the current stewardship contracting program I don't think that there is a necessary fix because the program is an experimental pilot program. There is resources that have been set up through the Forest Service that have been prescribed by the previous panel to be able to evaluate it. That is what we are doing currently. Many of the projects, including the Clearwater Project, is still in the early phases and we need to be able to understand more before moving ahead.
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    As Ms. Daly has testified, these projects need to be site specific, and as I have argued, they need to be relatively small. And I believe I am in agreement with Mr. Leahy in that we want to make sure that we don't have a wholesale exchange of Federal capital from the agencies self interests to be able to only do things for their own benefit, that the appropriations process needs to still be in place on major restoration efforts.
    But the stewardship contracting programs so far on the Clearwater has been a holistic project. It has encouraged many different sectors and interests to participate from timber industry representatives, wildlife manager, community representatives, a ranching interest. We have been active in photographing and site visits, interviews to be able to understand what is going on. We have only been in existence for about a year. Clearly some of these consequences will take many years to understand. My counsel to Congress would be to continue this experimental program, to continue to support the learning that can go on, to continue to encourage citizen participation. I think that there is much that we don't know about managing forests. Although I might have this fun title in front of my name, I realize that I know very little about how the forest functions. And I think that as we learn and as we understand how these specific areas respond to our treatments that we can manage the forest better.
    Mr. REHBERG. Thank you. For the panels benefit and my colleague, as you notice, the chairman has left and it is my intent to continue the rotation of questioning until such time as he return so he has an opportunity if he has any questions for the panel. So I will relinquish my questioning to Mrs. Clayton and there will be another opportunity for you to ask questions if your time expires.
    Mrs. CLAYTON. OK. Thank you. Dr. Burchfield, is that right?
    Mr. BURCHFIELD. That is correct.
    Mrs. CLAYTON. I would gather that all of you, and you can respond separately, would acknowledge that the necessary funds for restoration of the forest shouldn't be dependent on the stewardship contract.
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    Mr. BURCHFIELD. That is correct. I agree.
    Mrs. CLAYTON. Is that also your point of view?
    Mr. BURCHFIELD. That is my point of view as well. Restoration needs in our national forests and our private forests are very grave. But we have learned a lot about forest ecosystems in my lifetime and we understand that some of the things we did in the past, although were well meaning, probably exacerbated some disturbance processes such as fire. So what I would like to suggest is that we need a multi-pronged approach. Certainly appropriations will be necessary for many restoration efforts, but in limited scope and in areas where we know that we have an opportunity to engage the public and we have an opportunity to learn, I think stewardship contracting can be an effective tool.
    Mrs. CLAYTON. But the point I wanted to emphasize that stewardship is a value but it does not replace the necessary need for appropriated funds for restoration of our forests.
    Mr. BURCHFIELD. I agree. We need appropriated funds for the restoration of our forests.
    Mrs. CLAYTON. Ms. Daly, I was impressed with your analogy of how your group got started in terms of the loggers. But in my area, we don't have a lot of Federal land really. We have more of a private land. A lot of loggers we have in the area—we do have one major national forest in that area but not a lot. And part of my concern has been that our loggers who are good and honest and decent hardworking people need to be fully integrated in the whole process and find some way of certifying them and respecting their contribution but also understand they need sufficient training. Is there a training component to what you do prior to being involved in the stewardship contracting?
    Ms. DALY. We don't have a specific training component involved. What we do have is the Montana Loggers Association has what they call an Accredited Logger Program. And they make that available to take loggers through the same stewardship training that Montana State University extension service does for private landowners. So that is for two reasons, one, so that they are all speaking the same language, but more importantly so that the loggers are exposed to all of the wildlife issues, the water issues that are also part of the management of the forest.
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    Mrs. CLAYTON. Thank you for the outline. Those of us who find ourselves having to speed read and skim, you organized it very well so I am able to look at that and did ask a few questions, not of you, however, but I want to ask it of Mr. Brett Brownscombe. You indicated that the weakest link was the Forest Service in this and in the outline of the information that Ms. Jungwirth gave me, the whole monitoring area and the data was another. So my question is who provides the necessary data to designate an area and to give a description of a designated area as where you had to do the service in there? How do we base the empirical data to make a case for what we need to do for the ecological service? Is that the Forest Service? And why do you claim that they are the weakest link in this process?
    Mr. BROWNSCOMBE. OK. Answer the first question. Yes. It is the Forest Service that provides the data, however, they are not the only ones that have the knowledge. There is considerable local knowledge from people who live on the land in local communities who have worked the land in the past. There is also considerable scientific knowledge that exists independent of the Forest Service. The agency can use all of this to sit down through a—this is my understanding of what the stewardship program intends, through a collaborative process, get people together who have knowledge and define what your restoration needs are and what your restoration concerns are regarding the health of a particular piece of public forest land. Then the planning process can begin and that is the way that projects, regardless of what authority they are planned under, should be planned.
    The second question, when I said the Forest Service is the weakest link or has been the weakest link so far that primarily gets at the concern over what is happening with respect to restoration. The priorities that I see the Forest Service focusing on are still the timber sale program and fire suppression. And the restoration needs, restoration work is happening but it is not the—one, it is not funded fully as it needs to be, which isn't necessarily the Forest Service's fault. Congress bears the responsibility for the appropriation and I touched on my suggestion and desire to see what I think is needed, which is a stand-alone appropriation for restoration. But the agency's priorities follow their budgets and their money. And they also follow what they are being pressed to do by various public constituents including the timber industry, including local communities, including environmental groups.
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    And so I think if you have more incentives in the form of line item for restoration or the correct tools to do restoration, you are going to see a lot more community people and environmental folks coming to be proactive with the Forest Service. I don't think the Forest Service has reached out in coming up with creative restoration projects because one, the money is not there, and two, there direction right now is fire suppression. And suppression is in some cases needed but in some cases is a ship out of control with lots of money having, I think, little impacts on the true forest health issues that we face.
    Mrs. CLAYTON. Thank you.
    Mr. REHBERG. Thank you. Ms. Daly, again welcome. It is hard to have so many knowledgeable people living in Montana and representing you all. I can't get away with anything. To follow up on Mrs. Clayton's comment, I guess my question is do most citizens participating in the monitoring have a science or technical background and if not, what training is given to ensure that their properly equipped with necessary knowledge and expertise to perform these evaluations?
    Ms. DALY. Some of them do have a scientific and technical background. We have a fire ecologist, for instance, that is participating on the Pain Emory Project. Others have long experience. We have, for instance, the woman who is the head of the native plant society for the area and her knowledge of vegetation and weeds and all kinds of stuff is great. Then we have a number of people who have experience in business, for instance, because there are business aspects to the contracting process as well. We have people there who are concerned who have done the work on the land and so they are in a position to know what the problems are to getting work done. So I think it is a very well-balanced committee where we bring the local knowledge, the practical knowledge, the scientific knowledge together and they work and learn and share from each other.
    Mr. REHBERG. So is there a safeguard built in then so that, again getting back to my colloquy with Dr. Burchfield about the holistic approach, to see that the evaluation of a success or failure of a practice or a non-practice is scientifically sound?
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    Ms. DALY. Yes. I think so. And you have to realize that these local monitoring teams are not just evaluating the work that is going on on the ground. What you, in Congress, charge them to look at were the process that was occurring and how well these authorities were being implemented. You also charged them with looking at the effects on communities and the involvement of communities and then with the accomplishments of the program. So they have to look at a broad range of issues, social, environmental, and economic. And I think they are very well balanced to do that.
    Mr. REHBERG. OK. Let me go back to a comment you made about the money going to the treasury. Under the program, use Pyramid Lumber as an example, they go in and they bid on the timber and their money goes into the general fund and then the general fund funds the restoration or your program or does some of that money stay before it gets sent back to Washington, DC?
    Ms. DALY. OK. The Pyramid Lumber Project, which is the one that is on the Clearwater Project, that is a goods for services transaction. So they are providing a variety of services on the ground. They are the prime contractor. And then in exchange, they are receiving the timber value. In addition to that——
    Mr. REHBERG. Is that an equal transaction?
    Ms. DALY. It is not an equal transaction. They also were paying additional money above and beyond the services that they are providing because, as I understand it, the value of the sale was actually greater than the services that were being provided. So they provide those differently now. The Forest Service——
    Mr. REHBERG. But then—let us finish with them.
    Ms. DALY. Yes.
    Mr. REHBERG. In no case then does any of their money end up in the general treasury? It all gets spent on that project or other projects? There is a——
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    Ms. DALY. Yes.
    Mr. REHBERG. There is an equal other—are there other instances where there is an unequal instance then?
    Ms. DALY. Well, as I said, if it had just been done with a service contract without having the receipt retention or goods for services transaction ability, then the money would have gone to the treasury. And that is one of the advantage of the stewardship project is that we can issue service contracts but any revenue that is retained or gotten as a result of subsequently selling that material can then be used for work on the ground. It doesn't go to the treasury.
    Mr. REHBERG. OK. The reason I am asking all these questions is one of the things I have long believed—and I am not going to propose it—I am not sure Congress is ready for it nor is the American public ready for this, but it would seem like we would solve this problem with logging if we viewed them differently. If we viewed them as a tool to be used to manage our forests the way we want them to and we, in fact, as a Congress pay them to log, not charge them because they are using their machinery, their labor, and their equipment and their capital. Wouldn't that make better sense in this pilot project to actually pay them to do it rather than to charge them and then use the money?
    Ms. DALY. Actually, that is the one thing we would like to experiment with if we have the opportunity, which would be able to do—just as the Forest Service is able to certify people that are good bulldozer operators or whatever and when they need some work done they can go out and hire them on the hour to do that work, it would be nice if we could certify steward loggers or steward monitors or steward whatever they happen to be and then be able to pay them on an hourly basis to carry out the particular kind of work. We have not been able to test that specifically here because of the problem if you do it on an hourly basis you aren't able to set necessarily. We don't know how many hours it is going to take so that has been a problem. But if we had the capacity to do that we would love to do it that way. And I think many of the loggers, the contractors would like to be on that kind of a system.
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    Mr. REHBERG. Thank you. Mrs. Clayton.
    Mrs. CLAYTON. Follow-up question that my colleague raised with you. If you had excess dollars on your goods for services, those dollars would go back to the treasury?
    Ms. DALY. No.
    Mrs. CLAYTON. Oh, OK.
    Ms. DALY. They would stay in the program and in the instance that chief Bosworth was talking about, I believe they actually move them to another forest to do work there that it needed money for that it didn't have. In the projects in Montana so far where they have had excess receipts, they have been able to use that in the same state and on the same forest for doing other stewardship work. The pilot authority provides that those receipts can be used either on that stewardship project or on another stewardship project authorized by the legislation.
    Mrs. CLAYTON. But if I have a stewardship contract, I give the Forest Service an estimate what the cost is in the bidding and I take in the consideration what I anticipate the value of the timber that I would draw from that. So if there is—I retain the receipt. If actually what I had bidded I actually gain more through the bartering system, it is only that excess that goes back to the treasury.
    Ms. DALY. Yes. The way they usually are set up is there are a number of stewardship activities that are requested to be carried out. It might be thinning. It might be culvert removal. It might be a road obliteration or whatever it is. And then there is the forest work that is to be done. And so essentially, they bid on what it is going to take to do the stewardship work on the ground plus their profit. And then what they pay for is—or what they are offering is the trees that are being removed. So if that exceeds the amount that they are going to be doing the work on the ground plus their profit margin, then that money, yes, is retained.
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    Mrs. CLAYTON. So again, the Forest Service there knows that that particular—they may have some additional income for that given contract.
    Ms. DALY. Yes.
    Mrs. CLAYTON. So the incentive wouldn't be just the contractor trying to remove any validity to the question is there too much of an incentive for those goods for services and therefore the structure becomes tainted. The incentive is not just the contractor. It seems like if I am the forester and I know I am limited for restoration money because, guess what, Congress up there has been very stingy about restoration dollars and the only way I get extra dollars is to have this contractor have excess dollars, seems like they increase that argument rather than decreases that argument. Doesn't it?
    Ms. DALY. Well, what they are actually doing is what they are putting out for bid is a job. It is to treat this landscape to get it to this particular condition.
    Mrs. CLAYTON. Right.
    Ms. DALY. And here are the various activities that we need to get this landscape to this particular condition. And so they really don't know until the bids come in whether the cost of doing this various treatments on the land are going to be more than, less than, or equal to the revenue that might be generated.
    Mrs. CLAYTON. They being the Forest Service.
    Ms. DALY. They being the Forest Service who is going to review that bid. So it may be that it comes in and doing the work that is needed for the land is more than what the value of the timber is going to be. So then they either have to decide whether to use other appropriated dollars to make up the difference or to reduce the amount of activities that will be carried out to accomplish that.
    Mrs. CLAYTON. In your experience you have seen Forest Service do both?
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    Ms. DALY. Yes.
    Mrs. CLAYTON. They had to go into the treasury to make the difference when there was an underbidding of what the costs of that would be.
    Ms. DALY. Yes.
    Mrs. CLAYTON. All right. Thank you.
    Mr. GOODLATTE. Thank you, Mrs. Clayton. I apologize to the panel for having to slip away. But I will make up for it now. Mr. Leahy, what, in your opinion, is going to be done about the—I think chief Bosworth said 70 million acres that remain at high risk of catastrophic wildfire—what is going to be done about those if we don't undertake some projects like these that are designed to improve the health of those forests?
    Mr. LEAHY. Mr. Chairman, I think any of number of things could be done and are being done. There is a wide range of fuel reduction projects, prescribed burning, thinning, removal of under story that are going on. Very important. They are funded by Congress. And I think it is a—I know it is a top priority for the Forest Service and environmental groups support most of those projects. We support reducing unnatural fuel loading and trying to recover the forest from overzealous fire suppression in the past. I don't think stewardship contracting is the answer to those issues. Stewardship contracts at least right now, they are not necessarily more efficient than other projects. They are slower. The Pinchot report on stewardship contracts and the CRS report on the issue both pointed out that these projects take a lot of time. They are really for something different. They can address fuel-loading issue but theoretically stewardship contracts address a broader range and kind of comprehensively restore an area. So I think they have a role in that, but I don't think they are a good choice for the leading edge of addressing that issue.
    Mr. GOODLATTE. Well, where are we going to get the funding to do forest restoration?
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    Mr. LEAHY. I think that there should be a dedicated line item. I think it is a priority for the nation. I think it is a priority for Congress.
    Mr. GOODLATTE. Well, the Congress has stepped up and provided literally billions of dollars of late following the devastating fires that we had a couple of years ago. But we have only begun to scratch the surface of treating 73 million acres. We are nowhere near the amount of money that is going to take. Is your organization opposed to any commercial reward for removing this fuel load? I mean we have 191 million acres of national forest, 73 million of them overloaded with fuel density. You heard chief Bosworth talk about some forests where the healthy forest might be 40 or 50 large trees per acre and you have ten times that number per acre in those areas. Is it wrong to recover part of the value of removing those trees from the forests to be able to use that funding to do additional work in other parts of the forest?
    Mr. LEAHY. We are not opposed commercial reward for some of the work, we just think the incentive should be set up so that commercial reward and commercial logging doesn't drive the process. If you have to restore forest and you go in and in addition to taking out some of the smaller trees, you take out the largest trees, those are the most fire resistant. Those are the ones the Forest Service itself in a report to the response to the wildfires of 2000 said, ''The removal of large merchantable trees from forests does not reduce fire risk and may in fact increase such risks. The large trees are insurance for the future.''
    Mr. GOODLATTE. Well, I think Chief Bosworth said something similar in this testimony today, but that doesn't change the fact that if you have—two parts of that. First of all, if you have the kind of overgrowth that he has described, that there is an awful lot of trees that need to be removed and there is a commercial value to a great many of those trees, either for board feet being used or construction purposes or furniture or other uses of that type or some of the small trees can be used to create pulp for the paper products industry. You are not advocating that we don't try to get as much as we possibly can for the trees that are necessary to remove from the forests. Are you?
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    Mr. LEAHY. Well, I think that we are supportive of efforts to find economic value for smaller trees and more often than not, I think the larger trees with a lot of commercial value are not the trees that ought to be removed in the first place.
    Mr. GOODLATTE. Well, what about larger trees that have reached the end of their life cycle? If they are dying, isn't it appropriate to remove some of those larger trees?
    Mr. LEAHY. I think generally not. I think dying trees have a lot of value to the ecosystem. They are snags. They are great wildlife habitat. Large dying trees are not necessarily the problem. The problem is the small trees that have grown up underneath due to fire suppression and those are not generally economically valuable.
    Mr. GOODLATTE. Some and some of the trees can serve the purpose that you are describing. But if you have the kind of overgrowth that he is describing, and I think he described it as many large trees that have filled up some of this acreage, that is not a healthy circumstance either.
    Mr. LEAHY. Well, to the extent that merchantable trees with economic value need to be removed if and when they do need to be removed, we would be supportive of efforts to recover their economic value without incentives. We support log decking in which the logs are separated from the logger. And Mr. Rehberg, when you were out, suggested paying loggers to go out and do this work. And if they went out and did it and the Forest Service separately sells those trees, we would be supportive of that and or at least testing that authority. That is an authority that has not been well tested. There are some other possibilities perhaps——
    Mr. GOODLATTE. What would be your problem with the scenario that I described to chief Bosworth on the Shasta National Forest where they took out the large fir trees, 60, 70, 80 foot tall fir trees underneath even larger ponderosa pines? The timber company in that case paid $6 million for the right to take out the firs, not touch any of the ponderosa pines. And that $6 million goes a long way towards helping the Forest Service with a great many other projects that you and I would both agree are valuable undertakings. Is that a bad project?
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    Mr. LEAHY. Without knowing the specifics, probably not. I don't know if it was appealed by local environmental groups. If those trees had to come out for ecological purposes, then it is probably not something we would have opposed. But the value of those trees—the question is what happens with the value of those trees? And we think it is best going back to the treasury or perhaps a regional or national forest restoration fund could be set up that would then fund at a national regional level restoration projects.
    Mr. GOODLATTE. Mr. Brownscombe, you are involved in a multiparty monitoring committee?
    Mr. BROWNSCOMBE. Correct. Two of them, Mr. Chairman.
    Mr. GOODLATTE. And who are your fellow committee members?
    Mr. BROWNSCOMBE. Let us see. There is one community group that is part of one located in Wallowa County, OR. There is a private forestry consultant. He is also on another one of these groups. The Forest Service is involved as well. My involvement stems from—this is one of the issues I have with the stewardship contracting. My involvement stems from our appealing these projects as they initially existed because we didn't see the restoration value. That indicated that we were very interested and not motivated in the involvement in the monitoring. I would like to believe we would have been involved in the monitoring—my organization that is—regardless because I think the monitoring is critical and very important. I am very happy to be involved.
    Mr. GOODLATTE. Has it changed any way you see forest management and the other people who had viewpoints that were different from yours?
    Mr. BROWNSCOMBE. I think so. I think the more people you involve the more conversations you have between parties that don't always talk across the lines I think the better you are. And I think that is something we should all try to focus and incentivise if possible. And could I take a second just to respond to some of the questions you—or one of the questions you asked?
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    Mr. GOODLATTE. Let me go through these. Then I will be happy to let you do that.
    Mr. GOODLATTE. And I presume that you would feel like the others in that process benefited from your participation as well.
    Mr. BROWNSCOMBE. Correct.
    Mr. GOODLATTE. The sharing of ideas and closing the gap that sometimes exists in terms of finding solutions that require better understanding of what each side's motivation and goal might be. How have you incorporated your findings into the work being done on the ground?
    Mr. BROWNSCOMBE. Well, the findings haven't been—they haven't been found yet. The monitoring is ongoing. On one of the projects, some of the soil findings where the objective was to do the logging but protect the soils where you know they are already damaged so there was mitigation measures taken that relate to logging over snow. The soil results are still coming back. And my understanding is that they are coming back with some valuable findings.
    So with respect to the other project, it hasn't been done yet and I don't know what he monitoring will show. It is critical to me what he monitoring shows because it speaks to whether the Forest Service through the projects or anybody that has participated in planning the project have met the project objectives and have truly protected the resource and restored the landscape. So I think before we start to run, we should be sure that we know how to walk. And authorizing the stewardship authorities permanently, I think, takes a running step too far.
    Mr. GOODLATTE. Will the level of necessary monitoring or testing change as we keep adding projects?
    Mr. BROWNSCOMBE. Will it change in the sense of what is monitored or who is involved?
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    Mr. GOODLATTE. That is right. If we keep expanding this program obviously we want to make sure that the monitoring is working well but we also want to make sure that it expands to take into account the increased demand on those who are making these efforts.
    Mr. BROWNSCOMBE. Yes. And I think that is the key issue. Monitoring could be compromised if there is not enough money to do it. If you authorize so many projects they all require monitoring but the money is not there to do it, more people's time, frankly, is spread too thin to do it. That is a problem. That is why I think it is valuable to think in terms of small projects where we are doing these experiments. And if the projects are larger, at least make sure that the commitment dollars is there, the commitment of time is there.
    Mr. GOODLATTE. Well, that leads me into the question that I asked Mr. Leahy that you wanted to respond to. The fact of the matter is that we have an awful lot of work to do in our national forests. And if we keep it small, then this is obviously going to be a small component of solving that problem. How are we going to address the problem of 73 million acres of forests that are overloaded with fuel that are too dense because of a history of fighting forest fires and the need to continue to fight forest fires in most places where you have people living in or near these forests and where you have enormous problems with other environmental effects of forest fires, particularly ones that are not historically natural because they are more devastating and do get, with this fuel build up, into the entire over story and include burning the larger trees? What is your solution to that?
    Mr. BROWNSCOMBE. Well, I would agree with——
    Mr. GOODLATTE. With limited resources, bear in mind. We only have so much money that can be appropriated for this purpose.
    Mr. BROWNSCOMBE. Right. And so bearing in mind, I agree with what Mr. Leahy said about the separate appropriations, stand-alone restoration item.
    Mr. GOODLATTE. That is great but——
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    Mr. BROWNSCOMBE. Limited resources I know exist. A lot of those resources are being thrown into the fire suppression right now. I think fire suppression in the urban wild land interfaces are certainly reasonable and responsible. I think focusing so much energy as is being focused now on simply suppressing fires, especially when those fires are in the wild lands, is not the way we should be going. I think a lot of that money could be better served being placed into doing the type of hazardous fuels projects and thorough restoration projects that need to be done using service contracts.
    Mr. GOODLATTE. You will never get to it if the forest burns up before you get those projects accomplished. And in the eastern part of the United States, where my congressional district is two-thirds forested and one-third Federal lands, we have a lot of problems.
    First of all, the pressure on the private land is too great because while half of the land is federally owned and half owned by private landowners, 90 percent plus—probably 95 percent nowadays of the timber harvesting that comes to support the furniture industry and the home-building industry and the paper products industry comes off of that private land. And the Federal lands are growing up very densely, very thickly, and there probably isn't a place in my district where there isn't a home within three or four miles of these forests. So to allow them to simply burn out of control unaddressed is not a very good option there and I suspect that is true in great many parts of the west as well as I see these fires burning down on towns in Arizona and Colorado and so on.
    To suggest that we can simply let them burn is not—they can start a long distance away in an area that is no where near the urban interface, as you describe it, and it can get there without too much help in a pretty rapid period of time if you don't fight these forest fires.
    Mr. BROWNSCOMBE. Right. And I am not—I don't mean to imply let it all burn policy. But I do think—and I have understood what you have said and I have heard it from many in the local community where I live. I think that I have also seen, though, in every Forest Service document I have read that the causes of the current fire conditions relate to fire suppression in the past and past logging practices. So I think recognizing that in the west, where I live, and in the many areas throughout the west these are fire dependent ecosystems. We have to start providing a way for fire to rework its natural role in the ecosystem. Now, I have also——
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    Mr. GOODLATTE. The plan I have described to you at the Gooseneck Ranger District in the Shasta National Forest did exactly that and it kept the local economy healthy at the same time. I don't understand why there has to be this war between people who find the forest economically necessary to their well-being and people who are legitimately concerned about the ecological well-being of the forests. That plan on those 2000 acres, I was told, was going to be the end of that plan. And maybe Ms. Jungwirth, who is from that very area, can tell me.
    But there are millions of acres that could use that same formula, that same kind of treatment that would be both, I think, economically healthy to the community and environmentally healthy to the forest and reintroduce the fire that you talk about that is necessary for certain species and for natural preservation of the forest, but at the same time allows the people that have a very long history of living in and around these forests to continue to do that.
    Mr. BROWNSCOMBE. And I agree. And I think if I could tell you how I think it could be done. I don't believe it requires a war between people. I think that is something that has been blown up. There has been litigation. There have been appeals. That has been blown up in the highly publicized——
    Mr. GOODLATTE. And the forests continue to grow all of the time that all of that litigation goes on and they make the forest fire hazard even greater during the time that all that litigation takes place and all those forests in the pacific northwest are effectively shut down.
    Mr. BROWNSCOMBE. We recently had a restoration conference out in the area where I work that involved community forestry people and Ms. Jungwirth was there. It is an effort to have the conversations that you are discussing about how we deal with what the problem is. And I think there is a huge amount of value in continuing that process and doing that collaboratively. The question I get repeatedly is what is wrong with any commercial value. I am constantly asked, well, are you going to oppose anything that is commercial. Is there anything inherently wrong with deriving some value with what you are extracting. And my response to that is if there is commercial value to something that comes out of the forest for legitimate ecological purpose there is no problem with that. And the concern has always been what gets defined as what needs to come out of the forest.
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    The National Fire Plan has said in the plan itself don't use commercial logging and road building to try to solve fire risk problems. That being said, however, if there is value in the material, the trees that come out for restoration, so be it.
    The tension there really boils down to in the past, commercial logging has not protected the resource adequately. It is part of the reason why we are where we are today. So we are being asked, as the environmental community, to accept that commercial logging is going to restore the resource so why should we trust that inherently if it hasn't first been effective in protecting the resource. So that is where the tension is, but I don't think it is insurmountable. I think a lot of work can and is being done.
    Mr. GOODLATTE. I think we are about 30 years apart in terms of what has happened. I mean I think the environmental community has been very successful in shutting down timber harvesting in our forests, much of which I disagree with. But nonetheless, I certainly don't disagree with the desire to have healthy forests and to preserve old growth where possible and so on. But the practices of the Forest Service 30 years ago when I worked in a congressional office—25 years ago—the mindset of the Forest Service, it was a works program for engineers that built road after road after road. And I think the mindset of the Forest Service and the way the Forest Service operates has changed dramatically.
    I think the timber industry has adjusted a lot. And quite frankly, I don't think it is at all inappropriate for the public to expect that the environmental movement would adjust as well in acknowledgment of that and in recognition of the fact that we have a multiplicity of needs here and that they can all be addressed if people would work together. And I think that stewardship contracting is an ideal way to bring those groups together to accomplish not only the goal of improving the forests but also of improving the relationship amongst those groups.
    I am going to have to go vote before I adjourn the hearing. I would like to give some of the other members of the panel the opportunity to comment on this very issue as well. And I would like to start with Ms. Jungwirth since I have been out to your forest and have seen some of the things you have been doing and some of the challenges you have been facing.
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    Ms. JUNGWIRTH. Well, I would just like to say that I think you are absolutely right. Our public lands are caught between too much and not enough. Too much industrial forestry, which led to degradation of habitat and now preservation is not enough because we are losing them to fire and to insects. So both industrial forestry and strict preservation are bankrupt. I mean we have the evidence now. We lost the habitat. Now we are losing more habitat. So our challenge is how do we learn to do this restoration. It is a terribly new science. That is why we are having this argument. So we have ecological restoration institute. Let us support those things. Let us support the experiments. Let us keep the iterations going. Let us keep the learning going and let us do it quickly.
    Mr. GOODLATTE. Thank you. Ms. Daly.
    Ms. DALY. I think obviously since we have done it in our stewardship projects that fuels reduction is important. I don't think we can put all of the fuels reduction onto the stewardship project and I think what I fear is that all of the other goals that we had set for the stewardship project, all of the best-value contracting, getting the best end results on the ground will be lost if we just concentrate on fuels reduction. If that is a part of a total holistic treatment, that is great. If it just going to be a total fuels reduction program, maybe just need to have a total fuels reduction project that is funded separately.
    Mr. GOODLATTE. Well, I think we need both. And I agree with you. We don't want to lose sight of the other objectives.
    Ms. DALY. Right.
    Mr. GOODLATTE. But I don't think we want to lose sight of the fact that you can——
    Ms. DALY. It can be part of it.
    Mr. GOODLATTE. —do more of this work and cost justify it more and derive some revenues. And one of the things that pleases me most about this debate is we have gotten away from the whole argument of 10 years ago of below cost timbering. Well, now we want it to be below cost. I think everybody engaged in this debate is telling me, well, we want to be careful what we do and we want to do it right and doing it right may not pay for itself. So that is good but by itself, looking to the Congress to simply pay for what has to be done, both in terms of fire, improving the forests in terms of the fire risks, but also improving the forests for a lot of other things that I know you are concerned about, if we simply try to do it by appropriations from the Congress, I can tell you, that while everybody in the Congress is concerned about our forests, not that many people live in and around them so much they would be willing to appropriate the kind of funds that would be necessary to accomplish it without recognizing the need to derive whatever commercial value we can.
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    And we have lots of benefits that every single one of us are using here today, whether it is sitting at these beautiful tables and are using the multitude of paper that we required you to file with us with your statements or the building itself that we are sitting in, we use the products of our forest. We need to use them wisely and we need to treat the forests well as we take them out of them.
    But nonetheless, it doesn't change the fact that there is value there that should come back to the government, to the people who own these forests so that they can use that money again for more projects that will make the forests healthier. Dr. Burchfield, you get the last word.
    Mr. BURCHFIELD. Well, I just want to hearken back to a recent comment that you made that I think is the core benefit of stewardship contract, which is reinstating trust between the American people and the agency.
    For many years the Forest Service operated in a rather insular fashion. They thought they knew what they were doing and they are professionals. And in some respects, with hindsight now we can see that some mistakes were made. And right now stewardship contracting gives us this opportunity to engage in this reciprocal dialog that is creative, that is experimental, and I would really encourage us to continue the stewardship contracting program.
    Mr. GOODLATTE. Well, thank you. I regard the stewardship contracting program in exactly the same way. I really think because it went through the test of this Congress, which has a very diverse representation in and of itself with many diverse views, the final product, I think, really was an olive branch to everybody including the environmental community. And I think that to spurn stewardship contracting because it doesn't go quite the way you would like it to do rather than get in, get engaged and make these multiparty review processes and monitoring processes work, I think is a big mistake. And I think that the community would be better served by helping us make stewardship work rather than the multitude of appeals and objections and efforts to kill the efforts of myself and others here in the Congress to improve these programs and make them work.
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    Instead, we get constant resistance to this and it makes us feel like it is still the same old position that some environmental groups still take, no commercial harvesting of timber from our national forests, no human intervention in the forests in many places. And we have seen in this day and age that there has got to be management. I think it would be better to have everybody involved in that management than it would be to continue to fight while the forests grow and the forests burn.
    So I thank you all for your participation today. It has been a very good debate and I think it has helped to shed some light on the issue. And I hope that it also has helped to allow everybody to have a little better understanding of where we are all coming from. And maybe that will contribute to the process as well. Thank you again for joining us.
    I have some magic words that I need to share with everybody. The Chair would seek unanimous consent, and has reason to believe that he will get it, to allow the record of today's hearing to remain open for 10 days to receive additional material and supplemental written responses from witnesses to any question posed by a member of the panel. Without objection, it is so ordered.
    This hearing on the Subcommittee on the Department Operations, Oversight, Nutrition and Forestry is adjourned.
    [Whereupon, at 12:38 p.m., the subcommittee was adjourned, subject to the call of the Chair.]
    [Material submitted for inclusion in the record follows:]
Statement of Dale Bosworth
    Mr. Chairman and members of the subcommittee, thank you for the opportunity to appear before you today to present my views on the Stewardship End Result Contracting Demonstration Project. This pilot program has provided the Forest Service and local communities with additional opportunities to work collaboratively to find common ground and to focus on what is left on the land rather than what we are removing from it. My comments will reflect our experience with project implementation.
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    Congress first authorized the Pilot Stewardship Program in section 347 of the 1999 Interior Appropriations Act. Subsequent authorizations have increased the number of projects to 84 located across all regions of the Forest Service. Establishment of the pilot stewardship program in 1999 was the culmination of much collaborative work on the part of the Forest Service, many community groups and non-governmental organizations, the forest products industry, and others to find new and effective ways of accomplishing needed vegetation and other resource treatments. Shifting philosophies for management of forested vegetation, the number of acres in need of treatment, changes in types of products being utilized, decreases in the size of trees targeted for removal, and lower values realized for the material all indicated that the processes, procedures, and tools that were appropriate a few years ago may no longer be suitable for achieving some of today's desired goals or resource conditions. Additionally, residents of rural communities were increasingly expressing their desire to participate with the Forest Service at the local level in developing and implementing projects to help the stability of their communities.
    Furthermore, the severe fire seasons of the last few years have emphasized the need to reduce fire risk on Federal lands and have underscored the need for a new way of doing business. Fifty-four percent (54 percent) of the 84 projects under the pilot program have a fire hazard reduction objective.
    The pilot projects are testing a number of new contractual and financial authorities, such as exchange of goods for services, receipt retention, best value contracting, and multi-year contracting, These new authorities allow us additional tools to achieve land management goals, including fuels reduction activities, for the national forests that meet local and rural community needs. It was our expectation that the various new authorities would increase our flexibility in managing the national forests. Andrea Bedell Loucks of the Pinchot Institute will discuss some of the multi-party monitoring results in her remarks. We expect that increased flexibility will enhance our ability to sustain ecosystems through active restoration and maintenance activities.
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    A second expectation of the pilot program is to improve our work efficiency. The authorities being tested increase the contracting and financial methods available to accomplish program goals, consolidate land management activities into fewer contracts, reduce multiple entries and land disturbance, meet land management goals in a shorter time period, and afford us opportunities to conduct needed resource work over a larger area than what has historically occurred.
    Third, the stewardship pilot program can foster stewardship in communities, contractors, and workers. It encourages local participation, collaboration, and investments, which can empower individuals and groups as they become involved in managing the resources upon which their community depends. Relationships between the Forest Service and communities can improve, building trust and credibility.
    To date, approximately 22 pilots have been awarded accomplishing on-the- ground work in forest health and fuel reduction, riparian area restoration, road management, and recreation facility enhancement.
    Several inferences can be made from these projects. Community and individual collaboration in the pilot projects is building trust, credibility, and support by focusing on the end result. Economic benefits are occurring, primarily in the form of employment. Most of the firms who were awarded contracts were small businesses. Finally, by testing the authority to exchange goods for services, we can accomplish work that we may not otherwise have been accomplished. A majority of the stewardship pilots are testing the authority to exchange goods for services or are testing the retention of receipts from the products sold.
    Let me cite an example of a project in Montana with which I am familiar. The Dry Wolf Stewardship Project on the Lewis and Clark National Forest near Stanford, Montana was one of the first stewardship pilots that we implemented. The community of Stanford is very interested in the management of the national forests. Several members of the community have been involved in this project from the beginning to the end. They worked with the District Ranger to identify what they wanted the land to look like when the project was completed. Then, using the pilot authorities, the Ranger put together a project to improve the health and sustainability of the forested areas, return a channeled stream to its natural, free-flowing condition, do campground improvements, and provide a handicapped accessible trail. In addition, a small operator from the community of Stanford received the contract. The Forest is working with the contractor to ensure the project's success. With small contractors, visible progress is slow but steady. This project has generated trust and good will between the community and the Forest Service and is an excellent example of how the pilot authorities help the Forest Service achieve its resource management goals in a community-building way.
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    We would welcome the opportunity to work with members of the subcommittee in evaluating these pilots and assessing their benefits for forest management. This concludes my statement. I would be glad to answer any questions that you might have.
Statement of Lynn Jungwirth
        The Watershed Center and the citizens of Trinity County, California, have been active in stewardship contracting since 1996 when a local collaborative group began working with the U.S. Forest Service to develop procurement mechanisms which would help reinforce restoration of public lands while building new economies for rural forest communities.
    We supported the original section 347 pilots and are now engaged in the multi-party monitoring of some of those pilots and subsequent 338/332 pilots in California, Oregon, and Alaska. What follows is our summation of some of the lessons learned and brief summaries of interviews with implementers of five pilots.
    Key Lessons Learned
    The new authorities provide more flexibility to do complex restoration in a manner which provides benefit to rural communities.
     The new authorities have allowed agency to treat some acres that they otherwise would not have been able to treat due to high extraction costs and lack of sufficient appropriated funds.
     The new authorities enable the agency to put together a package that would be more attractive to local bidders
     Best value contracting for timber sales gave the Forest Service the ability to select contractors based on specific criteria including local economic benefit and ability to meet ecological goals.
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     When doing new innovative work it is important that the agency not be restricted to take low bid.
     Best value contracting using an integrated contract creates an incentive for contractors to do high quality work, as opposed to traditional timber sale system that only creates incentives to cut corners.
     Integrated contract levels the playing field by dramatically reducing the up-front costs involved in purchasing a timber sale. Allows more small companies to participate in the bidding.
     Designation by description saves the FS both money and time by not having them to mark every tree while still ensuring accountability for trees cut, through ''cut stump diameter'' measurement.
     Goods for services enable all of the activities to be completed in one entry. This resulted in reduced risk to the watershed by promptly treating the slash and completing the prescribed burning. Watershed was at less risk because the agency did not have to wait for appropriated dollars that may or may not appear in a timely manner.
     Direction to collaborate led to partnerships and collaborations that would not have happened otherwise (please refer especially to the Maidu interview below)
     FS staff is more willing to take risk of extra time and expense if they are given the opportunity to experiment with the pilots. The incentive, for them, is to ''finally be able to do something for the resource.''
    We believe stewardship contracting, which marries resource restoration goals and community economic and social restoration goals, is very promising. We encourage congress to continue the experiment. We encourage the Forest Service to provide more internal support for these on-the-ground innovators. The pilots test not only these new authorities, but also involvement of the local community and other cooperators in pre-NEPA planning and in project monitoring. We believe the restoration of our public lands and our public land communities can and must happen together.
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    Stewardship Pilot Interviews, July 2002, Compiled by Watershed Center Staff, Data resulted from interviews with project coordinators and one community cooperator
    Buck Pilot Project, Mike Piazza, COR, Wallowa Whitman NF
     644 acres thinned small diameter from mixed conifer stands
     6.8 miles of road reconstructed
     2240 tons of hog fuel removed to date (80 van loads of hog fuel @28 tons/van)
     5345.20 tons of logging slash removed to landing via whole tree yarding (8.3 tons/acre 644 acres)
    Ecological Outcomes
     thinned 644 acres of mid seral stands to promote late seral growth
     reduced risk of catastrophic wildfire
     logging over snow achieved very minimal soil disturbance
    Impact of Authorities
    Goods for Services
''The authorities allow us to put together a package that would be more appealing to potential bidders. The package put everyone on equal ground.'' Some characteristics of the contract that made it more appealing include:
     Low up front cost (easier for small firms to get into the project)
     No bonding requirements (unlike traditional timber sales)
     Pay as you go methods, as opposed to pay 40 percent up front
     Contractor was able to start with little up front money
     Able to have smaller contractors involved
     Resulted in district receiving more proposals than usual and of a higher quality.
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     Goods for services had little impact on the kind of work that they did.
    Retention of Receipts
     Kept the money locally
     Able to reinvest in the project
     KV too restrictive
     Fuels folks want to use $ for post project fuel activities
     $ (60,000??) going to fund Sprinkle on the La Grande RD of Wallowa-Whitman
     collecting $157,000 total
    Best Value Timber Sale
     project awarded to small local logging firm
     very helpful in contractor selection and administration
     use of the RFQ enable agency to select the best proposal for the job. Compare to timber sale that would get bought by a large mill who would contract a logger to do the work at lowest bid. Contract logger has no incentive to do good work, only incentive to cut corners to save money. Has no investment in the project outcome.
     Contractor wrote part of the contract so they had more ownership over project methods. Led to a better working relationship between FS and contractor. Less adversarial.
     Integrated contract mechanism allows small loggers to get in on the work. In normal bidding situation the mills would be less apt to buy the timber if a local logger bought it before them.
     Bonding on most timber sales prevents most small operators from participating.
     10 percent performance. 33 percent payment guarantee based on monthly volume. 40 days of cutting paid in advance
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     40–60 day advance deposits (mid-point payment of 50 percent contract value even if no logging has occurred)
     Contractors liked the flexibility to sell the products from the sale wherever they could find a market.
     Encouraged the ingenuity and resourcefulness of contractors in marketing the products.
    Community Involvement
     Little initial community involvement. Project was an off the shelf timber sale that was converted to a stewardship contract.
     Wallowa Resourced doing the monitoring
     WR helping with the marketing of the products, too
     Community involvement made FS processes more transparent
     Helped the agency make better use of WR and other local partners
     Opened the door to much more in-depth community involvement
     Led to greater mutual learning between FS and community
     Helped community learn limitation and opportunities of working with FS
    Congressional Message
     Timber sale has gone beyond its usefulness
     The agency is needing to do more than the timber sale can provide
     Expand stewardship contracts
     Screen the potential projects more closely
     Prioritize WUI areas for use of authorities
     Needs to be closely monitored
     Overall message: authorities provide greater flexibility to get things done
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    Antelope Pilot Project, Winema National Forest, Gerry Smith, Forest Resource Enterprises
    Ecological Outcomes
     thinned 1664 acres of small diameter lodgepole and ponderosa pine
     burned project area to reduce fuels and restore natural processes
     enhanced protection of 2,700 acre block of dedicated old growth.
     reduced fire hazard on 1664 acres
     reduced growth-related competition and moisture stress among large old trees
     provided cover and forage for big game
     3,900 ccf saw logs harvested in 2001
     2,000 ccf pulpwood harvested in 2001
     encouraged the development of markets for small diameter ponderosa pine
    Goods for Services
     Allowed agency to complete all of the activities needed at the site in one entry
     Would not have been possible to complete the project without the goods for services authority
     KV would not have been enough to complete all activities needed at site
     Allowed them to get much more work done at the site for much lower cost. If they had to do it in a separate service contract and separate timber sale they likely would not have received the appropriated dollars to do the work. Also, it is possible that the timber sale would not have sold due to the low value of the material.
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     Integrated contract (timber and service) reduced risk to resource by completing all of the activities at one time. Reduces financial cost by reducing contract preparation and administration costs. Reduces risks to home and property by completing the post-harvest activities such as slash piling and burning as soon as harvest work is completed (may not always happen same season due to snow).
     Site has good public access on major paved road into Crater Lake National Park
     Demonstrated effective old-growth restoration at relatively public site
     Authorities had no impact on site selection
     Authorities had no impact on selection of activities
    Best Value Contracting
     Best value contracting was an integral part of the contract
     Helped the FS get the optimal treatment completed because they were able to select the contractor that was best able to do the job
     BV allowed negotiations to take place—allowed FS and contractor to reach common ground—allowed them to get the contractor's opinion and expertise into the project
     Only 2 out of the 5 contractors that submitted bids had done service before. Indicates a potential need for training if considering more prevalent use in the future
     Contractor has more incentive to do good work
     If sold as a timber sale still good possibility that it would have gone to a local bidder
    Designation by Description
     Saved the FS a lot of money, about $40,000
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     Was easy for the contractor to implement
     Cut stump diameter system ensured accountability. Only the necessary trees got cut.
    Community Involvement
     Resulted in a closer working relationship between the agency and the community
     Should have brought them (the community) in sooner
     Local and regional interest groups (environmental) became more aware and supportive as a result of outreach and education
     A key component to doing the project
     Could be useful in a broader process
     Could help minimize NEPA
     Applicable and suitable to more than just pilot projects
     Pilot was a tremendous success
     Goods for service is an important additional tool to conduct fuel reduction activities
     Monitoring is very key and should be supported with adequate funding
    Baker City Pilot Project, Barry Hansen, AFMO, Wallowa Whitman NF
    Ecological Outcomes
     431acres thinned by helicopter whole-tree removal
     197 acres pre-commercial (ladder fuel removal)
     6.2 miles of road reconstruction and obliteration
     1,900 tons of fuel reduced
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     203 acres burned with prescribed fire
     Enhance and protect municipal watershed from risk of catastrophic wildfire
     Established fuel break along southern end of watershed
    Products produced
     1.2 Saw logs (mmbf)
     1.0 Pulp/chip (mmbf)
     150 Firewood (cords)
     4 Landing rehabilitation (acres)
    Impact of Authorities, Goods for Services
     Allowed the project to go forward. Project had been offered as a timber sale twice previously but did not sell.
     Goods for services added cash to the pot to make the project work
     At the time that the project originated the agency did not have the authority to do service contract with embedded timber sale.
     Believes that the pilot projects helped push the approval of the Desk Guide for service contract with embedded timber sale
     Allowed the agency to treat more acres with an equal amount to dollars
     Single integrated contract saved money because it reduced contract administration time and contractor mobilization costs
     Goods for services enable all of the activities to be completed in one entry. This resulted in reduced risk to the watershed by promptly treating the slash and completing the prescribed burning. Watershed was at less risk because the agency did not have to wait for appropriated dollars that may or may not appear in a timely manner.
    Designation by description
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     Saved them time and money because they did not have to mark every tree. Resulted in a significant cost saving.
    Retention of Receipts
     Project had a net cost so no receipts were retained
    Best Value Timber Sale
     Allowed agency to pick contractor with best record of doing quality work. Builds in an incentive for the contractor to do good work
     Since it was experimental work (whole tree helicopter logger of small diameter material) it was important that the agency had greater control over the contractor selection.
     BV gave agency ability to select a contractor that had a high probability of completing the job
     Since it was experimental and in the municipal watershed it was important to not be stuck with the low bidder
     When doing innovative work it is more important than usual to be able to select a quality contractor
    Community Involvement
     Project pre-solicitation got interest from small businesses and was offered as small business set aside even though was over a million dollars.
     Helped the contract go to a local bidder
     City (Baker City) took the lead on public outreach and communication
     Was out front running interference, helped to break impasses and get funding too
     Powder River Watershed Council was involved in EIS
     City's involvement resulted in the selection of the municipal watershed as the location of the pilot. Directly responding to community needs for protection of their watershed
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     Collaboration prompted the City to become more active in managing their watershed. Has applied for and received grants to treat fuels in the watershed
    Multi-Party Monitoring
     Little information shared with the public so far
     Research plan developed, provided research opportunities for PNW scientists
     Research will produce a new set of fuel models and field guides for mixed conifer/heavy fuel in the Blue Mountains
    Congressional Message
     Agency has begun to learn new ways of doing business; new more efficient and effective contracting mechanisms, more open and effective collaboration, but it is just a start. These experiments need to be given time to continue.
    Sprinkle Pilot Project
Jeff Hammes, Administrative Officer/Operations Staff
Wallowa Whitman NF
    Planned Activities
     Reduce risk of catastrophic wildfire by completing grapple piling/hand falling outside of harvest units for fuels reduction/restoration in Old Growth stands on 446 acres;
Conduct commercial timber harvest, precommercial thinning and fuels reduction on 2,400 acres, including removal of forest products;
Precommercial thin an additional 290 acres;
Obliterate or decommission 16 miles of existing roads;
Reconstruct or improve 2.4 miles of existing roads;
Complete wildlife habitat improvement projects on 71 acres; and
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Subsoil approximately 200 acres.
    Impact of Authorities
Goods for Services
     will allow them to treat acres and sites that were not previously economically feasible
     goods for services will allow them to treat the acres and complet the other associated activities
     Project has about $3 million of low value small diameter timber to removed to meet fuel reduction objectives
     Timber sale won't allow the completion of all the activities needed at the sites.
     Not enough funds available to complete a service contract
     Integrated best value contract will increase the length of the project.
     Integrated contract will also enable the contractor to complete the work in one entry
    Retention of Receipts
     Project has not been implemented but received about $60,000 from the Buck Pilot.
    Community Involvement
     Lots of activity with local multi-party monitoring team
     Resulted in a better understanding, both agency and public getting more educated
     Building a higher level of trust in the community
     Project is very close to town and very visible
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     Leading to greater public involvement at earlier stages
     Community forestry board reviewing the comments from the 30-day comment period
     CBF will help the agency respond to the issues; provide broader perspective on comments
    Multi-Party Monitoring
     Very active at this point
     Integral part of community involvement and public outreach
    Congressional Message
     Pilot has prompted lots of public outreach and education
     Agency should be given authority to develop more pilots
     Collaboration is the way of the future
     Pilots are one way to promote effective collaboration
     Staff would not be willing to take the risks and additional expense (involved in collaboration) if they did not have the reward (the flexibility and chance to get something done) offered by the pilots
    Maidu Stewardship Project
Farrell Cunningham, Maidu Cultural and Development Group
Plumas National Forest
          Would never have entered into a dialogue with the Forest Service without the Congressional direction to collaborate
     Allowed the Maidu community to improve its goals, objectives, and plans for self-sufficiency
     Received $100,000 for fuels reduction from the RAC
     Could never have made the proposal before. Increased capacity as a result of partnering with the Forest Service (and Forest Community Research, a local non-profit organization)
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     Message: give more authority to community groups to make decisions. Collaborative decision-making space is still limited.
Statement of Christina Cromley
    Dear Mr. Chairman and members of the subcommittee, thank you for this opportunity to provide comments on the USDA Forest Service stewardship contracting pilot program. We would like to thank the Chairman and the Subcommittee for holding this hearing. It is an important forum for local and national interests to discuss what has been and will be learned through the stewardship contracting pilot projects.
    Founded in 1875, American Forests is the oldest national citizen conservation group in the U.S. Our membership includes a diverse mix of scientists, landowners, resource managers, and community activists in urban and rural areas. We help citizens understand and participate in forest conservation policies and programs that affect them, their communities, and the forest ecosystems of which they are a part. Over the past seven years, we have worked with many partners in rural forest-based communities to advance understanding of community-based approaches to ecosystem management. We act as a bridge group between what happens on the ground with practitioners and what happens at the national policy level. We also act as a bridge group among different interests at the national level. Stewardship contracting has been an important tool in many community-based efforts and in creating common understanding among many different interest groups.
    We serve on the National Multi-Party Monitoring Team for the Stewardship Contracting Pilot Program. We also subcontract with the Pinchot Institute for Conservation to do outreach to inform national interests about what is happening with the pilots and multi-party monitoring and to learn about the concerns of these national interests. Our testimony is based on what we have learned through monitoring efforts and from close communication in our bridge role with agency, community, and interest group partners.
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    We have focused our testimony on the critical role of monitoring and evaluation to improved decision-making and land management. We attempt to address some of the concerns raised at the national level through monitoring and outreach efforts. These concerns include ''perverse incentives,'' exploring other stewardship contacting mechanisms, and suggesting appropriate means to expand and continue learning from the program.
    Importance of Stewardship Contracting to Community-Based Forestry
Stewardship contracting pilots integrate the four central ''pillars'' of community-based forestry: process, stewardship, monitoring, and reinvestment. First, the pilots are vital to process because they are intended to promote collaboration with communities in planning, implementation, and monitoring and evaluation. Second, they promote stewardship by seeking practical ways to move from an output driven economy to one based on restoration, ensuring the health of communities and the health of forests. For example, best value contracting requires that the Forest Service consider a contractor's past performance and technical approach in addition to price when awarding contracts. When awarding contracts under the stewardship contracting pilot program, special consideration is given to the ability of the contractor to meet the ecological objectives of the contract as well as their ability to provide local benefit. Third, the three-tiered local, regional, and national monitoring and evaluation process is helping us to identify key lessons and to take corrective actions and adapt practices as we move forward. Fourth, together with appropriated dollars, the funding and cost-saving contracting mechanisms authorized in these pilots—receipt retention, goods for services, and designation by description—help to provide an investment in the land and in rural communities. These components work together and each is important to the success of the program as a whole.
    Monitoring and evaluation
Monitoring and evaluation are in many ways the key to the long-term success of this program and the effectiveness of land management.
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     We must have a feedback loop to learn whether we are meeting our objectives, and if not, how to change practices so we do meet our objectives. Monitoring and evaluation provides that feedback loop by helping highlight lessons learned for managers so they can use them to improve practices. Taking a practice-based approach of learning by doing and monitoring a project as it progresses can test management actions in an on-the-ground, real world manner. Managers can then adapt practices to meet land management and community objectives more effectively based on what they learn.
     We must build trust to overcome gridlock over forest policy and management. The National Team report indicates that multi-party monitoring and evaluation is an effective means of building trust, ensuring collaborative learning, and improving accountability. Multi-party monitoring means that all interested parties, environmentalists, teachers, business owners, industry representatives, scientists, and others, work together to identify what needs to be monitored, how to monitor it, and how to interpret the results. Multi-party monitoring is one way for national interests to engage in decision making in an open, transparent way.
    Building a feedback loop
    Testimony from Andrea Bedell Loucks highlights many key lessons from the multi-party monitoring and evaluation process at the national level. For example, we learned that barriers to implementation of projects seem to be due more to internal agency practices and policy budget cuts, personnel transfers, narrow disciplinary foci of many staff, administrative delays, and a reluctance to take professional risks—than anything related specifically to the stewardship pilots. This finding emphasizes the need to recognize that stewardship contracting won't solve Forest Service problems; it is one of many tools to improve stewardship of the land, not a panacea. In addition, data analyzed at the national level indicates the process by which the monitoring takes place—in an open, inclusive fashion with a broad base of interests and in an adaptive way—is key to the success of the monitoring. Community involvement seems to improve the projects, including improved land management and site selection, improved relationships and increased trust, and enhanced local workforce opportunities.
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    Monitoring and evaluation are providing critical lessons on a more local level, as well. For example, the Flathead Forestry Project (FFP) in Montana worked with the Forest Service on the Cedar Flats project to prepare a detailed description detailing the desired future conditions at intervals from 5 to 200 years post-treatment. Bidders were asked to design the prescription to achieve desired future conditions.
    FFP selected five members to serve on the Technical Committee along with the Forest Service to review bids received. These members included a forester, two teachers, a wildlife biologist, a local environmental non-profit representation, and a community non-profit representative. Only two bids were received, and they were not of the quality sought. As a result, the Request for Proposals (RFP) was cancelled. To find out what went wrong, FFP designed a questionnaire with the multi-party monitoring team and sent them to contractors who received the RFP. They found that: (1) potential bidders were uncertain how to approach a bid that addressed how the area should look 5–200 years post treatment; (2) The RFQ had been issued at the busiest time of the loggers' year, and people did not have the time to work through a new and unfamiliar bid process.
    After receiving this feedback, the FFP and the Forest Service rewrote and reissued the RFQ, resulting in nine bids.
    To ensure the continued effectiveness of multi-party monitoring, we need to recognize the critical role that communities play in the monitoring and evaluation efforts if these efforts are to lead to improved practices and adaptive management. We can achieve this by doing the following:
     Distinguish between research and monitoring and evaluation
Multi-party monitoring and evaluation is meant to ensure accountability, to provide feedback mechanisms to improve decision-making and to build trust among diverse interests. It is not analogous to scientific research projects, which often take much longer to complete and are designed to test hypotheses that can lead to generalized results rather than to provide timely feedback that considers whether specific ecological, economic, and administrative goals were met.
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     Recognize the role that different types of expertise play in multi-party monitoring
    Because the point of multi-party monitoring and evaluation is not to produce a publishable piece of scholarly work but rather to ensure management goals are being met and to build trust, it is important to have participants with a range of backgrounds and expertise. Business owners, community leaders, teachers, county commissioners, environmentalists, researchers, and others can provide input on improving management for administrative efficiency, on addressing environmental and community concerns, and on a range of other factors that include but are not limited to ecological factors.
     Provide mechanisms to ensure against burnout
We need to make monitoring sustainable for the long-term. Many multi-party monitoring processes are staffed by community volunteers. Institutionalizing monitoring in a way that it receives adequate funding and resources is critical to ensure its long-term success and to avoid community burn-out.
    Building Trust: Addressing the concern over perverse incentives
     Outreach to national interests and on-going monitoring have taught us that one of the most controversial aspects of stewardship contracting is the potential for perverse incentives. Many outside interest groups have expressed concern that the goods for services and receipt retention mechanisms provide an incentive to cut more trees than is necessary to meet land management objectives. They have also expressed concern that using designation by description or prescription allowing the contractor to select trees cut based on desired condition on the land rather than having Forest Service employees mark the trees grants too much control to the contractor who can abuse this freedom. We agree that the potential for abuse exists with these contracting mechanisms and that it will be important to monitor closely how they are being implemented and to explore how we might improve the contracting mechanisms and/or provide safeguards to limit abuses.
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     However, below are some key points to consider in these debates:
Goods for services may provide fewer perverse incentives than timber sales. The Forest Service can not put a timber contract out for bid unless there is enough timber to make a profit (i.e., a timber sale must be economically viable for the Forest Service). The goods for services contracting mechanism can be used to offset the cost of service contracts, but if the value of timber is insufficient to cover all the services to be provided, appropriated funds or funds from other sources can be used to cover the shortfall. Therefore, the Forest Service does not have to cut more trees than is good for the land to use goods for services, while it might for a timber sale.
     There may be more oversight over goods for services and receipt retention than traditional timber sales.
    The Forest Service still maintains oversight over projects done using section 347 stewardship contracting mechanisms. For example, they may monitor the diameter of trees a contractor takes off the land to ensure that no unnecessary trees were removed. In addition to Forest Service oversight over work being done under stewardship contracting, there is multi-party monitoring oversight, and many contractors are using internal quality control programs that produce verifiable data about types and sizes of trees removed, basal area reductions, etc. The primary objective of a timber sale is to sell merchantable timber. The objective of a stewardship project is to meet one or more land management objectives. So monitoring can be done on the effectiveness of meeting land management objectives rather than just how much timber was taken. The multi-party monitoring and evaluation is what allows outside groups to provide additional oversight over objectives including but not limited to the removal of merchantable timber.
     Designation by prescription may give incentives to contractors to take fewer rather than more trees than is necessary to meet land management objectives. Contractors doing service work are often paid on a per acre basis. It may cost them less to take fewer rather than more trees off the land, especially if these trees are of limited commercial value. In Montana, the Forest Service and the monitoring teams are finding that contractors have been conservative in their removals, often taking the minimum number of trees necessary to meet land management objectives rather than too many.
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     We still need annual appropriations. Goods for services and receipt retention are often insufficient to pay for all the necessary service work. These mechanisms must be used in conjunction with annual appropriations rather than seen as mechanisms to replace annual appropriations.
    Lessons are still being learned: Other stewardship contracting mechanisms and variations on section 347 authorities. Outside interest groups, when they express concern over contracting mechanisms, often provide alternatives with which they might be more comfortable. If those mechanisms meet the objectives of the stewardship contracting pilots, exploring them can help to build trust. For example, many outside interest groups have advocated for separating the logger from the logs. In other words, the logger is a different person or company than the purchaser of the timber. Thus, the person logging has no interest in the value of the wood being cut and can focus solely on the end results on the land. Cedar Flats in Montana used both timber sales and service contracts to achieve stewardship objectives. On the part of the project, timber was sold roadside. That is, the service contractor doing work on the land made her decisions about what trees to cut based on what was necessary to achieve the desired future conditions. After these trees were harvested, they were cut to the generic lengths set by the Forest Service, and decked. Timber purchasers then bid on the logs in the deck. In the second part of the sale, all the trees in the unit were sold on a per ton basis to a single buyer on the stump, with the bids based on agency and bidder estimates of volumes, sizes, and species likely to be removed. The timber purchaser then provided the cutting length specifications to the service contractor. Paint Emery in Montana tested a mechanism called delivered log contracting. This allows the Forest Service to sell timber to multiple buyers based on factors such as species and size, and this can maximize revenue and minimize waste for the Forest Service. The roadside sale and the delivered log contracting are two ways to use the receipt retention mechanism in a manner that separates the logger from the logs.
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    Another option being explored is pre-certifying loggers. This concept would allow the Forest Service to contract with loggers they pre-certify as qualified and then pay them on an hourly basis to carry out particular projects. This mechanism might help build local capacity and provide incentives for skill training. When contractors are selected on the basis of training and experience, there is an incentive for them to develop and enhance their skills This compliments the use of best value criteria when selecting contractors, because all of the contractors would have been pre-certified as being capable, so all would meet the best value standards.
    The advantages and disadvantages of these mechanisms are still being explored. But it is important that variations on the five stewardship contracting mechanisms authorized in section 347 exist and are being tested and explored.
    In conclusion, we believe valuable lessons are being learned from the multi-party monitoring and evaluation process. We believe that the experiment of stewardship contracting should continue but in a cautious and thoughtful manner. It may not be appropriate to grant broad authority to the Forest Service to use the mechanisms authorized under section 347, but it may be appropriate and advantageous to continue to authorize, monitor and evaluate a limited and reasonable number of projects so learning can continue and we can improve the health of the land and the health of communities.
    Given the points highlighted above, we suggest that a limited and reasonable number of additional projects be authorized on a regular basis to ensure that learning continues. We suggest, for example, that a set number of projects might be authorized in each Region (the same number for every Region) every year or every other year, to ensure that learning occurs across the country and in different contexts. There should be enough projects authorized to provide assurance to the Forest Service and to contractors that the program will continue, but not so many that learning is disrupted and trust is lost. If such a suggestion moves forward, we would add the following:
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     Projects should not just be taken off the shelf. Beginning stewardship projects as new projects allows the Forest Service to learn with partners how to design, implement, and monitor these projects from the start. It also addresses the concern that the Forest Service is tweaking existing below-cost timber sales to make them work.
     Forests that already have stewardship contracting pilot projects should be given the opportunity to do additional projects. Additional iterations of projects by the same people can help improve the program overall. It can facilitate the process of applying the learning from existing projects to new projects. The program can continue to improve based on the learning.
     Support and technical advice should be given to forests receiving new projects, and forests that have projects should work with the Washington Office to develop and distribute lessons learned. Lessons should be shared among forests and regions so that practices can truly be changed and adaptation can happen effectively.
Statement of Brett Brownscombe
    Mr. Chairman and members of the committee, thank you for the invitation to appear before you today. As requested, I have attached my resume for your reference, if desired.
    I live and work in rural northeast Oregon, in the heart of the Blue Mountains. The issue of stewardship contracting is especially pertinent to this area because it is a literal showcase of the many pressing public land management issues facing the Nation today. This part of the country is dominated by small towns (with La Grande, a town of 13,000 being one of the area's population centers), pastoral settings on rural private lands situated in valley bottoms, and vast expanses of forested public land generally spanning the mountain ranges that house the headwaters of the area's many vital creeks and streams. The Wallowa-Whitman National Forest dominates the area's public land base, comprising 2.3 million acres of national forest land. The Forest Service, operating through seven ranger districts, is the primary public land manager.
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    If ever there were a location where the people, land, waters, and wild inhabitants of an ecosystem showed clear signs of stress, decline, and dysfunction either borne of or maintained by the old way of doing business on public lands, the Blue Mountains is a shining example. We have seen fish and wildlife species listed under the Endangered Species Act; the loss of old-growth associated habitat and wildlife species; the removal of the most fire resistant and genetically desirable trees to the detriment of the area's fire and plant ecology; degraded water bodies; an excessive road network that has constrained streams, increased sediment, and imposed impassible barriers to fish; and the aggressive suppression of natural disturbances such as fire and insects upon which ecosystem's resiliency and health depends. Especially with respect to this last concern, fire suppression combined with excessive logging of large, old trees has greatly reduced the forest's resilience to fire and created dense conditions of non-fire resistant species.
    Employment within and the profitability of the resource-extraction based sectors of local economies have also declined in the face of the unsustainable management that has compromised the health of the land and wrought legal conflicts; the impact of mechanization on the nature of work and the need for human labor; large corporate dominance, which has not enhanced value-added commodity production or small-businesses; and globalization, which has greatly effected the profitability of traditional industries, restricted access to markets, and put the squeeze on small-scale rural economies.
    When I referred above to the old way of doing business, I am referring to large, unsustainable timber sales that focus on extraction mindset that is detrimental to natural ecosystem components. The Forest Service's directive of issuing logging projects to satisfy the Allowable Sale Quantity on national forest system lands has contributed significantly to widespread ecosystem degradation, listings under the Endangered Species Act, and non-compliance with applicable environmental laws that have created the undesirable conditions of today—both ecological and economic. But in referring to the old way of doing business, I am also referring to the system of selling trees from public lands at rock-bottom prices to the highest bidder, without respect for the skills and ethics of that operator, without the adequate flexibility to focus work on other resource components in need of management attention, and without monitoring of the results of management actions. In this respect, the Best Value Contracting and Third Party Monitoring components of stewardship authorities offer improvements over the old way of doing business.
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    The proffered benefit of stewardship contracting is that, while a timber sale contract is geared towards generating income structured upon the disposal of Federal public resources (i.e.; trees) for dollars—Stewardship Contracts allow the Forest Service to better focus on outcomes—the payment for work within one project that will ideally improve the health of the land. Instead of seeing the forest only for the trees (or dollar signs), stewardship contracting in theory gives the Forest Service a greater ability to take a more holistic approach to contracting that also recognizes the roads, the riparian zones, native plants and wildlife, the weeds, and the soil, thereby helping the agency meet its legal obligations. Is this, however, a true picture of stewardship contracting in fact rather than just theory? Has stewardship contracting actually lived up to its billing? This is the critical question that I feel is most relevant to the issue of whether Stewardship authorities should be permanently authorized at this time. My answer is no.
    Based on my experience in northeast Oregon, if I were asked whether I would be comfortable permanently authorizing the continued implementation of projects identical to those which I am involved across the landscape, I would have to say no. My reasons follow, but in short, it is too early to permanently authorize a program that was intended as an experiment, where the program is still in its experimental stage, where the results of ongoing pilots remain unknown, and where serious concerns over the stewardship authorities relied upon remain unresolved.
    HCPC and other conservation organizations believe that incentives fostered by certain Stewardship authorities, such as ''Goods For Services'' and ''Designation by Description'', run counter to legitimate restoration. We believe such authorities have the inherent potential to deter rather than restore ecological health. We hope to be proven wrong through examples such as the ongoing pilot projects, but until then, the incentives promoted by these authorities remain a threat to legitimate restoration. The 83 pilot projects currently authorized may prove otherwise and assuage suspicions, but this is exactly the point: Until implementation, monitoring, and review of these pilots exist, permanent authorization of stewardship contracting remains unwarranted. The outcome of these pilots will influence the overall trust in these authorities and provide a picture of whether ecological benefits have been realized. Permanently authorizing a program prior to the collection of outcome-measured information that could shed light on the suspected shortcomings (and, to be fair, potential benefits) of stewardship contracting as a restoration tool is counter-productive to the goal of fostering a new way of doing business on America's public lands.
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    On the Wallowa-Whitman National Forest, a total of three stewardship pilot projects have been issued as pilots under the stewardship authorities. I have been directly involved in two of them. I currently serve on the multi-party monitoring team for both projects.
    A. The Buck Vegetation Management Project
The Buck Project underwent three iterations in the course of its planning lifespan, beginning as a traditional timber sale and eventually becoming a stewardship pilot. Despite receiving stewardship pilot status, however, the nature of the project did not substantially change from its original timber sale form. Some sale units were dropped upon appeal, but the nature of the sale remained that of a timber sale with dubious restoration attributes attached.
    Location: Wallowa Valley District, Wallowa-Whitman National Forest
    Stated Purpose: Reduce wildfire risk, promote historic stand composition.
    Stewardship authorities used:
     Goods for Services
     Retention of Receipts
     Best Value Timber Sale
    Actions and Points of Controversy:
     Action: Commercial logging of 3.5 million board feet of trees up to 21' in diameter.
Controversy: Restoration motivations do not exist to support the logging of larger diameter trees, especially ponderosa pine and larch. They are the most resilient to fire, the reduction of which was an objective of the Buck project. Trees of 20' in diameter, including ponderosa pine and larch, were part of the Buck Project's 3.5 mbf of goods removed under the goods for services authority. Their removal occurred in order to give the project enough monetary value to cover the cost of services. This illustrates the tension inherent in the goods for services authority. The objective of fire risk reduction is not met when fire resilient trees are removed. In fact, because of slash created by logging along with the removal of fire resilient, this type of logging has the potential to actually increase wildfire risk.
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     Action: The Project occurred in an area adjacent to a inventoried roadless area with poor soil conditions due to past logging.
    Controversy: First, logging for fire risk reduction should be prioritized within the urban- wildland interface. No structures were at risk within the Buck Project area. Thinning for fire risk reduction within or adjacent to a roadless area has not been shown to provide tangible restoration benefits. Second, soil protection is essential to the future productivity of the forest. Second, the Buck project proposed placing heavy machinery known to compact soils on top of conditions that already exceeded the Forest Service's standards for soil protection. By law, logging should not have been planned for these units. While the Buck project eventually dropped some units because of soil concerns and developed mitigation measures in order to protect remaining unhealthy soil areas, this occurred in response to an appeal. Such measures should be taken early on in the planning stages, which would happen more readily with multi-party planning efforts. In addition, the soil in the area was recovering on its own. Mitigation measures were developed in order to allow logging to proceed, which indicates that the logging took priority over leaving the soils to self-heal. The results of mitigation are still being monitored and tallied, which is part of the Buck Project's monitoring plan. These results will provide valuable information, which is an example of why Congress should avoid permanently authorizing the stewardship authorities at this point in time.
     Action: Reconstructing approx. 7 miles of road in order to complete the logging, including the excavation of a highway pit to provide rock and gravel for road reconstruction.
    Controversy: These actions provide little to no restoration benefit. Despite high road densities impacting wildlife and water quality across the Wallowa-Whitman National Forest, the Buck Project decommissioned no roads. Ample reasons existed for the Forest Service to do so, such as admissions that road densities exceeded Forest Plan standards thereby presenting a concern for wildlife security, and that the subwatershed affected by the Buck Project was rated at risk for road density, not properly function with respect to temperature, and functioning at risk vis-a-vis sediment. Despite the touted benefits of the retention of receipts stewardship authority in keeping dollars local in order to address local restoration needs, this authority did not ensure that local road densities were reduced even though ample evidence existed to compel this restoration action.
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    B. Sprinkle Restoration Project
    The Sprinkle Project was not initiated as a pilot project until it became apparent that it was not viable as a timber sale. Again, this is an example of a timber sale converted to a stewardship contract that relies on logging in order to fund restoration activities.
    Location: La Grande Ranger District, Wallowa-Whitman National Forest
    Stated Purpose: Reduce wildfire risk, promote historic stand composition.
    Stewardship Authorities Used:
     Goods for Services
     Receipt Retention
     Designation by Description
     Best Value Contracting
     Multi-Year Contracting
    Actions and Points of Controversy:
     Action: Commercial logging of over 6 million board feet of trees via thinning of trees up to 21' in diameter and salvage logging.
     Controversy: The concerns are generally the same as indicated above in the Buck Project analysis. The goods for services authority provides an incentive to cut trees that have no business being removed from a restoration perspective. These are the money trees necessary to pay for the cost of services. In the case of Sprinkle, an area that has been heavily logged in the past, the imposition of more commercial timber removal upon the area through methods such as salvage logging will detract from wildlife cover and snag densities. In addition, the Forest Service proposed only two action alternatives when considering how to address conditions in the Sprinkle Project area. The two alternatives looked very similar, differing only in the amount of timber volume to be removed (e.g.; commercial / salvage regular vs. commercial / salvage medium). True restoration projects should at least contain one restoration-focused alternative. The goods for services authority, however, impedes this by biasing the situation in favor of requiring commercial logging at some level. I am not saying that restoration projects are illegitimate if they have any commercial value, but the underlying purposes of commercial logging has certainly compromised resource protection in the past. Given this, why should commercial logging be any better at fostering resource restoration?
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     Action: Construction of 5.6 miles of temporary roads, reconstruction of approx. 2 miles of road, and approx. 2/3 mile of new road construction for the purpose facilitating logging.
Controversy: The majority of the Sprinkle project will occur in elk summer and/or winter range. The Forest Service has imposed road density standards for these areas that reflect the need to prevent the impacts of roads and motorized vehicles on wildlife. Despite the Sprinkle Project's effort to close and decommission several miles of road, the competing demand of roads for logging countered this restorative effort. Roads are known sources of soil compaction, noxious weed beds, water quality degradation, and wildlife disturbance via the motorized use they encourage. In the end, because of the perceived need to build roads for logging, the Sprinkle Project failed to meet the Forest Service's standard for road density in sensitive elk areas.
     Action: Non-commercial thinning in a designated old-growth area followed by replanting.
    Controversy: The purported benefit of this action is to protect old-growth habitat from severe fire. Logging within an old-growth area for fire protection, however, is regarded with considerable skepticism from a restoration perspective. The Sprinkle Project's monitoring plan will evaluate this action. Without results of monitoring such as this, the permanent authorization of stewardship projects that promotes this activity across the landscape is very premature. In addition, natural restoration rather than forced replanting should be the Forest Service's priority. If a need for replanting exists, this indicates excessive disturbance in an area.
     Action: Failure to address known wildlife habitat concerns in favor of continued thinning and commercial logging in an area that has seen heavy logging in the past.
     Controversy: The Sprinkle area is deficient in snags, large down wood, and thermal / hiding cover, all of which are important wildlife habitat attributes. The Forest Service acknowledges this in the project's environmental assessment. However, despite being billed as a restoration project, the Sprinkle Project admits to perpetuating inadequate snag levels and down wood, as well as reducing thermal / hiding cover. Where such conditions exist, large trees in the range of 20' dbh should be maintained for future snag and down wood production instead of logged. Density should be thick enough to provide for wildlife needs. Instead, the demand for commercially valuable goods competes with these wildlife concerns. In addition, the use of the designation by description authority allows for the further sacrifice of habitat components in favor of commercial value. While the Forest Service may designate the retention of a certain number of snags per acre when providing instructions to an operator, more specific sideboards are necessary in order to prevent a logger from leaving the smallest snags within that designated level and cutting the largest, most valuable from both a habitat and commercial standpoint.
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    A. Conflicts between the Stewardship authorities and resource restoration needs
    The Forest Service frequently equates stewardship contracting with goods for services. The fact is, goods for services is only one of the stewardship authorities. A host of others exist, which can and should be used independent of goods for services. For example, best value contracting offers significant benefits. On the Buck Project, this authority allowed the Forest Service to prioritize a local contractor with local experience and a respected reputation for using care on the landscape for the contract award.
    On the public lands of northeast Oregon, and many other areas for that matter, the need for restoration services far exceeds the level of goods available to pay for those services without further compromising the health of the ecosystem. Relying upon logging of commercially valuable trees as the primary mechanism for paying the costs of restoration actions promotes a counterproductive incentive from a restoration perspective, with the only justification being that restoration dollars have to come from somewhere. Goods for services and receipt retention both fit this paradigm. In this context, the amount of restoration work that can be done is limited by the level and value of goods to pay for this work. Assuming that the value of available goods will fall short of true restoration needs, and unless all resource protection scruples are abandoned such that all goods are liquidated, a restoration backlog will exist. On top of this is the potential for creating additional restoration needs due to the impacts of removing goods that often times are the most fire resilient and ecologically valuable trees remaining on the forest. The potential for restoration jobs clearly exists, but what is needed is a separate allocation of funds to cover the costs of legitimate restoration work that does not pay for itself. Congress should take up the call of restoration and provide this allocation instead of pretending that goods for services is a magic bullet.
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    Finally, without clear sideboards, the designation by description authority becomes a logger's choice program. I have seen examples of large, incredibly valuable (from a habitat perspective) snags removed because of their monetary value. This occurred despite the fact that the logger technically complied with the Forest Service's description of how many snags to leave per acre. The problem is, the choice of which snags to leave was left to the operator, who had monetary desires in mind. It is no surprise which snags remained standing at the end of the day. Not every operator can be trusted when their paycheck depends on the value of the trees they cut, and for this reason, this stewardship authority has pitfalls.
    B. Stewardship projects should be restoration projects planned from scratch rather than slightly tweaking and re-labeling existing timber sales. Early involvement of all public stakeholders in project planning is critical. Appeals should not drive project involvement.
    I was not involved in the planning of either the Buck or Sprinkle stewardship projects. In fact, Hells Canyon Preservation Council appealed both projects, which is the reason I believe I am now involved on the monitoring teams. The existence of an appeal should not determine the composition of a third party monitoring team.
    The Buck project began as a pure timber sale. When the Forest Service decided to apply for pilot status in order to use the stewardship authorities to contract and implement Buck, some within the Forest Service locally actually wondered why a perfectly decent looking timber sale should be converted to a stewardship contract. The Sprinkle Project also began as a pure timber sale. When the Forest Service realized that the sale was too far into a deficit scenario to attract a bidder, it applied for and received pilot status.
    Stewardship contracting should not be used to turn otherwise unviable timber sales into viable restoration projects by tapping into a bag of contracting authorities. Starting from a timber sale mold compromises the meaning of true restoration, and limits the holistic approach that serves as the grand promise of stewardship contracting. The fact that Buck and Sprinkle began this way adds to HCPC's concern over the work under the stewardship authorities amounting to something similar to a traditional timber sale. Stewardship pilots should be planned transparently and from scratch, involving all relevant stakeholders, and with restoration as the driving issue.
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    I raise these points only to demonstrate the nature of the Stewardship projects I have seen. These projects did not begin as a partnership effort, whereby all local representatives of various public land concerns gathered around a table in order to identify a resource concern where stewardship work is a priority and discuss a management approach to address it. HCPC and other organizations have long sought this type of involvement in the project planning phase, alongside other public stakeholders. Involvement of conservation organizations in stewardship projects should happen early, especially when it is known that a such an organization has concerns over public land management and could provide meaningful input into the planning process that may work to minimize controversy. While not a silver bullet necessarily, this is the surest way to resolve concerns and conflicts early and promote broad project support.
    C. Third Party Monitoring is critical.
    Monitoring should be enhanced with respect to all Forest Service projects. It is one of the most deficient components of past management efforts and one of the greatest promises of stewardship contracting. Monitoring is critical to the success of land management. Without baseline data and the collection of more information measuring the results of management activities, little is known about whether project objectives were ever met, whether the resource was adequately protected as promised, and how to adjust approaches in the future to better achieve objectives, protect the resource, and plan efficiently. Sadly, the Forest Service has avoided this process for decades, issuing timber sales with little to no follow-up monitoring. The result has been resource degradation, repeated mistakes or inefficiencies in project planning and implementation, appeals and litigation, and deficit spending.
    The third party monitoring element of stewardship contracting is a vital piece of this program. It is essential to knowing whether the Forest Service has actually achieved touted project benefits (resource and economic). It is essential to the concept of adaptive management, which the Forest Service purports to practice. Without the learning that monitoring facilitates, there is no impetus for adaptation of project design and implementation approaches. Finally, monitoring is essential to building trust between all stakeholders in public land management.
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    Congress has authorized the Forest Service to issue 83 stewardship pilots on national forest land across the nation. This well exceeds the original 28 pilots that Congress envisioned when it passed the fiscal year 1999 Interior and Related Agencies appropriations bill.
    Now is a time for learning from the pilot Stewardship projects that have already been authorized. Many of the 83 pilot projects around the Nation have not even been implemented to date, much less monitored. Before an informed and educated debate can occur on whether or in what form to authorize Stewardship Contracting, the results of the experimental phase of this program must be known. Based on this data collecting effort, sound decisions could later be made about: whether and which stewardship authorities have merit; which authorities have not offered benefits; where inefficiencies exist; to what extent the natural resource has benefited from stewardship contracting, or not; whether local communities have benefited, and how; and based on all of this information whether stewardship authorities should even be permanently authorized at all, and if so, what, if any, changes should be made to best serve resource restoration.
    Without this type of comprehensive review of a pool of pilot projects, Congress risks authorizing authorities that may be inefficient, ineffective, or worse, that may be counter-productive to the goal of forest health restoration and local community enhancement. It is imprudent to try to run before one is sure of his ability to walk.
    I believe permanent authorization is irresponsible at this time and contrary to the nature of a pilot program. Inherent in the term pilot project is the concept of experimentation, that something is being tested in order to determine whether it has merit beyond one trial run. Various parties working on various national forests across the country are involved in already authorized pilot projects, either in the planning, implementation, or monitoring phase. The sum of these experiences will produce significant information. Pulling this information together and learning from it should be Congress and the Forest Service's present focus.
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    By continuing to authorize more pilot projects through annual appropriations, Congress is making a de facto determination to administer an experimental program as if it were permanent. Establishing a deadline for the completion and review of a discrete pool of pilot projects, to be evaluated as a total package, is essential to determining whether the stewardship contracting program is working, and if so, whether to move beyond pilot status and into permanent status. Before authorizing new pilot projects, Congress should ensure that the Forest Service has prioritized and has the time and funding to evaluate a discrete package of currently authorized projects that can serve as the basis for a comprehensive evaluation of the merits of the stewardship contracting program.
    The Forest Service's traditional approach of issuing large timber sales has failed to balance the needs of the ecosystems, their non-human inhabitants, and the human societies that had grown up around the public land in northeast Oregon, and throughout other parts of the West for that matter. Attempting to return to this old way of doing business is foolish. Few living in northeast Oregon would disagree that restoration needs clearly exist within the Blue Mountain province, and specifically on the Wallowa-Whitman National Forest. The potential for restoration jobs clearly exists, but the weakest link in the system thus far has been the Forest Service and its ability to facilitate legitimate restoration work through existing contracting authorities, budgets, and priorities. Stewardship contracting has stepped into this arena.
    My experience has been that stewardship pilot projects resemble more of an evolved form of a timber sale than true restoration projects. True stewardship work is needed, but questions remain over whether and the extent to which stewardship contracting pilots are indeed achieving restoration benefits. Skepticism continues to exist over the ability of various stewardship authorities to achieve true restoration, and time and experience will confirm or overcome this feeling. Monitoring and evaluation of the pilots are essential in this respect, but such efforts remain undone. It is my believe that while stewardship contracting offers some promise beyond a timber sale contract, conflicting incentives exist, and Congress ultimately needs to provide stand-alone funding for costly restoration work. Congress does so with respect to other public works programs that create jobs and promote social well being. Funding a restoration program for the public lands would result in worthwhile ecological and economic benefits.
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    Permanently authorizing the stewardship contracting program at this point in time would be a misguided and premature decision that places faith in a program that is still under study, may deserve modification, and provokes concern among many stakeholders who wish to monitor results before passing final judgment. It would be the equivalent to authorizing flights on Wilbur and Orville Wright's first airplane without having required that it first be test piloted on a number of occasions and refined based on the results.
    Thank you for the opportunity to testify before you today. I would be happy to answer any questions you might have.
Statement of James Burchfield
    I wish to thank the Subcommittee for the opportunity to testify on this important innovation in the management of National Forest lands, and to thank the other members of the Clearwater Stewardship Contracting Monitoring Committee, John Manz, Jack Copps, Mary Mitsos, Jim Stone, Sterling Miller, Tim Love, and Carol Daly, for their assistance in bringing me to Washington, DC to share our experiences with stewardship contracting.
    In my view stewardship is the simultaneous nurturing of land and people. Stewardship on National Forests implies an ongoing sensitivity to the interests of citizens, whether they live in close proximity to National Forests, or if they are connected to these lands via business, recreational, or subsistence activities. It should go without saying, but it is worthy to emphasize, that the maintenance of ecological functions and processes within these forests is the foundation of the benefits realized by the American people. Thus, stewardship is fundamentally about sustaining the ecological well-being of our public forests, and from this flows the tangible and intangible rewards that support our lives. To put it another way, there is no stewardship if the forest is harmed, for both the forest and the people are the victims of forest abuse.
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    Stewardship contracting is an experimental program that attempts to change the manner by which the energy and creativity of the private sector may become engaged in sustaining the well-being of the forest. The stewardship contracting program involves a restructuring of shop-worn, often-times adversarial relationships between business and the Forest Service, and it is my belief that it provides a welcome opportunity to improve the management of forests. Equally importantly, it offers the potential to foster a heightened sensitivity and responsiveness to people's interests regarding public forests, such that human communities can discover, in conjunction with the Forest Service, the means by which human benefits may be derived while sustaining ecological functions and processes.
    Although the Forest Service has suffered through multiple public controversies over the past few years, by and large the agency remains an institution of great honor and accomplishment. It has responded forcefully to changes in public demands regarding forests and has adapted its management in light of our emerging knowledge about ecological conditions and trends. It has been at the vanguard of experimental programs in natural resources management, and at the forefront of enormously difficult efforts to encourage citizen participation in public lands decisions. Its staff can only be characterized as one whose professionalism, effort, and integrity stand as a credit to the American people. However, the Forest Service has been bound by a rather disconnected system of contracting rules and procedures, and has found itself slow to adapt to organizational innovations that allow for greater flexibility and responsiveness to new methods of forest management. The learning provided by the stewardship contracting program has been, in an institutional sense, a breath of fresh air. Here is a chance for the agency to encourage business innovation, to accomplish activities on the ground with greater efficiency, and to consider stewardship from a holistic, rather than a piece-meal perspective.
    Based on my experience with the Clearwater Stewardship Contracting Project on the Seeley Lake Ranger District of the Lolo National Forest, I would like to illustrate the effects of stewardship contracting in three areas: the ecological conditions in the forest; the business management environment within the Forest Service; and the social environment in rural communities.
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    The Clearwater Stewardship Contracting Project addresses a common problem within western forests: an abnormally high density of trees within a fire adapted ecosystem. A major activity of the project is to thin several of these dense forest stands—approximately 418 acres in this case—to reduce the risks associated with both high intensity wildfire and windthrow. In addition, approximately 152 acres would be harvested in small clumps to recreate a patchy, landscape mosaic to improve wildlife habitat for a variety of significant wildlife species, including the grizzly bear. Since a standard method for reducing stand density involves felling trees, this presented the opportunity to offer the standing trees as a commercial product, what is commonly referred to as the goods side of a stewardship contract.
    The Clearwater project also allows the application of prescribed fire to reduce forest fuels on 160 acres, the spot spraying of noxious weeds on an estimated 37 miles of road, the reduction of soil sediments in aquatic systems by improving maintenance along this same road system, and improvement of water quality and sanitation through the replacement of old-style, pit toilets with eight, Aspen-style concrete vault toilets. These activities are commonly identified as the service side of the stewardship contract, and they are funded from the revenue generated from the forest stand treatments identified above.
    There have been several commentaries raised in the popular press that the exchange of goods for services might create incentives for the Forest Service to harvest forests aggressively and inappropriately to allow the agency to supply new elements of infrastructure within National Forests. A shibboleth for this phenomenon is trees for toilets. It is fascinating that a trees for toilets exchange actually occurred on the Clearwater project, and in this case, it has been a beneficial exchange for the forest ecosystem. From a forest structure and process standpoint, the harvesting of trees on the tightly defined areas of the Clearwater project provides greater vigor to the forest and a lower risk for the occurrence of a wildfire that cannot be effectively extinguished. From a water quality perspective, the placement of new toilets reduces risks of introducing organic pollutants from human waste. Each project stands independently as a beneficial activity to the ecosystem. I wish to state clearly, however, that I find it highly inappropriate to allow a demand pull for infrastructure improvements (such as better toilets) to mandate commercial harvests of trees on National Forests. The need for forest density reduction must be the driving force behind harvest activities, not the need for infrastructure. In the case of the Clearwater project, both needs coexisted, and the structural attributes of the stewardship contract—the capacity to exchange goods for services—allowed for an efficient, coordinated, and rapid solution to two ecological problems. In my view, this is a good thing. Without the resources from the harvest treatments to reduce forest density, it would have taken several years for the Lolo National Forest to distribute its limited capital improvement funds to replace the leaky pit toilets.
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    A second attribute of stewardship contracting is its capacity to catalyze more efficient and responsive business relationships within the Forest Service. Both in terms of external relationships and internal procedures, stewardship contracting offers valuable latitude for experimentation that could reduce demands on staff and provide less costly, higher quality services. Two examples, one on how the Clearwater project has addressed timber marking, and another on how accomplishment reporting has occurred on this project, demonstrate the potential of a more flexible business environment.
    Stewardship contracting allows purchasers of a contract to identify trees to be harvested via designation by description, a system where criteria for tree selection are described by the Forest Service, yet the actual selection (or marking) of trees to be thinned is done by the purchaser (under previous rules, trees must be marked by Forest Service staff). The traditional concern about purchasers selecting the trees to be harvested is based on the assumption that purchasers will take only the best trees and leave the low quality trees behind. Indeed, the history of forest management in the United States is rife with examples of high-grading, and one of the major problems in many forest environments is the prolonged absence of large trees and the ecological services they provide. In the case of the Clearwater project, where most trees are the same size and they occur in high density, the selection of trees for harvest by operators can actually help protect the residual forest stand, since the key issues are maintaining appropriate spacing and minimizing physical damage to stems from equipment. Equipment operators are best suited to understand how their equipment can move through the snow to avoid trees, and having relatively inexperienced Forest Service seasonal employees select the residual standing trees (in the preceding summer), may not create feasible opportunities to effectively (or efficiently) leave a residual stand of well distributed trees. Moreover, the cost to the agency to send the crews out and mark the trees can be quite high, whereas experienced timber operators can do the same job at much lower expense (and in many modern operations, they are able to continuously evaluate their marking accuracy as part of built-in quality control programs).
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    Ironically, this system of designation by description on the Clearwater project was so new that it took more time and effort than anyone anticipated. The opportunity for future efficiencies, however, seems quite real, but in this first trial, much effort was expended to check the marking accuracy of the purchaser and to resolve uncertainties that had never been previously considered, such as whether or not to count dead trees in density measurements. Yet this type of conversation between the agency and the operators led to new thinking about the types of structural attributes that would be desirable in the forest and how this could be accomplished through existing harvest technologies. Even though the anticipated efficiencies were not immediately realized, what occurred was the recognition of a more flexible and site-specific series of marking guidelines. The learning that emerged from this exchange could lead to better forest management.
    This example of designation by description raises again the fundamental question about stewardship contracting: does it help sustain important ecological processes and functions in the forest? There may be a concern that more efficient timber marking procedures, utilizing the skills of timber operators, might lead to a diminishment in the quality and diversity of the forest. This will require continuing, comparative research between the different types of marking procedures to gain a credible answer. However, in my view, it seems highly plausible that greater efficiency might not mean lower quality. It is likely that timber purchasers would have an interest in improving forest vigor (and potential future commercial opportunities for themselves), by treating thinned stands in ways that provide the highest quality residual stand for the future. It is quite possible that timber operators, especially those that are locally owned (like the operator in the Clearwater sale, Pyramid Mountain Lumber), would benefit from higher quality trees in the forest, especially considering the probability that poorly executed actions increase the risk of a wildfire that could eliminate future sources of income.
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    Stewardship contracting might not only stimulate simple efficiencies such as thinning patterns that reduce residual stand damage from equipment use, it might open the door to enormous efficiencies if there is an increased level of communication between the Forest Service and timber operators. Stewardship contracts have already generated creative proposals from bidders on stewardship projects, since awards are made by best value determinations. Issues such as operator skills, experience, and quality control are considered. Many contractors in today's market possess the same skills and quality control interests as the most respected professionals. Why not let these operators become partners in the operational side of forest stand density treatments? This most certainly implies vigilance, monitoring, and systematic evaluation by the agency, but if both the Forest Service and timber operators share an objective for a vigorous, diverse forest, then exploring means for each to utilize their operational strengths seems quite logical. Of course, the Forest Service will retain decision-making authority and accountability for those forests that require treatments, but the multiple steps to manifest these treatments, and the communication necessary to negotiate them, would seem to encourage a system like stewardship contracting, where business relations are structured with sufficient flexibility and interaction to allow the most capable actors to carry out necessary tasks.
    An example of how stewardship contracting motivated an internal change in the business environment of the Forest Service is a new financial accounting system for stewardship projects, developed by staff members of the Lolo National Forest and the Northern Regional Office. Since traditional accounting systems are not structured to address the goods for services exchanges, a simple, flexible, and highly transparent accounting system was generated by motivated Forest Service personnel to keep track of the credits and expenses within the Clearwater project. What is notable about the system is that its platform is a readily available computer software spreadsheet that is easy to learn, easy to access, and gives immediate results. Stewardship contracting provided the impetus to create this more responsive, straightforward accounting system, and it generated a confidence and awareness among Forest Service staff that there are many new tools available to make their work function more efficiently.
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    The third area where stewardship contracting has potential for positive change is in the social environment in rural communities. It is my understanding that the Congress intended stewardship contracts to support local and rural community needs. In the case of the Clearwater project, there are both direct and indirect benefits from this stewardship contract. The direct benefits of this project to Seeley Lake, Montana, are quite straightforward: a local, family-owned woods products facility, Pyramid Mountain Lumber, was the successful bidder on the contract. It has consciously hired a series of locally-based subcontractors to accomplish much of the project work, from harvesting and hauling of wood to the installation of vault toilets. The timber generated from the thinning and other harvest operations has sustained local employment in the Pyramid mill, and additional work was provided through the sale of smaller dimension material to a locally owned post and pole facility. The improvement of roads, bridges, water quality, and the treatment of noxious weeds enhances the attractiveness of the area to visitors, and the recreational businesses that are so important to Seeley Lake will benefit from improved conditions in the forest.
    To me, however, the indirect benefits of the Clearwater project are far more interesting. Stewardship contracting is an exemplar of real efforts by the Congress and the Forest Service to foster citizen participation in public land management. The creation of citizen-based, multi-party monitoring committees, such as the one on which I proudly serve as chair, demonstrate a serious commitment on the part of the agency to engage in active deliberation on the most rational and responsible ways to manage our National Forests. It is more than the Forest Service listening to the ideas and concerns of people that care about the National Forests. The agency, through Stewardship Contracting, has made a commitment to an evaluation of its actions by diverse representatives of the many faces of the public interest. On the Clearwater Stewardship Contracting Monitoring Committee, the District Ranger participates at every meeting and promotes and atmosphere of openness and thoughtful debate. I can speak confidently on behalf of the entire Clearwater Monitoring Committee, that our monitoring efforts are supported by the agency, and we are encouraged to provide independent critique. Since we remain in the process of discovery, it is too soon for us to provide a full evaluation of this project, but our initial interviews and site inspections have been quite encouraging. It appears to us that the project is helping the forest and helping the community of Seeley Lake.
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    What this openness and receptiveness to multi-party evaluation means to me is this: the Forest Service is making a genuine attempt to encourage trusting, mutually reinforcing relationships with the citizens of Seeley Lake. The long-term consequences of this process of rebuilding trust are difficult to estimate, but they could be profound. For a host of reasons, the Forest Service operated in a rather insular fashion in recent decades, allowing people to observe their decisions and actions, but not engaging people at the community level in a meaningful, reciprocal manner. Many events and administrative changes have broken down this prior isolation, and stewardship contracting appears to be one of the more effective tools to continue this trend toward agency integration into community affairs. Since stewardship contracting encourages active participation of residents in Forest Service management, it may help promote a social environment in rural communities that is far less polarized and position-oriented than the past.
    In addition to hearing of my recent experiences with the Clearwater Stewardship Contracting project, the purpose of this hearing is also to elicit views on the present and future ability of the Forest Service to enter into stewardship contracts. It is my belief that stewardship contracting is an important method for addressing management opportunities within the National Forests, but the stewardship program needs to be bounded by certain principles:
     Stewardship contracts should always have their operations focused on improving ecological processes and functions. There should never be a perception of trading valuable ecological resources, such as old growth forests, for public services.
     Stewardship contracting is best served when the scope of its operations remain relatively small compared to the larger-scale programs involved in managing forests. From both an administrative and operational perspective, stewardship contracting is but one tool in the management of public lands. I believe our system of governance displays great wisdom by safeguarding the expenditure of Federal capital through the Congressional appropriation process. Allowing any Executive Branch agency to exchange public assets for work that is self-determined sets the stage for self-serving and potentially corrupting consequences. No one wants to see large-scale exchanges of Federal resources for the over-development of agency interests. By keeping stewardship contracts small, they can focus on targeted, significant ecological problems and restoration needs, keeping public engagement focused on priority issues and building confidence with attainable, comprehensible objectives.
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     The learning from the stewardship contracting experiments will go on for many years. The ability to evaluate how these projects differ from traditional contracting or management procedures will require serious, time-series measurement, which implies costs. It is difficult to engage citizen volunteers in monitoring activities because of the many competing demands on people's time. However, a demonstration by the Forest Service that it values an exploration and critique of its projects vitalizes volunteers. If the Forest Service wishes to improve the climate in the social environment, it cannot abandon its commitments to citizen-based evaluation and learning.
    I again want to thank the Chair and the Subcommittee for the opportunity to testify on this important topic, and I will be happy to answer any questions.

Statement of Andrea Bedell Loucks
    Mr. Chairman and members of the committee, on behalf of the numerous partners and contributors that collectively implement the multiparty monitoring and evaluation process for the USDA Forest Service Stewardship Contracting Pilots, I would like to thank you for this opportunity to speak with you today. My name is Andrea Bedell Loucks and I am a Program Associate for the Pinchot Institute for Conservation. The Institute is an independent nonprofit organization that works collaboratively with diverse partners and interests to strengthen forest conservation by advancing sustainable forest management, developing conservation leaders, and providing science-based solutions to emerging natural resource issues.
    In July 2000, the Institute was awarded a contract to design and implement a framework for multiparty monitoring and evaluation of the pilots. This framework was mandated under Subsection (g) of section 347 of the fiscal year1999 Omnibus Appropriations Act for Interior and Related Agencies (P.L. 104–277) and requires the distribution of detailed annual reports to the Appropriations Committees. This morning I would like to highlight some of our recent findings.
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    As the agency shifts its management focus from timber-oriented objectives towards stewardship or restoration activities, stewardship contracts may play a critical role. Through our efforts in multiparty monitoring, we are striving to assess whether ecological management objectives and administrative efficiencies are being achieved and if the needs of rural communities are being addressed through the pilot program.
    To assess these objectives, we are utilizing a tiered multiparty process that incorporates local trends and issues and feeds into a larger national policy framework. The information I present here is based upon data we collected and have analyzed for fiscal year 2001.
Project Status
    The 2001 annual report, which I have submitted for the Record, provides information on those projects authorized under section 347, with some supplemental information on projects authorized under section 338 of the FY2001 Appropriations Act for Interior and Related Agencies (P.L. 106–291).
    By the close of FY2001, 56 projects were authorized by Congress for implementation by the Forest Service. These pilots are widely distributed geographically, with every Forest Service administrative region supporting at least one project. Of these 56 projects, approximately 31 (or 55 percent) of the pilots have completed NEPA and 13 (23 percent) have encountered an appeal or litigation. The majority of local projects identified NEPA processes and required formal consultations as the principle cause for project delays. At this point in time, we are unable to determine if these delays are isolated to the pilots or are similar to trends being witnessed throughout the agency.
    Approximately 22 (39 percent) of the projects have developed contracts, and 11 (20 percent) have been awarded to successful bidders. In general, the majority of pilots are utilizing bundled contracts in project implementation (e.g., timber sale with services included or service contract with product removal included). Bundled contracts provide multiple benefits to the agency but there is still learning that needs to be done about how bundled contracts assist contractors. Pilot coordinators have indicated that this bundling allows for more comprehensive ecosystem treatments, fewer entries onto a site, reduction in overall contract development and administration expense, and the creation of new opportunities for contractors to expand their range of services. It should be noted that despite these benefits to the agency, experience has shown that some prospective contractors have been uncomfortable with, and even deterred from bidding on bundled contracts. This is due in part to bundling familiar work requests with one or more bid items outside the contractors' areas of expertise.
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    We also collected preliminary information on funding sources for the pilots and costs associated with implementation. Because the Forest Service does not have standardized methods for recognizing and accounting for revenues and expenses on an individual project basis, the majority of figures provided were best estimates and this may prove problematic for future comparisons. According to our collected data, roughly 75 percent of the pilots received appropriated dollars to fund their activities, whereas 34 percent are relying on the exchange of goods for services and 6 percent on receipt retention. With regards to cost, again we have the issue of estimate reporting, but cursory reviews are helping shed light on which project parameters have a higher cost associated with them (e.g., service contracts and NEPA).
    Of the many innovations being tested in the stewardship pilots, the issue of expanded authorities offers the most insightful and sometimes controversial dialogue. Among these authorities are: the exchange of goods for services, the retention of receipts, designation by description or prescription, best-value contracting, and multi-year contracts. Of these, the majority of pilots are testing the exchange of goods for services (47 pilots, or 84 percent) and best-value contracting (30 pilots, or 54 percent). While we remain cautious at this point in time in determining whether the proposed benefits of the expanded authorities are being achieved, our most recent review found that they are providing local Forest Service units with more options and greater flexibility in meeting project objectives (e.g., allowing management in low-value high-access cost areas and improving contract and implementation efficiency through bundled activities).
    To date, the majority of project accomplishments have not been on-the-ground activities but rather planning and procedural aspects of the pilots (e.g., completing NEPA analyses, developing contract instruments, and involving community members). This should not be interpreted as a weakness of the projects; rather we must take into consideration the innovative nature of these projects and the inherent learning curve associated with them. We operate with the assumption that activities and accomplishments will increase in subsequent years.
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    The pilots are addressing a number of ecosystem management objectives in their operations, many targeting multiple objectives within the same project. Highlighted objectives include: aquatic habitat and water quality restoration; forest treatments and terrestrial management; fuels management; road management and maintenance; and forest product removal. Specific details on planned activities and treatment acres can be found in the 2001 report.
    We are also witnessing an increase in both the numbers and diversity of stakeholders involved in project planning, implementation, and monitoring. These participants represent a wide array of interests, including a mix of public and private organizations and those concerned with commodity and non-commodity issues, with the majority being represented by state agencies (65 percent of pilots), conservation groups (56 percent of pilots) and industry/industry-related groups (50 percent of pilots).
    Finally, early monitoring results indicate that the stewardship pilots are contributing in various ways to local economies. These benefits primarily come in the form of employment opportunities. For example, of the 13 section 347 projects that have proceeded with on-the-ground work, 12 have utilized local organizations or firms to complete project work.
    An important role for us in monitoring the effects and impacts of the stewardship pilots is identifying key issues and concerns. As I explain these issues, one should keep in mind that they mirror many of the larger problems that the agency routinely faces—many of which are addressed in recently released agency reports and on-going re-engineering initiatives.
     Institutional Culture. Local, regional and national teams consistently recognized the poor or inconsistent flow of information within the agency and between the agency and the larger public. Numerous suggestions were made to improve communications strategies and to engage a more diverse collection of interest groups during all phases of pilot implementation. Many internal policies and agency practices were also identified as significant barriers to project implementation. These barriers included: budget cuts, personnel transfers, the narrow disciplinary focus of many staff, and a reluctance to take marginal professional risks for innovative or creative approaches (particularly among contract officers). Issues of agency culture were also mentioned as significant barriers to implementation and collaboration. For example, many Forest Service personnel admitted to inexperience and general uneasiness in facilitating multiparty discussions and monitoring procedures.
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     NEPA Requirements. Inefficient compliance and consultative processes were also identified as principle barriers to project implementation. It is important to note that the existing issue is not with the legislation but rather, with the lack of streamlined compliance procedures within the agency. It could not be determined at this time if NEPA-related project delays were isolated to pilots or whether process problems were exacerbated by the nature of these projects.
     Funding. The management objectives of stewardship pilots, and those of developing lasting collaborative relationships, require long-term commitment by all parties. However, pilot coordinators stated that the current Federal budget process provides, at best, for funding certainty over a 2-year period—an abbreviated time period during which watershed restoration and other related goals cannot be fully achieved. It was therefore recommended that the Forest Service develop a budget process that reflects a sustained commitment to large-scale management efforts. As the National Team stated in its annual report, ''It will be extremely difficult, if not impossible, to provide for a sustained community-based approach to watershed and community health without providing for long-term budget support for efforts and ensuring that the appropriations process reflect the commitment and stability inherent within these objectives.''
     Community Involvement. The pilots are beginning to show that highly motivated groups can have an impact that reaches far beyond individual stewardship demonstration projects. To date, community involvement in the pilots has resulted in: improved landscape level management, facilitated site selection, increased trust and support in agency projects, increased economic opportunity, and enhanced local workforce capacity.
     Concern Over Expanded Authorities. Many environmental groups are cautious of the goods for services and receipt retention authorities, which may directly link timber sales and restoration activities, thereby creating perceived conflicts of interest. Additional concerns surround the use of designation by description, as some interests recognize potential opportunities for abuse. We continue to reach out to these groups to gain greater understanding and to address some of these concerns through improved criteria and information collection.
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    In closing, I would like to stress the need for prudence as we consider the applicability of permanent authority extension. The processes and framework we are utilizing to monitor and evaluate the stewardship pilots are part of a much larger adaptive process that will undoubtedly help inform future planning and management. By being responsive to stakeholder concerns and involving diverse interests, we hope we are building accountability and trust and promoting learning. However, to realize the true potential of this, it is essential that future actions be based on what we learn. For this, I would like to suggest that we remain cautious in discussions of permanency until we compile more detailed results and can confidently attest to the usefulness and efficiency of the new processes being tested by the stewardship contracting pilots.
Statement of Carol Daly
    Mr. Chairman, members of the subcommittee, thank you for the invitation to participate in this hearing and to discuss with you the issues and opportunities in stewardship contracting.
    Flathead County, MT, covers 5,257 square miles, roughly the size of the State of Connecticut. Approximately 77 percent of its land area is in government ownership, including large portions of the Flathead National Forest and Glacier National Park. Of the remaining 23 percent in private ownership, 62 percent is forested. Our two major employment sectors, forest products and tourism, are entirely dependent on the healthy functioning of our forested landscape.
    Changing times, economics, and demographics in the Flathead have increased the number of people concerned about forest management, and diversified their viewpoints. Contentious ecosystem management issues include not only timber harvesting, but also endangered species and wildlife habitat protection; road building, closure, and obliteration; snowmobile and off-road vehicle use; hazardous fuels reduction; prescribed fire; and wildfire.
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    Since 1994, the all-volunteer Flathead Forestry Project (FFP), in which I participate and to which my organization provides administrative support, has been working to increase positive community involvement in forest issues. Anyone wishing to collaboratively address mutual concerns is welcome, and we have participants whose experience and interests include logging, mill operation, environmental conservation and protection, recreation, education, public policy, etc. Our mission is to: (1) promote community trust and collaborative processes, (2) improve forest and ecosystem health, and (3) maintain a sustainable resource-based economy in the Flathead.
    FFP and similar groups around the country who are part of the growing community-based forestry movement have based their work on four key principles: Process, Stewardship, Monitoring, Reinvestment
    The process must be open, inclusive, accessible, and transparent. Over the past eight years, FFP has carried out, in cooperation with public and private land managers, a series of demonstration projects on private, state, and Federal lands, with maximum public participation in all phases of the work: planning, design, contracting, and monitoring,
    Stewardship forestry, as FFP practices it, means managing for the long-term health and sustainability of the entire forest ecosystem, including soil, water, vegetation, wildlife, and humans. It augments and builds upon existing public participation processes and environmental protection efforts. It encourages Federal forest managers to adopt a bottom-up, community-based approach to ecosystem-specific forest planning and management. It emphasizes activities to improve or restore the landscape, with any related harvest designed to leave the best to provide healthy, diverse, and fully functioning forests for all time.
    FFP's on-the-ground demonstrations have enabled us to test and refine our innovative approaches to stewardship contracting. A key ingredients is the best value selection of contractors, people trained and/or experienced in the philosophy and practice of stewardship forestry. We believe in taking maximum advantage of the skills and vast experience of forest workers, giving them a more active role in developing the prescriptions they will implement on the land. One of the means of doing this is through designation by prescription or end results contracting, whereby the contractor is held responsible for achieving a specified desired condition on the land, rather than just for removing trees pre-marked by the Forest Service.
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    On-going, multi-party monitoring and evaluation of the stewardship process and resulting projects enables us to continually learn from our demonstrations and to adaptively manage our work so that lessons learned are quickly used to improve current and future projects.
    Finally, we believe in and practice reinvestment in our forest ecosystems putting time and money back into the land that sustains us. In addition to our work on the ground, FFP participants have put over eight years of our lives into this effort, and find much more work still ahead of us.
    To facilitate the broader testing of our concepts in other parts of the country, FFP authored ''The Forest Ecosystem Stewardship Demonstration Act of 1995'', which was introduced in both houses of Congress. Although FFP's bill did not pass at that time, section 347 of the 1999 Omnibus Appropriations bill (which established the Forest Service's current stewardship demonstration program) incorporated many of the same concepts, including the use of qualifications as well as price in selecting contractors, end-results contracting, and the retention of funds received from the sale of forest products to pay for other stewardship activities.
    The Forest Service's stewardship program has two basic funding mechanisms plus goods for services and retention of receipts. Unfortunately the former has received far more attention than the latter, and indeed some people have come to equate stewardship contracting with goods for services. We need to be very clear: Stewardship contracting is a means through which to accomplishing the overall restoration and health of the land. Goods for services is just one of several possible ways of paying for stewardship contracts.
    Even before the creation of the section 347 program, FFP was sensitive to critics' concerns that, with a goods for services approach, contractors might potentially have perverse economic incentives to remove more, bigger, or better trees than necessary to achieve the desired ecological end results. Thus, all of our projects (including our Paint Emery project with the Forest Service under the section 347 authority) have tested various ways to eliminate that possibility. Some call it separating the logger from the logs, but we prefer to look at it as putting the focus on what is to be left, not what is to be removed. Paying the contractor to conduct the stewardship work on the ground, but selling any timber removed in a completely unrelated transaction. In the section 347 program this means using the retention of receipts authority instead of goods for services.
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    Now in our ninth year of work, FFP participants remain committed to our original goals, although there is considerable frustration about the slowness of progress toward overall accomplishment of our mission. Others share our frustration. Some of the challenges rural communities and community-based forestry groups face in collaboratively working on Forest Service stewardship demonstrations include: Years spent in the environmental analysis of proposed projects, during which process sometimes seems to eclipse substance as the Forest Service attempts to create bulletproof documents.
    2. Resultant delays in implementation, sometimes leading to a loss of project momentum and community infrastructure (people, equipment, processing facilities) needed to carry out projects.
    3. Agency resistance, in various locations and at various organizational levels, to collaboration with non-agency partners. Some of the reasons given are lack of time, lack of staff resources, an urgent need to get projects on the ground (related to the perception that working collaboratively is too time consuming), skepticism about the value of collaboration, et cetera.
    4. Lack of agency incentives or rewards for collaborative participation. Building trust and respect among participants, particularly given the decades of strife and debate over forest management that we have come through, is not easy. It takes great patience, a willingness to listen and learn, candor in speaking, and integrity and consistency in action. A good sense of humor helps a lot. Some Forest Service personnel excel in these qualities, and in their areas they have made outstanding progress in forwarding collaborative stewardship efforts. But because that effort is not evaluated and rewarded comparably to achievement of more quantifiable targets, employees who make a significant commitment to collaborative efforts do so largely unrewarded. Effective collaboration and innovation should be encouraged, evaluated, and rewarded on a par with work on achievement of other, more traditional, performance targets.
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    5. Inconsistent project-level management. Some projects have managers with so many other duties that the time and emphasis they can give to the demonstration effort is very limited. Other projects have been slowed by multiple changes in project managers. In still other cases, managers with a real gift and enthusiasm for the collaborative stewardship process have had to make choices between continuing their work in place and advancing their careers. For instance, an assistant district ranger I know who worked tirelessly with a community collaborative for three years to bring a stewardship project to fruition recently gave up a chance for promotion in order to stay with the project as it finally got to the implementation stage. ''I've probably hurt my career'', he told me, ''but I didn't feel I could leave at this stage.'' He shouldn't have had to make that choice.
    6. Insufficient training and support for personnel involved in the stewardship demonstrations. Agency personnel cannot be effective participants if they lack the needed training and internal support resources. Two areas of special concern are collaborative processes and contracting. Staff people working with collaborative groups need relevant training and access to technical assistance, both to enhance their own participation and to enable them to help the groups with which they work address and overcome problems that arise. Meanwhile, procurement and timber sale contracting officers need to be trained together about the stewardship contracting process and how they can and should use their authorities proactively to support and enhance it.
    7. Erratic information flows. It is sometimes difficult for agency field staff and communities to get consistent and timely information about what is expected or permitted in stewardship forestry efforts. Interpretations of available authorities and contracting arrangements can vary from region to region, and sometimes from forest to forest.
    8. Investment and budgeting issues. Achievement of stewardship and forest restoration goals will require a significant and on-going commitment of financial resources. These activities cannot all be expected to pay for themselves. Additional appropriated dollars will be needed. Forest Service administrators also need maximum flexibility in fund management, rather than having to deal with current inflexible, stovepiped funding categories. Such managerial discretion, of course, must be combined with clear accountability standards.
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    What about giving the Forest Service permanent authority for stewardship contracting?
    Section 347 requires the agency to report annually to Congress on the stewardship contracting demonstration process, resulting accomplishments, and how communities are being involved. The third annual report was delivered last month, and showed that most projects are only now getting through the planning and environmental analysis process and proceeding to contract. We just don't have enough information yet to know how well the stewardship contracting process works in practice.
    It will take another two or three years at least to determine whether the various special authorities being tested are producing the desired end results on the landscape and in communities. Project level, regional, and national monitoring and evaluation teams are going to be gathering and analyzing a plethora of data and ''lessons learned'' during that time, and I think it would be a mistake not to wait for their findings before making decisions about how any permanent authorities should be defined and implemented. One thing I do hope is that the greatest possible flexibility is preserved for stewardship projects, so that ecosystems can be treated according to their particular needs, not with one-size-fits-all guidelines and prescriptions.
    Stewardship contracting is a new tool in the Forest Service's management toolkit an addition to, but not a replacement for, traditional procurement and timber sale contracting mechanisms. Because of its self-funding authorities (goods for services and retention of receipts), it looks particularly attractive in these days of restricted budgets and appropriations. But I hope that doesn't divert everyone's attention from what I consider stewardship contracting's more important aspects enabling the agency to contract needed ecological restoration and preservation work to highly skilled and experienced people at a fair price, and letting those contractors use their knowledge and abilities to help design and then carry out appropriate, site-specific treatment prescriptions.
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    When trying to explain the uniqueness and the potential of stewardship contracting to people in the Flathead, I talk with them (as I have with you) about collaborative processes, ecological goals, new ways of thinking and working. But the best way to explain the program is to take people out on the land to see what's happening and to talk with the stewardship contractors themselves. I'd like to invite all of you on one of those tours. Flathead Forestry Project participants would be delighted to show you what we mean by stewardship contracting. But until then, perhaps you can get some taste of the process and the results by hearing them in in the words of a local stewardship contractor, Bob Love, writing about one of FFP's pre-section 347 demonstrations.
    When I walked through the [proposed treatment] units, I recorded my observations in a notebook and referred to them when I wrote my proposal. One of my first impressions was that the units lay on a ridge that was relatively high compared to the surrounding country. Its topography made it attractive to wildlife, especially whitetail deer and elk. Reading the sign, I could see that they passed through the area in all seasons, but never spent a lot of time on the ridge. After further observation, I concluded there was not enough food to hold them here for long. Rocky mountain maple, a preferred winter browse for ungulates, was abundant, but had grown beyond the reach of even the elk. Pruning the maple would encourage new growth and provide more browse for the big game, but I intended to leave some of the maple clumps intact to serve as nesting and feeding habitat for birds.
    Stunted birch was the most prevalent species in the two units, especially in [strips that had been roller-thinned decades before]. The ungulates in our area browse on it only as a last resort, and...the extensive birch thickets were shading out other plant regeneration, and limiting the potential diversity of the habitat. I didn't think the birch was healthy enough to sprout with any vigor if I cut it off as closely as possible to the ground. I hoped this would kill most of it, or at least inhibit its growth long enough to allow other plants to become established. Dealing with all this brush would be time-consuming and costly, and I guessed my time would be evenly split between slashing and logging.
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    The logging was largely a matter of leaving the healthiest, most dominant trees on the land and removing those that were suppressed or had been damaged by the roller thinning. The overriding goal of my treatment was to replicate the effects of a non-lethal fire; to reduce the forest's density but maintain its structure and improve its diversity. Careful, selective logging would enhance the vigor of the dominant trees; pruning the maple brush would increase browse production; and killing the stunted birch would partially heal the damage done by the roller thinning. I researched the chemical effects of birch trees on soil chemistry in mixed deciduous and conifer forests, and learned that birch trees cycle more nutrients, more rapidly, than coniferous species. This led me to assume that they might alleviate fluoride contamination from the aluminum plant [in nearby Columbia Falls], so I proposed to retain every healthy birch and leave as much birch slash on the ground as possible. My proposal focused less on forestry than it did on overall land health....
    It's been over 2 years since I completed my units, and I walk through them every 3 months or so. The overstory trees I left are responding well to the additional sunlight and nutrients, as are the plants and shrubs in the understory. Very little of the stunted birch has regrown since I slashed it, but the pruned maple has sprouted vigorously. Whitetails, elk and the occasional moose are attracted by the plentiful browse and spend more time here than they used to. Although the forest is more open than it was, the animals obviously feel secure.
    Before work began, FFP members conducted plant surveys in the project area and took photographs from several established points in each unit. Photographs were taken after the work was done, and will continue to be taken in the future. These photos, coupled with further plant surveys, will help FFP and the Forest Service evaluate the forest's response to management.
    In my opinion, the Cedar Flats Project was a success.
    I think so too.
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    Thank you for your kind attention. I would be happy to answer any questions you may have.