Update on the Status of the Merchantable Timber Contracting Pilot Program

Counties containing federal lands have historically received a percentage of the receipts generated by the sale or use of natural resources on the federal lands. A steep decline in federal timber sales during the 1990s, however, resulted in a significant decrease in federal payments to counties that previously depended on timber receipts. The Secure Rural Schools and Community Self-Determination Act of 2000, reauthorized in 2008, was enacted, in part, to address this decline by stabilizing payments to counties that depended on revenues from timber sales on Forest Service and certain Bureau of Land Management (BLM) lands. Under the aceach county may continue to receive a portion of the revenues generated from the sale or use of resources from these lands or may choose instead to receive annual payments based in part on historical revenue payments to the county. Among other things, the act provides for the Forest Service and BLM to implement certain land management projects, known as Title II projects, using a portion of these funds. The act mandates that a certain percentage of Title II projects involving the sale of merchantable timber be carried out under a pilot program in which the agencies are to use separate contracts for harvesting timber and selling it, rather than using a single contract for both activities, as is typical for most timber sales. The percentage requirement in the act varies by fiscal year: for projects using fiscal year 2008 funds, not less than 35 percent of eligible projects must be carried out within the pilot program; for fiscal year 2009 funds, not less than 45 percent; and thereafter, not less than 50 percent. The reauthorization also mandates that we assess this contracting pilot program and report on our assessment by September 30, 2010. In response to this mandate, we (1) identified the number of projects the Forest Service and BLM have implemented under the law, including the number expected to generate merchantable timber, the number in the pilot program, and the extent to which the percentage requirements of the law have been met; and (2) collected information on the agencies' experiences in using the pilot program.

Since the 2008 reauthorization of the act, according to agency data, almost 1,100 Title II projects have been approved or implemented by the Forest Service and BLM, with 10 of these expected to involve the sale of merchantable timber. None of these 10 projects have been completed; it is, therefore, too early to determine the extent to which the agencies will meet the act's percentage requirements for the pilot program. Under the 2000 act (covering the period from fiscal years 2001 through 2007), approximately 5,400 Title II projects were approved, according to agency data, with 40 projects involving the sale of merchantable timber. Of these 40 projects, 6 (15 percent) were carried out under the pilot program. This number (which represents the agencies' cumulative total for fiscal years 2001 through 2007) fell short of the 2000 act's percentage requirements, which ranged from 15 percent of projects in 2001 to 50 percent of projects in 2004 through 2007. In describing their experiences, agency officials provided a variety of explanations for the small number of projects carried out under the pilot program. These explanations included the relative scarcity of projects involving the sale of merchantable timber and the availability of other, more effective contracting mechanisms for carrying out projects that did include merchantable timber.