Natural Resources
Status of Merchantable Material Contracting Pilot Program Authorized by the Secure Rural Schools and Community Self-Determination Act of 2000 Gao ID: GAO-03-596R May 9, 2003The Secure Rural Schools and Community Self-Determination Act of 2000, enacted October 30, 2000, mandated that we assess a merchantable material contracting pilot program authorized by the act and report on our assessment by September 30, 2003. The pilot program encompasses certain forest-related projects undertaken as a result of the act and mandates the use of separate contracts for the harvesting or collection of merchantable material, such as timber, and the sale of that material rather than a single contract for both activities.
In summary, based on our preliminary work, of the approximately 1,300 forest-related projects approved at the time of our review, only 13 are expected to generate merchantable material and, thus, be eligible for the pilot program. Only 6 of these 13 are expected to be conducted within the pilot program--and none of the 6 has yet been implemented. Given the preliminary nature of the pilot program and the small number of projects, a full-scale assessment by September 30, 2003, would provide very limited information. We briefed Congress on these findings and reached agreement that no further assessment of the pilot program will be conducted at this time. Also as agreed, we are providing this letter summarizing program activity to date.
GAO-03-596R, Natural Resources: Status of Merchantable Material Contracting Pilot Program Authorized by the Secure Rural Schools and Community Self-Determination Act of 2000
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entitled 'Natural Resources: Status of Merchantable Material
Contracting Pilot Program Authorized by the Secure Rural Schools and
Community Self-Determination Act of 2000' which was released on May 09,
2003.
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United States General Accounting Office:
Washington, DC 20548:
May 9, 2003:
Congressional Committees:
Subject: Natural Resources: Status of Merchantable Material Contracting
Pilot Program Authorized by the Secure Rural Schools and Community
Self-Determination Act of 2000:
The Secure Rural Schools and Community Self-Determination Act of 2000,
enacted October 30, 2000,[Footnote 1] mandated that we assess a
merchantable material contracting pilot program authorized by the act
and report on our assessment by September 30, 2003. The pilot program
encompasses certain forest-related projects undertaken as a result of
the act and mandates the use of separate contracts for the harvesting
or collection of merchantable material, such as timber, and the sale of
that material rather than a single contract for both activities.
In summary, based on our preliminary work, of the approximately
1,300 forest-related projects approved at the time of our review, only
13 are expected to generate merchantable material and, thus, be
eligible for the pilot program. Only 6 of these 13 are expected to be
conducted within the pilot program--and none of the 6 has yet been
implemented. Given the preliminary nature of the pilot program and the
small number of projects, a full-scale assessment by September 30,
2003, would provide very limited information. We briefed your offices
on these findings and reached agreement that no further assessment of
the pilot program will be conducted at this time. Also as agreed, we
are providing this letter summarizing program activity to date.
Background:
Since the early 20th century, counties containing federal lands have
been compensated for the tax-exempt status of federal lands within
their boundaries. This compensation generally represents a percentage
of the receipts generated on federal lands through the sale or use of
natural resources--such as timber, minerals, recreation, or grazing
permits. Localities generally are required to use these funds for
roads, schools, or other services and facilities. However, the steep
decline in federal timber sales during the 1990s resulted in a
significant decrease in federal payments to counties that historically
depended on timber receipts.
The Secure Rural Schools and Community Self-Determination Act of 2000
was enacted, in part, to address the decline in federal payments by
stabilizing payments to counties that depended on revenues from timber
sales on Forest Service and certain Bureau of Land Management (BLM)
lands.[Footnote 2] Under the act, each county may continue to receive a
portion of the revenues generated from these lands or can choose
instead to receive annual payments equal to the average of the three
highest annual revenue payments to the county from fiscal year 1986
through fiscal year 1999.
Counties electing the second option generally must use 80 to 85 percent
of the payments on certain county services such as maintaining roads
and schools.[Footnote 3] The remainder can be (1) reserved by the
county for special projects that benefit federal lands, known as Title
II projects; (2) reserved by the county for county projects related to
federal lands (such as search-and-rescue work on federal lands), known
as Title III projects; or (3) returned to the Treasury. The
merchantable material contracting pilot program applies only to Title
II projects.
Title II projects are to be proposed by local resource advisory
committees and must be approved by Forest Service or BLM; these
agencies then carry out approved projects using the reserved Title II
funds. Projects are to improve maintenance of existing infrastructure,
enhance forest ecosystems, and restore and improve land health and
water quality. The act requires that a certain percentage of Title II
projects nationwide that are expected to generate merchantable material
must be implemented under the pilot program, using separate contracts
for harvesting or collecting the material and selling it.[Footnote 4]
The authority to initiate Title II projects under the act expires
September 30, 2006.
Few Pilot Projects Have Been Approved, and None Have Yet Been
Implemented:
According to our analysis, as of February and March 2003, the Forest
Service or BLM had approved 1,268 Title II projects. Of these, 13
projects are expected to generate merchantable material: 1 began in
fiscal year 2002 and is ongoing, 9 are expected to begin in fiscal year
2003, and the remainder to begin in fiscal year 2004 or later.[Footnote
5] Of the 10 projects underway or expected to begin in fiscal year
2003, 6 are expected to be included in the pilot program using separate
contracts for harvesting and selling merchantable material. All six
pilot program projects are in Oregon, and all involve removing small-
diameter trees. As of March 2003, no harvesting or collection of
merchantable material had begun on any of the six projects. Table 1
shows the projects' locations and anticipated start dates.
Table 1: Title II Projects to Be Conducted Under the Merchantable
Material Contracting Pilot Program:
Project name: Boaz Forest Health and Small Diameter Utilization;
Project location (county and state): Jackson (OR); Title II funds
reserved: $108,362; [Empty]; Estimated start date: Spring 2003;
[Empty]; Managing agency: BLM.
Project name: Density Reduction-Chetco; Project location (county and
state): Curry (OR); Title II funds reserved: 75,000; [Empty]; Estimated
start date: Spring 2003; [Empty]; Managing agency: Forest Service.
Project name: Small Tree Treatment Project-Illinois Valley; Project
location (county and state): Josephine (OR); Title II funds reserved:
67,500; [Empty]; Estimated start date: Summer 2003; [Empty]; Managing
agency: Forest Service.
Project name: Waters Creek Fuel Reduction; Project location (county and
state): Josephine (OR); Title II funds reserved: 146,250; [Empty];
Estimated start date: Spring 2003; [Empty]; Managing agency: Forest
Service.
Project name: Westside Small Tree-Chetco; Project location (county and
state): Curry (OR); Title II funds reserved: 75,000; [Empty]; Estimated
start date: Summer 2003; [Empty]; Managing agency: Forest Service.
Project name: Westside Small Tree-Gold Beach; Project location (county
and state): Curry (OR); Title II funds reserved: 68,550; [Empty];
Estimated start date: Summer 2003; [Empty]; Managing agency: Forest
Service.
Source: Forest Service and BLM.
[End of table]
Because of the small number of approved projects expected to be
conducted within the merchantable material contracting pilot program,
further assessment of the program by September 30, 2003, would provide
limited useful information. As agreed with your offices, we are
providing this letter summarizing program activity to date and plan no
further assessment of the pilot program at this time.
Scope and Methodology:
To determine the number of Title II projects, including the number of
projects expected to generate merchantable material and the number to
be conducted in the pilot program, we reviewed Forest Service and BLM
documents including lists and descriptions of projects; interviewed
officials in all nine Forest Service regions and BLM's Oregon State
Office; and interviewed cognizant headquarters officials in Forest
Service and BLM. We conducted our work from January through March 2003
in accordance with generally accepted government auditing standards.
Agency Comments:
We requested comments on a draft of this letter from the Secretaries of
Agriculture and of the Interior. In response, we received oral comments
from the Forest Service's Director of Policy Analysis and BLM's Acting
Group Manager for the Forest and Woodland Management Group, who
generally concurred with the information presented in our letter. The
BLM official also provided some technical corrections, which we
incorporated as appropriate.
We are sending copies of this letter to the Secretary of Agriculture
and the Secretary of the Interior. The letter also is available on
GAO's home page at http://www.gao.gov/.
If you have questions about this letter or need further information,
please contact me at (202) 512-3841, or David P. Bixler, Assistant
Director, at (202) 512-7201. You may also reach us by email at
hillbt@gao.gov or bixlerd@gao.gov. Other key contributors to this
assignment were James Espinoza, Steve Gaty, and Diane Lund.
Barry T. Hill
Director, Natural Resources and Environment:
Signed by Barry T. Hill:
List of Congressional Committees:
The Honorable Thad Cochran
Chairman
The Honorable Tom Harkin
Ranking Minority Member
Committee on Agriculture, Nutrition, and Forestry
United States Senate:
The Honorable Pete V. Domenici
Chairman
The Honorable Jeff Bingaman
Ranking Minority Member
Committee on Energy and Natural Resources
United States Senate:
The Honorable Bob Goodlatte
Chairman
The Honorable Charles W. Stenholm
Ranking Minority Member
Committee on Agriculture
House of Representatives:
The Honorable Richard W. Pombo
Chairman
The Honorable Nick J. Rahall, II
Ranking Minority Member
Committee on Resources
House of Representatives:
FOOTNOTES
[1] Pub. L. No. 106-393, 114 Stat. 1607 (2000).
[2] The act covers all National Forest System lands as well as certain
BLM lands in Oregon.
[3] Counties receiving less than $100,000 annually from National Forest
System lands may spend up to 100 percent of the payment on these county
services.
[4] In fiscal year 2001, 15 percent of Title II projects generating
merchantable material were to be conducted under the pilot program; in
fiscal years 2002 and 2003, 25 percent of projects; and in fiscal years
2004-2006, 50 percent.
[5] No Title II projects involving merchantable material were approved
or undertaken in fiscal year 2001.
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