Mr. WILES. If you would like, I will go down the list of accounts and try to explain why these are being deferred.

Mrs. HANSEN. Please do.

PUBLIC LANDS DEVELOPMENT, ROADS AND TRAILS

Mr. WILES. The first item is public lands development, roads and trails. This is the road construction account in the Bureau of Land Management and represents contract authority that is made available under the Highway Act. The budgeted program is being carried out since this rescission was predicted in the budget in January. I think the committee is aware that each year the contract authority that is added to the Highway Act is much greater than we have liquidating money to take care of. So even if this authority wasn't rescinded, BLM would have a difficult time trying to let contracts because BLM wouldn't have the cash to liquidate the contracts.

NATIONAL PARK SERVICE

The next item is the National Park Service rescission. That is the same thing-huge amounts in contract atuhority for which we really don't have liquidating cash.

Also under the Highway Act the authority is good for 3 years, after which it lapses. These amounts proposed for rescission are the amounts that would lapse because they would be 3 years old. There is still lots of authority left in both of these accounts.

Mr. EVANS. In both instances these amounts represent obligational authority beyond cash on hand capable of being spent ; is that correct? Mr. WILES. Right. Also deferrals against these two accounts are much larger than these rescisisons. The basic reason for these rescissions is that these funds would lapse on June 30, anyway. They are 3 years old. BLM and NPS do not intend to use them and they will lapse under the Highway Act.

Mr. EVANS. So even if they didn't lapse you don't have the cash?

Mr. WILES. That's right. We intend to use all the liquidating cash Congress has appropriated, and we also intend to carry out the budget program. As a matter of fact, if you go back to this schedule, the Park Service has been allowed to use $34 million more of contract authority that has been apportioned than was originally in the budget. They will be using more than was in the budget this fiscal year. Mr. YATES. How much more?

Mr. WILES. $34,356,000 more has been apportioned than was originally in the budget.

Those are the two rescission items.

OREGON AND CALIFORNIA FUND DEFERRAL

Then we come to the deferral items. The first one is the Oregon and California grant lands funds. These are receipts for the timber sales on the Oregon and California lands. There was a budgeted program and that budgeted program is still being carried out. However, as we make the budget each January, we are attempting to predict unobligated

up

balances at the end of that year and then unobligated balances at the end of the next year. In trying to predict those two unobligated balances, we are also trying to predict receipts over the next 18 months.

The budget carried $5,243,000 for deferral. Since that time BLM has changed their estimate of timber receipts. Their original estimate was $118 million. They are now saying they will collect $150 million this year. That is basically the difference between the $35 million and the $50 million.

Mrs. HANSEN. Will this deferral affect the O. & C. county funds in any way?

Mr. WILES. No these are BLM moneys. Under this particular account, as the committee probably knows, 50 percent of the receipts go directly to the Oregon and California counties; 25 percent of the receipts is allowed to be used by BLM to maintain the forest, and 25 percent goes to the general fund of the Tresury.

Mr. EVANS. Are you saying this results from an increase in stumpage prices?

Mr. WILES. That is right.

Mr. EVANS. We just experienced the exact opposite in Colorado, where the Forest Service is reducing the stumpage price because of the low retail market for finished lumber.

Mr. WILES. You are right. This is also happening to us now. This has been a recent change in timber prices. At the time BLM made this estimate, they were estimating something over $200 a thousand board feet. Since that time, which was 6 months ago, timber prices have dropped dramatically on the commercial market. They will probably have to revise this downward again. That is what makes it so difficult in this kind of an account. You are trying to predict prices 18 months in advance and timber prices fluctuate. This will probably have to be reapportioned and taken down again.

Mr. Evans. But your action here isn't based upon an actual increase in the last 6 months of the price of stumpage?

Mr. WILES. NO. It's based on sales, if that price would have held. But that price probably won't hold. Of these funds, the 50 percent that is collected for the counties goes to the counties in the next year. The 25 percent that is collected for the Treasury goes to miscellaneous receipts. This deferral has no effect on the amount going to the counties.

Mrs. HANSEN. I may say to the gentleman from Colorado that the timber market is down.

Mr. WILES. Right.

Mrs. HANSEN. There is little market for timber at this time because of the decline in housing starts.

Mr. EVANS. That is the point I was making.

Mrs. HANSEN. The export of timber from all Federal lands is limited to that which is excess to domestic needs. So many shipping ports are stacked with timber.

Mr. WILES. As I understand-Mr. Wyatt knows more about this than I do-BLM enters into a contract for someone to cut this timber. At the time they enter into that contract there is a price on the contract. BLM gets 20 percent of it at that time and then the timber company will cut it later and has to pay the remaining 80 percent. BLM is

basing their receipt estimates on the contracts made some time ago. That is why receipts would be up, whereas the current market is down. Mrs. HANSEN. They are required to cut it within a certain time. Mr. WILES. Right.

Mrs. HANSEN. And at the prevailing market price that they purchased the timber at that particular point in time. Isn't that correct? Mr. WILES. That is my understanding, Madam Chairman. Mrs. HANSEN. But their next sale will probably be down.

Mr. WILES. Yes. The next time the timber company comes in they will bid much lower.

Mr. EVANS. So this represents cash in hand you would have or expect to have that you are not going to spend?

Mr. WILES. Right. Some of it is to be allocated yet. We haven't collected it all.

Mr. EVANS. Based on existing contracts?

Mr. WILES. Right. But we do intend to carry out the budgeted program.

EFFECT OF 0. & C. DEFERRAL

Mr. WYATT. Can I ask you this? What would this money be used for if it were not rescinded?

Mr. WILES. Mr. Wyatt, this is not a rescission. This is a deferral. It will be available again on July 1.

Mr. WYATT. Then what would it be used for? I saw the rescissions at the top. What would it be used for this year if it were not deferred until July 1?

Mr. WILES. I am not sure. I will have to check with BLM. I really don't think that BLM would have the capability at this time of the year to gear up and use that much money. If receipts do fall next. year, this will be very helpful in keeping their program on a level rather than dropping down because of lower receipts.

Mr. WYATT. If it were to be used, do you know what it would be used for?

Mr. WILES. It would be used for additional timber roads, additional forest management, additional planning.

Mr. WYATT. What kind of forest management? Does it include reforestation, thinning, salvage, and that sort of thing?

Mr. WILES. I am not a forester, Mr. Wyatt, but I believe you are right. It would include all those things, plus some recreation work and timber road construction.

Mr. WYATT. Would you know what specifics are involved in this? Mr. HUGHES. We don't know. We can ask BLM.

Mr. WYATT. Madam Chairman, I would like to have this broken down as to exactly how this money would be used between now and July 1, 1975, if it were not deferred. I would like the exact details. Mr. YATES. Which deferral are you discussing?

Mr. WYATT. The item on the Oregon and California grant lands, the first deferral item. I think that it certainly is true that there is a glut on the market right now for lumber and forest products, but when things start cranking up again, when we do have demand, it will be worse than ever. Prices are going to go out of sight. I would like to know what part of this would be applicable to providing fiber for the future a year from now, 2 years from now, et cetera. I would like to

have that broken down. When you furnish this to the committee, I would appreciate it if you would see that I get a personal copy of the breakdown. I would like it broken down in as much detail as possible. Mr. WILES. We would be glad to do that.

Mr. WYATT. Also, I would like to have a breakdown from the BLM as to how this deferral affects employment in western Oregon, if at all. I would like to know how many jobs are involved and what the effect is on employment. We really can't tell very much about it until we have that information.

Mrs. HANSEN. The purpose of this hearing was to discuss these items. and obtain the type of information needed to be able to act properly on these requests.

Mr. HUGHES. It shouldn't take more than a day to get the answers back. [The information follows:]

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