The Secure Rural Schools and Community Self- June 6, 2023 Determination Act: Background and Issues Katie Hoover Under federal law, state and local governments receive payments through various programs due Specialist in Natural to the presence of federally owned land within their jurisdictions. Some of these payment Resources Policy programs are based on the revenue generated from specific land uses and activities. For example, Congress has authorized payments to the counties containing national forests—managed by the Forest Service—based on the revenue generated from those lands. In addition, Congress has authorized the 18 counties in western Oregon containing the Oregon and California (O&C) lands and Coos Bay Wagon Road (CBWR) lands—managed by the Bureau of Land Management (BLM)—to also receive a payment based on the revenue generated from those lands.

Revenue-generating activities include timber sales, recreation, grazing permits, and land use rentals, among other activities; timber sales have been the largest historical source of revenue. Starting in the 1990s, however, federal timber sales began to decline substantially, which led to substantially reduced payments to the counties. In response, Congress enacted the Secure Rural Schools and Community Self-Determination Act of 2000 (SRS; P.L. 106-393) as a temporary, optional program of payments, starting in FY2001. Congress has since extended the payments for every year —except FY2016—through FY2023. Counties with eligible lands (national forests, O&C, and CBWR lands) canmay opt to receive either an SRS payment or a revenue-sharing payment, althoughbased payment; most counties have elected to receive the SRS payment. Because a larger subset of counties are eligible, the bulk of the SRS payment goes to the lands managed by the Forest Service.

Each county'’s SRS payment is determined by a formula based on historic revenues, area of eligible federal lands, and county incomes. Because theypayments are based on historic, rather than current, revenue, the SRS payments are not affected by any annual fluctuations in the revenue streams from the specified lands. (This means that the SRS payments would not be impacted by any potential revenue fluctuations associated with COVID-19). The total SRS payment, however, declines by 5% annually revenue, fluctuations in current revenue streams from the specified lands do not affect SRS payments. Congress has changed the SRS payment formula several times. For example, Congress amended the formula so the payment declined by 10% annually from FY2008 through FY2011 and again amended the formula so the payment declined by 5% annually from FY2012 to FY2020. More recently, the Infrastructure Investment and Jobs Act (IIJA; P.L. 117-58) removed the annual decline and established a set annual payment amount. The program is funded through mandatory spending, with funds coming first from agency receipts and then from the Treasury. SRS payments are disbursed after the fiscal year ends, so the FY2020FY2023 SRS payment—the last authorized payment—areis due to be made in FY2021.

FY2024. The SRS payment is divided into three parts, each named after its respective title in the authorizing law and each with different requirements for how the funds may be used. Title I payments are to be used in the same manner as the revenue-sharingbased payment (restricted to roads and schools purposes for the Forest Service payment but available for a broader range of governmental purposes for the BLM payment). Title II payments are retained by the relevant federal agency to be used for projects on or to benefit the federal lands within the county. Title III payments are to be used for specified county purposes. There are different requirements for how a county may allocate its payment among the three titles, and those requirements vary depending on the total payment amount the county is set to receivereceives. The bulk of the payment, however, is allocated to the Title I payment (around 80%-85% of the payment for most counties). Congress has continued the allocations of the total payment among titles set by each county in FY2013.

Prior to the Infrastructure Investment and Jobs Act (P.L. 117-58), Congress had frozen the payment allocations chosen by each county for the FY2013 payment and continued that allocation through the FY2020 payment. When SRS payments temporarily expired for FY2016, county payments returned to the revenue-based system and were significantly lower than the payments received under SRS. With the pending expiration of SRS after the FY2020 paymentFY2023 payments, county payments arewould be set to return to the revenue-based system for FY2024. Congress may consider several options to address county payments, including reauthorizing SRS (with or without modifications), implementing other legislative proposals to address the county payments, and taking no action, among others. Congressional debates over reauthorization have considered the basis, level, and distribution of payments and interaction with other compensation programs (e.g., the Payments in Lieu of Taxes program); the authorized and required uses of the payments; the duration of any changes (temporary or permanent); and the source of funds (receipts, the Treasury, or other revenue source). In addition. More generally, legislation with mandatory spending—such as SRS—raises policy questions about congressional control of appropriations. Current budget rules to restrain deficit spending typically impose a procedural barrier to such legislation, generally requiring offsets by additional receipts or reductions in other spending.

The FY2019 SRS payment was distributed in April 2020. The totalIn addition, as with non-defense mandatory spending, SRS payments are generally subject to sequestration, though that has varied over the years based on when payments were reauthorized. The FY2022 SRS payment was distributed in spring 2023. The total, post-sequester FY2022 SRS payment (Titles I, II, and III) was $254.3267.0 million ($225.8239.0 million FS; $28.427.9 million BLM). The total FY2022 SRS payment made to counties (Titles I and III only) was $228.7241.1 million ($202.6215.5 million FS; $26.0 million BLM).

Under federal law, local governments are compensated25.6 million BLM). Congressional Research Service link to page 6 link to page 6 link to page 7 link to page 8 link to page 8 link to page 9 link to page 9 link to page 10 link to page 13 link to page 14 link to page 15 link to page 18 link to page 19 link to page 23 link to page 23 link to page 24 link to page 25 link to page 26 link to page 26 link to page 26 link to page 29 link to page 30 link to page 30 link to page 13 link to page 15 link to page 22 link to page 27 link to page 29 link to page 10 link to page 12 link to page 16 link to page 19 link to page 20 link to page 28 Secure Rural Schools and Community Self-Determination Act: Background and Issues Contents Background ..................................................................................................................................... 2 Forest Service 25 Percent Payments ......................................................................................... 2 Bureau of Land Management O&C and CBWR Revenue-Based Payments ............................ 3 Revenue-Based Program Concerns and Issues ......................................................................... 4 Payment Stability ................................................................................................................ 4 Linkage ............................................................................................................................... 5 Declining Timber Receipts ................................................................................................. 5 Secure Rural Schools and Community Self-Determination Act of 2000 ........................................ 6 SRS Payment Formula .............................................................................................................. 9 Payment Election .................................................................................................................... 10 Payment Allocations: Title I, Title II, and Title III ................................................................... 11 Resource Advisory Committees (RACs) .......................................................................... 14 Payment Data and Analysis ........................................................................................................... 15 FY2019 and FY2020 Payments .............................................................................................. 19 FY2021-FY2023 Payments ..................................................................................................... 19 Sequestration ........................................................................................................................... 20 Legislative Issues .......................................................................................................................... 21 Payment Formula .................................................................................................................... 22 Lands Covered ........................................................................................................................ 22 Geographic Distribution of SRS and PILT Payments ............................................................. 22 Source of Funds....................................................................................................................... 25 Authorized and Required Uses of the Payments ..................................................................... 26 Reauthorization and Duration of the Programs ....................................................................... 26 Figures Figure 1. FS and BLM Total Secure Rural Schools (SRS) Payments ............................................. 9 Figure 2. FS and BLM Total Secure Rural Schools (SRS) Payments by Title ............................... 11 Figure 3. FS and BLM Payments, FY2001-FY2022 ..................................................................... 18 Figure 4. PILT, BLM, and FS Payments Made in FY2022 ........................................................... 23 Figure 5. Source and Distribution of Forest Service (FS) Payments ............................................. 25 Tables Table 1. Secure Rural Schools (SRS) Legislative History .............................................................. 6 Table 2. FS and BLM Total Secure Rural Schools (SRS) Payments, FY2001-FY2022 ................. 8 Table 3. Secure Rural Schools (SRS) Title Allocations ................................................................. 12 Table 4. Forest Service (FS) Payments .......................................................................................... 15 Table 5. Bureau of Land Management (BLM) Payments.............................................................. 16 Table 6. FS, BLM, and PILT Payments Made in FY2022, by State .............................................. 24 Congressional Research Service link to page 32 link to page 35 link to page 37 Secure Rural Schools and Community Self-Determination Act: Background and Issues Appendixes Appendix A. SRS Reauthorizations Through FY2017 .................................................................. 28 Appendix B. FY2013 Sequestration Issues ................................................................................... 31 Contacts Author Information ........................................................................................................................ 33 Congressional Research Service Secure Rural Schools and Community Self-Determination Act: Background and Issues nder federal law, local governments receive federal funding through various programs due to the presence of federal lands within their borders. Federally-This is in part because federally U owned lands cannot be taxed, but may create demand for services from state or local entities, such as fire protection, police cooperation, or longer roads to skirt the property. Many of the compensation programs are based on revenue generated from specific land uses and activities (referred to as revenue-sharingbased programs throughout this report).

Counties containing national forests managed by the Forest Service (FS) have historically received a percentage of agency revenues. Similarly, counties containing the Oregon and California (O&C) and Coos Bay Wagon Road (CBWR) lands, primarily managed by the Bureau of Land Management (BLM), also have received a payment based on agency revenues. For many decades, the primary source of revenue from those lands was the sale of timber.¹1 In the 1990s, timber sales declined substantially from the historic levels in the 1980s—by more than 90% in some areas—which led to substantially reduced payments to the counties. In response, Congress enacted the Secure Rural Schools and Community Self-Determination Act of 2000 (SRS) to provide a temporary, optional system to supplant the FS and BLM revenue-sharingbased programs.²2 The authorization for the SRS payments originally expired at the end of FY2006, but Congress extended the payments an additional 1316 years—through FY2020FY2023, with a one-year lapse in the authorization for FY2016—through several reauthorizations.3 SRS is set to expire after the FY2020FY2023 payments are made, after which county payments are to return to a revenue-based system.

This report provides background information on FS and BLM revenue-sharingbased payments and a brief overview of a related payment program—the Payments in Lieu of Taxes (PILT) program.³ 4 Because the revenue-sharingbased, SRS, and PILT payments interact with each otherone another in varying ways, proposals to amend the revenue-sharingbased programs or SRS have often included modifications to the PILT program as well. This report then provides on overview of the SRS payments and a discussion of some of the legislative issues facing Congress when considering these payment programs, including the potential effects from the Coronavirus Disease 2019 (COVID-19) pandemic.⁴

Background

programs. Payment Terminology The fol owing definitions reflect how the different payments are defined and referred to in this report (note that other sources may use different terms or report the data differently). For the payments in which both Forest Service (FS) and Bureau of Land Management (BLM) lands are applicable, the appropriate agency wil be specified in the text. BLM payment reflects the payments made to the counties containing the Oregon and California (O&C) and Coos Bay Wagon Road (CBWR) lands as authorized for that year. For years prior to FY1993, this was the respective revenue-based payment; starting in FY1993, this was the BLM safety-net payment. For years starting in FY2001, however, this generally refers to the BLM Secure Rural Schools and Community Self-Determination Act (SRS) Title I and Title II payments. BLM total payment includes the BLM payment plus the SRS Title II payment retained by the agency. FS 25 Percent Payments are the revenue-based payments authorized through the Act of May 23, 1908. Data for the 25 Percent Payments may also include the Special Act Payments as specified, such as the Payments to Minnesota 1 For more information on federal timber sales, see CRS Report R45688, Timber Harvesting on Federal Lands. 2 The Secure Rural Schools and Community Self-Determination Act of 2000 (SRS; P.L. 106-393), 16 U.S.C. §§7101-7153. 3 SRS payments for FY2021-FY2023 were reauthorized in the Infrastructure Investment and Jobs Act (IIJA; P.L. 117-58, §41202). 4 Payments in Lieu of Taxes Act of 1976 (PILT; P.L. 94-565 as amended, 31 U.S.C. §§6901-6907). For more information, see CRS Report R46260, The Payments in Lieu of Taxes (PILT) Program: An Overview. Congressional Research Service 1 Secure Rural Schools and Community Self-Determination Act: Background and Issues Counties. For the years FY1993 through FY2000, the data for the 25 Percent Payments also include the FS safety-net payments. FS payment reflects the payments authorized to be made to eligible counties for that year. Prior to FY2001, this includes the FS 25 Percent Payment and the FS safety-net payment. Starting in FY2001, this includes the FS revenue-based payment plus the SRS Title I and Title II payments, except in FY2016, when SRS payments were not authorized. FS total payment includes the FS county payment plus the SRS Title II payment retained by the agency. Revenue-based payment for the FS comprises the 25 Percent Payments. For the BLM, this comprises the O&C and CBWR payments. Safety-net payment includes payments made from FY1993 to FY2000 to certain counties in Washington, Oregon, and California for both FS and BLM (for Oregon, only BLM). SRS Title I, II, or III payment reflects the payment made pursuant to one or more of the SRS titles, as specified in the text. SRS total payment includes the sum of the Title I, Title II, and Title III payments. Background Forest Service 25 Percent Payments Forest Service 25 Percent Payments

Congress has authorized several different revenue-sharingbased payments for the counties containing lands managed by the FS.⁵5 SRS affects one of those payments—the payments authorized under the Act of May 23, 1908, referred to as the "25 Percent Payments" in this report. The other payments (e.g., Payments to Counties for the national grasslands and Special Act Payments) are much narrower in scope and application and, consequently, much smaller.⁶6 These payments are sometimes included in FS revenue-sharingbased payment totals, but they are not affected by the SRS payments.

Congress first directed the FS to begin revenue-sharingbased payments in appropriations laws for 1906 and 1907. For those years, the requirement was for the FS to pay 10% of its gross receipts per year to states for use on roads and schools in the counties in which the national forests are located. In 1908, Congress raised the payment to 25% of gross receipts and permanently authorized the 25 Percent Payments as mandatory spending.⁷7 The compensation rate remained at 25% of gross receipts annually for the next 100 years, until it was changed in 2008 to 25% of average gross receipts over the previous 7 years—essentially a 7-year rolling average of receipts.⁸ 8 Receipts come from eligible sales, leases, rentals, or other fees for using national forest lands or 5 Compensation programs related to energy and mineral development on national forest system lands are administered by the Department of the Interior (DOI) and are not addressed in this report. 6 The Payments to Counties program requires payments of 25% of net receipts generated on the national grasslands to be paid directly to the counties ($52.0 million for FY2021). Special Act Payments include various other revenue-based payments authorized for specific purposes or limited to specific places, such as the Payments to Minnesota Counties program, which provides payments to three counties in northern Minnesota based on the appraised value of certain lands within the Superior National Forest ($5.7 million for FY2021). Special act payments also include payments for quartz mined from the Ouachita National Forest in Arkansas and for revenue generated on the Quinault Special Management Area in the Olympic National Forest in Washington (~$4,000 in FY2020 for both). Data from the Forest Service (FS), FY2022 Budget Justification and FS’s Payments to Counties website at https://www.fs.usda.gov/working-with-us/secure-rural-schools/bankhead-jones-payments. For more information on these programs and FS’s mandatory appropriations generally, see CRS Report R46557, Forest Service Appropriations: Ten-Year Data and Trends (FY2011-FY2020). 7 Act of May 23, 1908, 16 U.S.C. §500. 8 P.L. 110-343 §601. Congressional Research Service 2 Secure Rural Schools and Community Self-Determination Act: Background and Issues Receipts come from eligible sales, leases, rentals, or other fees for using national forest lands or resources (e.g., timber sales, recreation fees, and communication site leases), although Congress has designated some activities exempt from the revenue-sharing requirement.⁹ Because the payments areFS revenues for the purposes of revenue-sharing payments.9 Because the payment amounts are calculated based on the average annual revenue generated during a seven-year period, the payment amounts cannot be calculated—and thus payments cannot be made— until after the most recent fiscal year in each period is completed (for example, payments reflecting the annual average for FY2014-FY2020 are to bewere made in FY2021).

The 25 Percent Payments are sometimes referred to as the Payments to States program because the FS first sends the payment to the states.¹⁰10 The states have no discretion in assigning the funds to the appropriate county, however. FS determines the amount of the total state payment to be allocated to each county based on each county'’s national forest acreage and provides that amount to the state. The states cannot retain any of the funds; the funds must be passed through to local governmental entities for use at the county level (but not necessarily to county governments themselves).¹¹11 Each state must spend the funds on road and school programs, and state law sets forth how the payments are to be allocated between road and school projects. The state laws differ widely, generally ranging from 30% to 100% for school programs, with a few states providing substantial local discretion on the split.

Bureau of Land Management O&C and CBWR Revenue-Sharing Payments

Based Payments Congress has also enacted revenue-sharingbased programs for BLM lands for various types of resource use, including the Oregon and California (O&C) payments and Coos Bay Wagon Road (CBWR) payments.¹²payments.12 The O&C payments are made to the 18 counties in western Oregon containing the revested Oregon and California grant lands, which are lands that were returned to federal ownership for failure of the state to fulfill the terms of the grant. The O&C counties receive 50% of the receipts from these lands, and the funds may be used for any local governmental purposes.¹³13 The CBWR lands are located in two of the same counties in western Oregon that also contain O&C lands. A portion of the revenue generated from the CBWR lands also must be paid to the two counties, and those funds may be used for schools, roads, bridges, and highways.¹⁴

14 The O&C and CBWR payments are mandatory payments that are paid directly to the counties. The CBWR and O&C lands and payments are often grouped together, and in this report "O&C" “O&C” refers to both, unless otherwise specified.

9 For example, revenue generated through stewardship contracts is not counted toward the revenue-based requirement (16 U.S.C. §6591c(e)(3)(A)). For more information on the authorized uses and revenue-generating activities on the national forests, see CRS Report R43872, National Forest System Management: Overview, Appropriations, and Issues for Congress. 10 FS sometimes includes other payment programs within the Payments to States program, which is also the name of the Treasury account from which the payments are made. This includes the Payments to Counties and Payments to Minnesota Counties. SRS is included when authorized. 11 For example, funds may be allocated directly to a school district. 12 FS also manages a portion (19%) of the O&C lands. For more information, see CRS Report R42951, The Oregon and California Railroad Lands (O&C Lands): Issues for Congress. Compensation programs related to grazing, land sales, and energy and mineral development are not addressed in this report. 13 43 U.S.C. §§2601 et seq. 14 Per statute (43 U.S.C. §§2621 et seq.), 75% of the gross receipts from Coos Bay Wagon Road (CBWR) lands are deposited to a special fund and used to make tax-equivalency payments; any portion remaining in the fund after a 10-year period is transferred to the General Fund of the Treasury. Congressional Research Service 3 link to page 30 Secure Rural Schools and Community Self-Determination Act: Background and Issues Payments in Lieu of Taxes (PILT) Program Payments in Lieu of Taxes (PILT) Program

In addition to the FS and BLM revenue-sharingbased programs, Congress has enacted other programs to compensate for the presence of federal land. The most widely applicable program, administered by the Department of the Interior, is the Payments in Lieu of Taxes (PILT) Program.¹⁵ (31 U.S.C. §§6901-6907). PILT payments to counties are calculated in dollarsdol ars per acre of federal land and are based on eligible federal lands, as specified in statute (the total payment amounts are restricted in counties with very low populations). The eligible lands include national forests and O&C lands, among others, in each county.

PILT payments are reduced (to a minimum payment per acre) by other payment programs as specified in statute.¹⁶ The PILT payments are reduced by the FS payments but not by the O&C payments. This means that the PILT payment for counties containing national forests is affected by the FS payment (either revenue-sharingbased or SRS), but the PILT payment for counties containing O&C lands is not similarly affected. This also means that decreases in FS payments may increase a county'’s payments under PILT in the followingfol owing year (and vice versa), although the difference is rarely proportionate. Proposals to amend the revenue-sharingbased programs or SRS have often included modifications to the PILT program.

Revenue-SharingPILT payments are reduced (to a minimum payment per acre) by other payment programs as specified in statute. For more information, see CRS Report R46260, The Payments in Lieu of Taxes (PILT) Program: An Overview. Revenue-Based Program Concerns and Issues Program Concerns and Issues

Prior to the enactment of SRS, Congress, counties containing FS and O&C lands, and other observers raised three principal concerns about FS and O&C revenue-sharing programs,¹⁷ which werethree principal concerns about FS and O&C revenue-based programs had been raised by Congress, counties containing FS and O&C lands, and other observers:15 (1) payment stability and the annual uncertainty about payment amounts; (2) the linkage between timber revenue and county payments; and (3) the decline in FS and O&C receipts due to the decline in timber sales. SRS addresses some of these concerns, but they may again be at issue when SRS expires.

if the authorization for SRS payments were to expire. Payment Stability

One concern about the FS and O&C revenue-sharingbased payments was that payments would fluctuate annually based on the revenue received in the previous year. Even in areas with modest declines or increases in revenuetimber sales, payments have varied widely from year to year. For example, from FY1985 to FY2000, the payments from each national forest fluctuated an average of nearly 30% annually—that is, on average, a county'’s payment in any year was likely to be nearly 30% higher or lower than its payment the preceding year. This is in part due to fluctuations in timber sale locations and market forces, among other factors. Such wide annual fluctuations imposed serious budgeting uncertainties on the counties.

The concern over annual fluctuations led to Congress changing the compensation rate to a rolling seven-year average of receipts in 2008.¹⁸16 Thus, payments increase more slowly than in the past when and where national forest receipts are rising but decline more slowly when and where receipts are falling. The extent to which this provides more stability for the counties is not clear. Since this change has been enacted, most counties have opted to receive an SRS payment instead of the revenue-sharingbased payment, except for the one year when the SRS payments were not authorized. Relatedly, however, the expiration and reauthorization of the SRS payments over the past few years has introduced a different kind of budgeting uncertainty for the counties, discussed further in the " “Reauthorization and Duration of the Programs" ” section of this report.

Linkage

15 Forest Counties Payments Committee, Recommendations for Making Payments to States and Counties: Report to Congress (Washington: GPO, 2003). Hereinafter referred to as Forest Counties Payments Committee Report, 2003. The committee was established in Section 320 of the FY2001 Interior and Related Agencies Appropriations Act, P.L. 106-291. 16 P.L. 110-343 §601. Congressional Research Service 4 Secure Rural Schools and Community Self-Determination Act: Background and Issues Linkage A longer-term concern is referred to as linkage. Some observers noted that because the counties received a portion of receipts, they were financially rewarded for advocating receipt-generating activities (principally timber sales) and for opposing management decisions that might reduce or constrain such activities, thus reducing the direct financial benefits from receipts (e.g., designating wilderness areas or protecting commercial, tribal, or sport fish harvests). Some interests support retaining the linkage between county compensation and agency receipts because such activities usually also provide local employment and income, especially in rural areas where unemployment is often high. Others assert that ending the linkage is important so that the direct financial incentive for maximizing receipts would be removed as one of the factors for local government officials to consider in their decisionmaking regarding use of the lands for activities other than timber sales.¹⁹

17 Declining Timber Receipts

A primary concern about the FS 25 Percent Payments and O&C payments was the effect of declining timber sale revenue on counties. National forest receipts (subject to the 25% sharing) declined from their peak of $3.02.9 billion in FY1989 to $664.3691.0 million in FY1999, in inflation-adjusted FY2019 dollars.²⁰constant FY2022 dollars.18 The decline was primarily due to declining receipts from decreasing timber production. For example, FS harvested 12.0 billion board feet of timber in FY1989 (at a value of $2.72 billion in FY2019constant dollars); in FY1999, FS harvested 2.9 billion board feet (at a value of $525.8 million in FY2019constant dollars).²¹19 The decline in timber sales began in the Pacific Northwest but eventually was experienced nationwide, owing to a combination of changing forest management policies and practices, increased planning and procedural requirements, changing public preferences, economic and industry factors, and other developments. BLM experienced a similar trend in receipts over the same time period.

Consequently, the revenue-sharingbased payments to counties also declined. For example, the FY1989 FS 25 Percent Payments totaled $751.4 million (FY2019 dollars).²²722.3 million.20 By FY1993, the payment was $540.6 million (FY2019 dollars).²³ Similar0 million.21 Similarly to the decline in timber receipts, the decline in the revenue-sharingbased payments also began in the Pacific Northwest. For example, payments to the counties in Oregon containing national forests decreased by 20% from FY1989 to FY1993, and payments to the counties containing the 17 Forest Counties Payments Committee Report, 2003, p. 24. 18 FS revenue data compiled from annual budget documents. In nominal dollars, the receipts in FY1989 were $1.44 billion and the receipts in FY1999 were $432.5 million. Figures adjusted to constant (estimated FY2022) dollars using the Gross Domestic Product (GDP) Chained Price Index (CPI) from the White House Office of Management and Budget (OMB) Table 10.1, “Gross Domestic Product and Deflators Used in the Historical Tables” at https://www.whitehouse.gov/omb/budget/historical-tables/. 19 FS timber data compiled from annual Cut & Sold reports available at https://www.fs.usda.gov/forestmanagement/products/cut-sold/index.shtml. In nominal dollars, the value of the FY1989 timber sales was $1.31 billion, and the value of the FY1999 timber sales was $342.3 million. Figures adjusted to constant (estimated FY2022) dollars using the GDP-CPI from the White House OMB Table 10.1, “Gross Domestic Product and Deflators Used in the Historical Tables” in Historical Tables. For more information on federal timber sales, see CRS Report R45688, Timber Harvesting on Federal Lands. 20 FS historical payment data provided by FS Legislative Affairs office, 2005. In nominal dollars, the FY1989 25 Percent Payment was $361.9 million and was adjusted to constant (estimated FY2022) dollars using the GDP-CPI from the White House OMB Table 10.1, “Gross Domestic Product and Deflators Used in the Historical Tables” in Historical Tables. 21 FS historical payment data provided by FS Legislative Affairs office, 2005. In nominal dollars, the FY1993 25 Percent Payment was $304.7 million and was adjusted to constant (estimated FY2022) dollars using the GDP-CPI from the White House OMB Table 10.1, “Gross Domestic Product and Deflators Used in the Historical Tables” in Historical Tables. Congressional Research Service 5 link to page 10 link to page 32 Secure Rural Schools and Community Self-Determination Act: Background and Issues forests decreased by 20% from FY1989 to FY1993, and payments to the counties containing the O&C lands decreased by 28%.²⁴22 In California, FS payments to counties decreased by 30% over that same time frame, and in Washington, FS payments decreased by 35%. The extent of declining revenues in individual counties within those states varied, ranging from minimal to substantial (and often was a function of the amount of applicable federal land located within the county).

In 1993, Congress authorized FS and BLM to make "safety-net payments" to several counties in the Pacific Northwest, including in Oregon, California, and Washington.²⁵23 These payments were set at a declining percentage of the average revenue-sharingbased payments made to those counties between FY1986 and FY1990.²⁶24 As federal timber sales—and revenue-sharingbased payments—began to decline nationwide, however, Congress replaced the regional safety-net payments with the nationwide SRS program starting in FY2001.

Secure Rural Schools and Community Self-Determination Act of 2000

In 2000, Congress enacted the Secure Rural Schools and Community Self-Determination Act (SRS) after extensive debates and several different bill versions.²⁷25 The act established an optional alternative to the revenue-sharingbased payments for FS and O&C lands, starting with the FY2001 payment. Each county with FS or O&C land could choose to receive either the regular revenue-sharingbased payments or the SRS payment.

SRS was originally enacted as a temporary program, expiring after payments were made for FY2006. However, SRS was reauthorized and modified several times, and payments were authorized annually through the FY2015 payment (see Table 1 and Appendix B)A). The authorization lapsed for the FY2016 payment, but payments were reauthorized starting in FY2017 and extended through FY2023.26 SRS payments—like the revenue-basedFY2017 and are set to expire at the end of FY2020. The longest reauthorization was for four years; otherwise, the reauthorizations have extended the payments for one or two years each. SRS payments—like the revenue-sharing payments—are disbursed after the end of the fiscal year, so, barring any congressional action, payments are set to expire after the FY2023 the FY2020 payment is to be made in FY2021.

The SRS payments are determined by a formula based on historic revenue generated on the applicable federal lands. Originally, each county'’s SRS payment was calculated as the average of the three highest payments received by the county between FY1986 and FY1999. The formula was later amended to include other factors and to decline annually, as discussed in the " “SRS Payment Formula"” section. . Funds needed to achieve the full payment are mandatory spending and come first from agency receipts (excluding deposits to special accounts and trust funds) and then from "“any amounts in the Treasury not otherwise appropriated."²⁸”27 The program is also authorized to receive discretionary funding, although this has happened only one time (FY2007, see Appendix B A for more information).

27 16 U.S.C. §7112(b)(3). Congressional Research Service 7 link to page 12 link to page 13 link to page 13 link to page 13 link to page 13 link to page 13 Secure Rural Schools and Community Self-Determination Act: Background and Issues The SRS payment is divided into three parts, based on three of the titles in the authorizing law. Each county can allocate the payment among the three titles, with different requirements depending on the amount a county was set to receive.

• • Title I payments are to be used in the same manner as the revenue-sharingbased payment (for roads and schools purposes for the FS payment, or, for the BLM payment, for any governmental purpose).²⁹
• 28 • Title II payments are not made to the county but are retained by FS or BLM to be used for projects on the relevant federal lands within the county.³⁰
• 29 • Title III payments are made to the county, and the funds are to be used for specified county projects.³¹

30 The bulk of the SRS payment (8384% on average) is for counties containing the national forests (see Table 2 andand Figure 1). This is because the FS payment is more broadly applicable, whereas the BLM payment is applicable only for the 18 counties in one state—Oregon—containing the O&C lands. Because a portion of the SRS payment is retained by the agency, it is common to see only the portion of the payment that was made to the county—the Title I and Title III payments—provided in various reports.

. Figure 1. FS and BLM Total Secure Rural Schools (SRS) Payments (FY2001-FY2019)

Sources: (FY2001-FY2022) Sources: FS FY2001-FY2005, FY2007 data from FS legislative affairs office; and FS FY2006, FY2008-FY2019 FY20221 data from annual FS report, All Service Receipts: Title I, II, and III Region Summary (ASR-18-3), available at httphttps://www.fs.usda.gov/main/pts/home. working-with-us/secure-rural-schools/payments. BLM payment data are from the SRS Official Payment reports, available at https://www.blm.gov/programs/natural-resources/forests-and-woodlands/oc-lands. . Notes: FS = Forest Service; BLM = Bureau of Land Management. The Some years may reflect sequestration. The bars reflect nominal dollarsdol ars. The gray line reflects total SRS payments adjusted to constant (FY2019) dollars using the annual consumer price index for all urban consumers reported by the U.S. Department of Labor, Bureau of Labor Statistics, available at https://www.bls.gov/data/. No SRS payment was authorized for FY2016. For FY2017, BLM's revenue-sharingestimated FY2022) dol ars using the GDP Chained Price Index from the White House Office of Management and Budget, Table 10.1, “Gross Domestic Product and Deflators Used in the Historical Tables—1940-2027,” in Historical Tables, at https://www.whitehouse.gov/omb/historical-tables/. SRS payments were not authorized for the FY2016 receipt year. For FY2017, BLM’s revenue-based payment is reflected in the SRS payment for consistency purposes. The x-axis is the Receipt Year, which reflects the fiscal year in which the payment was based, not the year the payments were made. The payments were made in the followingfol owing fiscal year (e.g., the FY2018 payment was disbursed in FY2019). SRS payments were not authorized for the FY2016 receipt year.

The following sections discuss the payment formula, payment allocations, and use of the funds in more depth and provide payment data and analysis. Information on the two most recent reauthorizationsreauthorization (authorizing payments for FY2017FY2021 through FY2020FY2023) is included in the payment data section. Information on the prior reauthorizations is available in Appendix B.

A. SRS Payment Formula

The SRS payment formula has been modified several times. When SRS was first enacted, each county'county’s payment was calculated as the average of the three highest revenue-sharingbased payments received by the county between FY1986 and FY1999. The total authorized payment for FY2001- Congressional Research Service 9 Secure Rural Schools and Community Self-Determination Act: Background and Issues FY2006 was the sum of the payments calculated for each participating county for each year. When the program was reauthorized in FY2008, however, Congress modified the program in several ways, including by establishing a new payment formula and specifying the total authorized payment level. The payment formula is still based on each eligible county’s historic revenue-sharingbased payments, but it also takes into account each county'the changes incorporated the county’s share of federal land and relative income level into the calculation.31 In essence, the new formula differed from the original SRS formula by basing half the payment on relative historic revenue and half on relative proportion of FS and O&C land, with an adjustment based on relative county income. This was done because the majority of payments under the original SRS went to Oregon, Washington, and California (more than 65% of payments in FY2006). Because of the altered allocation, several counties opted out of the amended SRS system, and others opted in. Because payments are based on historic revenue, fluctuations in current revenue streams from the specified lands do not affect SRS payments. Under the modified formula, the total authorized SRS payment level—defined as full funding—was set at $500 million for FY2008.32 From FY2008 through FY2020, this full funding amount was set to decline annually (originally by 10%, later changed to 5%). The annual decline, however, was removed starting with the FY2021 payment, with the full funding amount set to a constant amount equal to the FY2017 payment.33 The full funding amount is allocated among all counties that elect to receive an SRS payment in lieu of the revenue-based payment. Thus, the fewer counties that participate (i.e., the more that opt for the revenue-based payment programs rather than SRS), the more each eligible county receives. s share of federal land and relative income level.

Payment Election

Initially, each county could elect to receive the revenue-sharingbased payment or the SRS payment and could transmit that election to the respective Governor, who transmitted the elections to the appropriate Secretary (for FS, the Secretary of Agriculture; for BLM, the Secretary of the Interior).³⁵ 31 Eligible counties are those that choose to receive payments under this program; counties that choose to continue to receive payments under the original revenue-based programs are excluded from these calculations. Relative income is calculated using an income adjustment based on the per capita personal income in each county relative to the median per capita personal income in all eligible counties. Income data is calculated using the most recent data available from the Department of Commerce Bureau of Economic Analysis. For a step-by-step guide on calculating payments, see FS’s SRS website at https://www.fs.usda.gov/working-with-us/secure-rural-schools/payments. 32 16 U.S.C. §7102(11). 33 IIJA, P.L. 117-58, §41202. Congressional Research Service 10 link to page 15 link to page 16 link to page 16 Secure Rural Schools and Community Self-Determination Act: Background and Issues Interior).34 Although the election was good for two years, a county could opt to receive an SRS payment one year and the revenue-sharingbased payment the following year.³⁶ However, the The authority to make such an election had expired at the end of FY2013, and an extension hashad not been included in the three reauthorizations that since have been enacted. following three reauthorizations. Essentially, Congress had frozen the payment elections each county made for the FY2013 payment and continued that election through the FY2020 payment. Those counties that opted to receive an SRS payment in FY2013 have continued to receive an SRS payment (for those years that payments arewere authorized). Counties; counties that opted to receive a revenue-sharingbased payment in FY2013 continuecontinued to receive the revenue-sharingbased payment and havedid not hadhave the opportunity to opt in to SRS. Most (90%) counties have elected to receive the SRS payment.

The FY2021 reauthorization ended the freeze on payment elections. Initially, the freeze on payment elections was set to end for the FY2023 payment, but Congress enacted legislation removing the sunset date on the payment freeze.35 Payment Allocations: Title I, Title II, and Title III

The SRS payment is divided into three parts, based on three of the titles in the SRS statute (see Figure 2 and Table 3). There are different requirements for how the payment is allocated among the three titles, depending on the payment amount a county is set to receive (see Table 3 for descriptions). Since the original authorization, Congress has modified the required allocations as well as the authorized uses of Title II and Title III funds.

Figure 2. FS and BLM Total Secure Rural Schools (SRS) Payments by Title (FY2001-FY2019)

Sources: (FY2001-FY2022) Sources: FS payment data are from the annual FS report, All Service Receipts: Final Payment Summary Report PNF (ASR-10-01), available at httphttps://www.fs.usda.gov/main/pts/securepayments/projectedpaymentsworking-with-us/secure-rural-schools/payments. BLM payment data are from the SRS Official Payment reports, available at https://www.blm.gov/programs/natural-resources/forests-and-woodlands/oc-lands.https://www.blm.gov/programs/natural-resources/forests-and-woodlands/oc-lands. oc-lands. 34 16 U.S.C. §§7112(b)(1)-(2). Election submissions must be submitted to the respective Secretary by August every two years. If no election is made, counties receive an SRS payment. 35 The timing of the reauthorization of SRS payments as enacted in IIJA in November 2022 was after the August deadline specified in statute for making payment elections for the following two years. P.L. 117-102, however, allowed for a payment election to be made for FY2021. Congressional Research Service 11 link to page 18 link to page 18 link to page 17 link to page 30 link to page 30 Secure Rural Schools and Community Self-Determination Act: Background and Issues Notes: FS = Forest Service; BLM = Bureau of Land Management. Some years reflect sequestration. Notes: FS = Forest Service; BLM = Bureau of Land Management. The bars reflect nominal dollarsdol ars. The gray line reflects total SRS payments adjusted to constant (FY2019) dollars using the annual consumer price index for all urban consumers reported by the U.S. Department of Labor, Bureau of Labor Statistics, available at https://www.bls.gov/data/estimated FY2022) dol ars using the GDP Chained Price Index from the White House Office of Management and Budget, Table 10.1, “Gross Domestic Product and Deflators Used in the Historical Tables” in Historical Tables. No SRS payment was authorized for FY2016. For FY2017, BLM'’s revenue-sharingbased payment is reflected in the Title I payment for consistency purposes. The x-axis is the Receipt Year, which reflects the fiscal year in which the payment was based, not the year the payments were made. The payments were made in the followingfol owing fiscal year (e.g., the FY2018 payment was disbursed in FY2019).

Regardless of the allocation, however, the bulk of each county'’s payment is allocated to Title I payments, and those funds are to be used in the same manner as the revenue-sharingbased payment (for roads and schools purposes for the FS payment; schools, roads, bridges, and highways for the CBWR lands; or any governmental purpose for the O&C lands). The Title II payment is not made to the county, but is retained by the relevant federal agency to be used for projects on the federal lands within the county and supported by local Resource Advisory Committees (RACs; see " “Resource Advisory Committees (RACs)" ” for further information). The Title III payment is made to the county, and the funds are to be used for specified county projects, such as community wildfire preparedness planning and to reimburse county expenditures for emergency services related to the federal lands.³⁷

36 The authority to initiate projects under Title II or Title III expires on September 30, 20222025; project funds not obligated by September 30, 20232026, are to be returned to the Treasury.37 Table 3. Secure Rural Schools (SRS) Title Allocations SRS Payment Use of Funds Allocation Requirements Title I Same as specified in the revenue-based, are to be returned to the Treasury.³⁸ The authority for RACs to initiate projects and to obligate Title II funds had expired at the end of FY2013 and FY2014, respectively, but has been reauthorized and extended in each of the three previous SRS reauthorizations.

, §601). In the original SRS authorization, counties with minor distributions (less than $100,000 in annual payments) could allocate 100% of the payment to Title I purposes. Counties receiving more than $100,000 in annual payments, however, could allocate only 80%-85% of their payment to Title I. The remaining 15%-20% of the payment could be allocated to Title II or Title III purposes, or the funds could be returned to the Treasury.

The allocation requirements were changed, however, in the FY2008 reauthorization.³⁹38 Starting in FY2008, counties with modest distributions (annual payments between $100,000 and $350,000) could continue to allocate any portion of the remaining 15%-20% to Title II or Title III, as previously authorized. Counties with distributions above $350,000 were limited to allocating up to 7% of the payment to Title III. (Counties with minor distributions could continue to allocate 100% of the payment to Title I.)

The legislative text was also changed in the FY2017 reauthorization by defining counties with major distributions (payments more than $350,000 annually), but this did not result in any substantive changes to the allocation system.⁴⁰ In the previous three reauthorizations, however, Congress has continued the payment allocations the counties made for the FY2013 payment. This means that counties have had the same payment allocations since that time and have not had the option to make any changes.

39 The authority to make changes to a county’s payment allocations was frozen from FY2013 through the FY2020 payment similarly to how the payment election decisions were frozen. The FY2021 reauthorization ended the freeze on payment allocations.40 38 P.L. 110-343, §601. 39 P.L. 115-161, Division O, §401(a)(3)(C). 40 Initially, the reauthorization enacted in IIJA would have set the payment allocations for the FY2021 payment at the default allocation (80% to Title I; 20% to Title II). Similar to the issue with payment elections, this was a function of (continued...) Congressional Research Service 13 Secure Rural Schools and Community Self-Determination Act: Background and Issues Resource Advisory Committees (RACs) Resource Advisory Committees (RACs)

SRS authorized both FS and BLM to establish RACs to improve collaborative relationships and to provide recommendations for Title II projects.⁴¹41 Both agencies had established advisory committees for various purposes prior to the enactment of SRS. For instance, BLM'’s preexisting advisory councils in Oregon are charged with administering the duties of the RACs as established by SRS.⁴²42 RACs also must operate in accordance with the provisions of the Federal Advisory Committee Act.⁴³43 Pursuant to SRS, each unit of eligible federal land has access to a RAC, although the Secretary concerned may combine RACs as needed. For example, a single RAC may cover multiple national forests, or a single RAC may cover part of a national forest while other RACs cover the rest.⁴⁴

44 RACs generally must consist of 15 members appointed by the respective Secretary and representing a broad and balanced range of specified community interests (i.e., 5 members each from user interests, environmental interests, and the general public). A majority of the members must be present for a meeting to achieve a quorum, and a majority of the members representing each community interest must agree for a project to be approved and for project funds to be obligated.

Because many of the RACs have been unable to meet the membership or project agreement requirements, they have been unable to approve projects. In some cases, the funds were returned to the Treasury because they were not obligated before the authority to obligate funds expired or was reauthorized. For example, over $9 million of Title II funds were returned to the Treasury at the end of FY2014.⁴⁵ However, the45 To address this issue, Congress has enacted several changes to the RAC membership requirements. The Agriculture Improvement Act of 2018 (the 2018 farm bill) authorized the Secretary concerned to reduce the membership requirement to nine members if there are not enough qualified candidates.⁴⁶ In addition, the46 The 2018 farm bill also established a pilot program in Montana and Arizona to allow the Secretary concerned to name a designee to appoint RAC members through FY2023 (rather than requiring the Secretary to make the appointment).⁴⁷

Payment Data and Analysis⁴⁸

Table 4 and Table 5 appointments).47 The FY2021 reauthorization renamed the farm bill pilot as the Regional Pilot Program (RPP) and established a separate National Pilot Program (NPP) available for all other states (other than Montana and Arizona) through FY2023.48 The NPP allows the FS Chief or BLM Director to nominate RAC members, with automatic approval after 30 days if the applicable Secretary does not act on the nomination. the timing of IIJA’s enactment relative to a statutory deadline for transmitting payment allocations. P.L. 117-102, however, allowed for counties to make payment elections for FY2021. 41 16 U.S.C. §7125(a)(2). 42 43 U.S.C. §1739. For more information on BLM’s Resource Advisory Councils (RACs), see https://www.blm.gov/get-involved/resource-advisory-council. 43 5 U.S.C., App. 2. For more information, see CRS Report R44253, Federal Advisory Committees: An Introduction and Overview. 44 For more information on FS RACs, see https://www.fs.usda.gov/main/pts/specialprojects/racs. 45 U.S. Department of Agriculture Office of Inspector General, Forest Service Secure Rural Schools Program, Audit Report 08601-006-41, August 2017. Hereinafter referred to as USDA OIG 2017. 46 P.L. 115-334, Title VIII, §8702. 47 P.L. 115-334, Title VIII, §8702. 48 P.L. 117-58, Division D, §41202. Congressional Research Service 14 link to page 19 link to page 20 link to page 20 link to page 20 link to page 20 link to page 20 Secure Rural Schools and Community Self-Determination Act: Background and Issues Payment Data and Analysis49 In any given year, a combination of different FS and BLM payments may be authorized and made. Some of these payments are made entirely to counties (e.g., the FS 25 Percent Payments), whereas the agencies retain a portion of the SRS payment. Because the agency, type of payment, and payment recipient vary by year, it may sometimes be unclear which data are being reported. This is particularly an issue for the FS payment because even when SRS payments are authorized, some counties may still receive a 25 Percent Payment. This is less of an issue for the BLM payment, however, because all 18 eligible counties have elected to receive the SRS payment. Table 4 and Table 5 provide data on FS and BLM payments, respectively, since the first SRS payments were made in FY2001. Payments made to counties under SRS are substantial and significantly greater than the revenue-sharingbased payments. For example, in FY2000, counties received an FS payment of $193.4 million (all figures in the text are in nominal dollars unless otherwise specified).⁴⁹50 In FY2001, the first year SRS payments were made, counties received an FS payment of $361.8 million.⁵⁰51 For the initial six years SRS was authorized, the counties received $359.1 million annually on average for FS SRS Title I and III payments. That was more than 55% above what the counties received annually on average for the six years prior to the enactment of SRS ($231.4 million).⁵¹52 Over the life of the program, the FS SRS Title I and III payments have averaged $325.9303.6 million annually, and the BLM SRS Title I and III payments have averaged $7263.7 million per year ($398.5 million combined, FS and BLM).⁵²

Figure 3 shows FS payments compared tomil ion. Congressional Research Service 17 link to page 22 Secure Rural Schools and Community Self-Determination Act: Background and Issues Initially, SRS payments were higher than estimates of what the payments would have been had SRS not been enacted. To illustrate, FS receipts (for revenue-sharingbased purposes) in FY2001 totaled $271.3 million.⁵³53 Without SRS or the safety-net payments, the FS 25 Percent payment would have been around $67.8 million for that year. With SRS, the FS payment in FY2001 totaled $361.8 million.⁵⁴54 Similarly, BLM receipts from the O&C lands totaled approximately $16.4 million in FY2001.⁵⁵55 Without SRS or the safety-net payments, the 50% revenue-sharingbased payment would have been approximately $8.2 million in FY2001, compared towith the $102.0 million payment under SRS (Title I and Title III). SRS (Title I and Title III).⁵⁶

Figure 3. Forest Service (FS) Payments and Estimated Payments

Sources: CRS. FS total payments are from the annual FS report, All Service Receipts: Final Payment Summary Report PNF (ASR-10-01), available at http://www.fs.usda.gov/main/pts/securepayments/projectedpayments. The estimated FS payments if Secure Rural Schools (SRS) had not been enacted for FY2008 through FY2018 are from FS spreadsheets available at the same web page. The estimated FS payments for years FY2001-FY2007 are from an unpublished spreadsheet received from FS on November 30, 2011. Notes: Total FS Payment reflects the payments authorized to be made to eligible counties for that year. Prior to FY1993, this includes the FS revenue-sharing payments. From FY1993 through FY2000, this also includes the FS safety-net payments made to certain counties in California, Oregon, and Washington. Starting in FY2001, this includes the FS revenue-sharing payment plus the SRS Title I and Title III payments, except in FY2016, when SRS payments were not authorized. Data adjusted to constant (FY2019) dollars using the annual consumer price index for all urban consumers reported by the U.S. Department of Labor, Bureau of Labor Statistics, available at https://www.bls.gov/data/. The x-axis is the Receipt Year, which reflects the fiscal year in which the payment was based, not the year the payments were made. The payments were made in the following fiscal year (e.g., the FY2018 payment was disbursed in FY2019).

Under the original payment formula, the first SRS Title I and Title III payments were $448.2 million (FS and BLM combined) for FY2001 and increased to $493.5 million for FY2007 (see Figure 4).⁵⁷3). The SRS Title I and Title III payments increased and peaked for FY2008 ($562.8 million) when the payment formula was modified.⁵⁸ The SRS payments declined steeply over the next few years in part based on the annual 10% decline in the full funding level, but also because certain states were no longer receiving the higher transition payments. The annual decline was changed to 5% starting in FY2012. With the exception of FY2016, when SRS payments were not authorized, the payments have continued to decline by 5% annually.

Figure 43. FS and BLM Payments, FY2001-FY2019

FY2022 Source: Forest Service (FS) payment data are from the annual FS report, All Service Receipts: Final Payment Summary Report PNF (ASR-10-01), available at httphttps://www.fs.usda.gov/main/pts/securepayments/projectedpaymentsworking-with-us/secure-rural-schools/payments. Bureau of Land Management (BLM) payment data are from the Secure Rural Schools (SRS) Official Payment reports and the Timber Receipt payment reports, available at https://www.blm.gov/programs/natural-resources/forests-and-woodlands/oc-lands. . 53 Data provided by the Forest Service Legislative Affairs Office, February 21, 2013. 54 This figure reflects an SRS Title I and III payment of $346.2 million plus $15.6 million revenue-based payment. Including the SRS Title II payment ($24.9 million, retained by the agency), the FS SRS total payment in FY2001 was $371.1 million and the FS total payment was $386.7 million. 55 Historical data on O&C receipts and payments from BLM Legislative Affairs office, 2011. Congressional Research Service 18 link to page 12 link to page 19 link to page 20 link to page 32 Secure Rural Schools and Community Self-Determination Act: Background and Issues Notes: SRS payments were not authorized for FY2016, so the payments made that year were the revenue-sharingbased payments. That is the only year reflected on this graph in which the BLM payment was based on revenue-sharingbased payments. The bars reflect nominal data. The gray line reflects total FS and BLM payments adjusted to constant (estimated FY2023) dol ars using the GDP Chained Price Index from the White House Office of Management and Budget, Table 10.1, “Gross Domestic Product and Deflators Used in the Historical Tables” in Historical Tablesconstant (FY2019) dollars using the annual consumer price index for all urban consumers reported by the U.S. Department of Labor, Bureau of Labor Statistics, available at https://www.bls.gov/data/. FY2016 was the only year that BLM issued revenue-sharing payments. The x-axis is the Receipt Year, which reflects the fiscal year in which the payment was based, although payments were made in the followingfol owing fiscal year (e.g., the FY2018 payment was disbursed in FY2019).

Some years reflect sequestration. Because SRS payments were not authorized for FY2016, the counties received a revenue-sharing based payment of $84.9 million ($64.4 million for FS; $20.5 million for BLM).⁵⁹56 Had SRS been authorized, the SRS payment would have been $254.7 million (95% of the FY2015 payment). When SRS payments were reauthorized for FY2017, the full funding amount was set at 95% of the FY2015 payment amount.

FY2017 and FY2018 Payments⁶⁰

FY2019 and FY2020 Payments57 SRS payments were reauthorized for FY2017 and FY2018 in the Stephen Sepp Wildfire Suppression Funding and Forest Management Activities Act, enacted as Division O of theFY2019 and FY2020 in the Further Consolidated Appropriations Act, 2018 (P.L. 115-141, commonly referred to as the FY2018 omnibus).⁶¹ The reauthorization was signed into law on March 23, 2018, after the FS and BLM had distributed the FY2017 revenue-sharing payments to the states and counties.

FY2019 and FY2020 Payments

Unlike the previous two reauthorizations, this reauthorization was enacted before the revenue-sharing payments had been disbursed. For FY2019, the SRS total payment for FS and BLM combined was $254.3FY2020 (P.L. 116-94, Division H, Title III). The reauthorization also extended the deadlines for the authority to initiate projects under Title II or Title III but did not include any other changes to the program or the payments.58 Those counties that opted to receive an SRS payment for FY2013 automatically received the FY2019 payment, and the payment was allocated among the titles based on the allocations made by each county in FY2013. Unlike earlier reauthorizations, this reauthorization was enacted before the revenue-based payments had been disbursed. For FY2019, the SRS total payment for FS and BLM combined was $254.3 million and the combined SRS payment made to counties (Title I and Title III) was $228.7 million. The FS SRS total payment was $225.8 million for FY2019 and the FS SRS payment made to counties (Title I and Title III) was $202.6 million. The BLM SRS total payment was $28.4 million for FY2019, and the BLM SRS payment made to counties (Title I and Title III) was $26.0 million. See also Table 2, Table 4, and Table 5. For FY2020, the SRS total payment for FS and BLM combined was $241.5 million and the combined SRS payment made to counties (Title I and Title III) was $217.2 million. The FS SRS total payment was $214.7 million for FY2020, and the FS SRS payment made to counties (Title I and Title III) was $192.6 million. The BLM SRS total payment was $26.8 million for FY2020, and the BLM SRS payment made to counties (Title I and Title III) was $25.6 million. FY2021-FY2023 Payments SRS payments were reauthorized for FY2021, FY2022, and FY2023 in the Infrastructure Investment and Jobs Act (IIJA; P.L. 117-58, Division D, Title XII). The reauthorization set the payment level (full funding amount) as equal to the payment made in FY2017, removing the annual decline in payment levels. The payments received by counties for FY2021-FY2023 will not necessarily equal the payment that county received in FY2017. This is because the payment formula is based on the total number of counties that receive an SRS payment, meaning each 56 The revenue-based payment initially disbursed by BLM was $19.1 million, because BLM withheld 6.9% of the payment pursuant to the sequestration order for FY2016 nonexempt, nondefense mandatory spending. BLM later reversed this decision, and issued a payment of $1.4 million in FY2018 to account for the difference. Although the payment was not made until FY2018, the $1.4 million is included in the FY2016 payment in this report for consistency. 57 For information on payments from earlier authorizations, see Appendix A. 58 16 U.S.C. §7128, §7144. Congressional Research Service 19 link to page 12 link to page 19 link to page 20 link to page 35 Secure Rural Schools and Community Self-Determination Act: Background and Issues county’s payment may vary based on the number of participating counties, but also because counties may alter their payment allocations, and subsequently, the amount they receive. IIJA, and subsequent legislation enacted by the 117th Congress, ended the freeze on payment elections and allocations and modified RAC membership requirements.59 For FY2021, the SRS total payment for FS and BLM combined was $281.7 million and the combined SRS payment made to counties (Title I and Title III) was $228.7 million.⁶⁸253.3 million. The FS SRS total payment was $225.8250.7 million for FY2019FY2021 and the FS SRS payment made to counties (Title I and Title III) was $202.6 million.⁶⁹224.9 million. The BLM SRS total payment was $28.431.0 million for FY2019, FY2021, and the BLM SRS payment made to counties (Title I and Title III) was $26.0 million.⁷⁰

Sequestration

As nonexempt, nondefense mandatory spending, the revenue-sharing28.4 million. See also Table 2, Table 4, and Table 5. For FY2022, the SRS total payment for FS and BLM combined was $267.0 million and the combined SRS payment made to counties (Title I and Title III) was $241.1 million. The FS SRS total payment was $239.0 million and the FS SRS payment made to counties (Title I and Title III) was $215.5 million. The BLM SRS total payment was $27.9 million and the BLM SRS payment made to counties (Title I and Title III) was $25.6 million. The difference in payments between FY2021 and FY2022 is due to sequestration, as discussed below. Sequestration As nonexempt, nondefense mandatory spending, the revenue-based payments and the SRS payments may be subject to an annual sequestration of budgetary authority through FY2029 pursuant to the Budget Control Act of 2011.⁷¹60 The extent that the payments are subject to sequestration has been controversial, starting with the sequestration order issued for FY2013.⁷²

61 Generally, whether the revenue-sharingbased payments and the SRS payments were subject to annual sequestration depended on the timing of the enactment of the SRS reauthorization in relation to the calculation and publication of the sequestration order for the applicable year.⁷³62 Because the FY2014-FY2015 and FY2017-FY2018 reauthorizations were enacted after the sequestration orders were issued for those years, both FS and BLM—eventually—interpreted that the payments were not subject to sequestration for those fiscal years. At different times during those years, , however, both FS and BLM have withheld funds for sequestration during those years and haveand later reversed their decisions and remitted the funds. For example, FS initially withheld 6.2% of the FY2018 SRS payment for sequestration and then reversed the decision and issued those funds later in the year. Similarly, BLM initially interpreted the revenue-sharingbased payment for FY2016 as being subject to sequestration but later reversed the decision and issued a "“pop-up"” payment to cover the difference a couple of years later. It is unclear how sequestration will be treated for the FY2019 and FY2020 payments.

59 Although IIJA ended the freeze on payment elections and allocation decisions, the law was enacted after the due dates established in statute, meaning the authority to implement those changes would have been delayed. P.L. 117-102, however, allowed for counties to make payment election and allocation decisions for FY2021. 60 P.L. 112-25. For more information, see CRS Report R42972, Sequestration as a Budget Enforcement Process: Frequently Asked Questions or CRS Report R45941, The Annual Sequester of Mandatory Spending through FY2029. 61 For more information on the FY2013 sequestration issues, see Appendix B. 62 The sequestration reports are available from https://www.whitehouse.gov/omb/legislative/sequestration-reports-orders/. Congressional Research Service 20 Secure Rural Schools and Community Self-Determination Act: Background and Issues The FY2021 payments were not subject to sequestration, but the FY2022 payments were subject to sequestration (5.7%).63 Legislative Issues Legislative Issues

Congress may consider severala range of options to address the expiration of the SRS payments at the end of FY2020. These include reauthorizing SRS, with or without modifications, implementing other legislative proposals to address FS or BLM payments, or taking no action (thus continuing the revenue-based system that took effect upon the program'’s expiration). Several issues have been raised about payment programs generally and SRS specifically, including the

• payment formula,
• lands covered,
• • payment formula, • lands covered, • geographic distribution of the payments,
• • source of funds,
• • authorized and required uses of the payments,
• • lack of implementing regulations, and
• • duration of the payments. duration of the payments.

In addition, Congress may be interested in the potential impact of the COVID-19 pandemic on SRS and the revenue-sharing payments. Each of these issues is discussed in the following sections.

If Congress were to reauthorize SRS, modify it, or both (or the FS and BLM payment programs generally), there would be a range of potential fiscal impacts. If the legislative option were to include any new mandatory spending, then it could be subject to congressional pay-as-you-go (PAYGO) or other budgetary rules. If the new mandatory spending were to result in an increase in the deficit (in excess of the baseline), these rules would require budgetary offsets through increasing revenue or decreasing other spending.⁷⁴64 Alternatively, Congress may choose to waive or set aside these rules. Congress has at times provided such a waiver by including a specific type of provision, called a reserve fund, for SRS in the annual budget resolution. Several SRS reauthorizations, however, have been included in large legislative packages and as such have been offset by unrelated programs. Further, Congress might consider funding the program through the regular annual discretionary appropriations process (the program was funded through discretionary appropriations once, for FY2007). This would provide less certainty of funding from year to year, as funding for the program would compete with other congressional priorities within overall budget constraints.

In general, any legislative option that results in a higher authorized payment (whether through SRS or another payment program) would either require a larger offset or would increase the federal deficit. Depending on the specific changes, however, many or most of the counties would receive higher payments. Modifications that result in a lower authorized payment would have the opposite potential fiscal impact to the Treasury but would also likely result in lower payments to the counties.

63 FS, SRS Sequestration in Previous Years, https://www.fs.usda.gov/sites/default/files/sequestration-chart-2019-2023.pdf. 64 For an overview of federal budget procedures, see CRS Report 98-721, Introduction to the Federal Budget Process, or CRS Report R45789, Long-Term Budgeting within the Congressional Budget Process: In Brief. Congressional Research Service 21 link to page 27 link to page 28 Secure Rural Schools and Community Self-Determination Act: Background and Issues Payment Formula Payment Formula

The original SRS formula was based entirely on the revenue generated historically by the eligible lands. The total authorized payment was the sum of the payments calculated for each participating county and fluctuated annually based on participation. Congress amended the formula to also take into account each county'’s share of federal land and relative income level and established an annually declining payment level. Though the payment level declines by 5% annually,. For several years, the formula declined annually; this was changed starting with the FY2021 payment. The payment level is set at a constant rate, though the formula does not include any adjustment for inflation.

Congress may consider modifying the SRS payment formula in a variety of ways. These include relatively minor changes, such as by adjusting thechanges such as reapplying an annual decline so that the payments continue to decrease annually but at a different rate, or so that payments increase annually, or so that payments are set at a constant rate. Another modification could be adding an inflation adjustment to the formula. Alternatively, Congress may consider more comprehensive modifications, such as using a different historical revenue range, or adjusting the formula by other factors (e.g., population). In addition, some have proposed combining SRS, PILT, and other revenue-sharingbased payment programs.⁷⁵

65 Lands Covered

SRS provides payments to the counties containing national forests (managed by the FS) and the O&C lands (managed by BLM). Federal lands managed by other agencies, as well as other lands managed by FS or BLM, were not included in SRS. For example, national forests and national grasslands are both part of the National Forest System managed by the FS, although the laws authorizing their establishment differ. Both are subject to a revenue-sharingbased requirement with the counties containing those lands—although the counties containing national grasslands receive 25% of net receipts—and were excluded from SRS. The counties containing national forests receive 25% of gross receipts averaged over the previous seven years and were included in SRS. It is unclear why the national grassland payments were not included in SRS; it is also unclear why the national grasslands payments are based on net receipts, and the national forests payments are based on gross receipts.

Counties containing other types of federal lands may receive little or no compensation. PILT provides compensation to counties containing a broad array of federal lands, but many lands—inactive military bases, Indian trust lands, and certain wildlife refuge lands, for example—are excluded from PILT. The counties containing the national forests and O&C lands, however, get PILT payments in addition to the SRS or revenue-sharingbased payments. Congress could consider several options related to extending a compensation program to all tax-exempt federal lands and trust lands, although determining the basis of compensation likely would generate significant debate.⁷⁶

66 Geographic Distribution of SRS and PILT Payments

Another issue for Congress is the geographic allocation of federal land payment programs generally, and specifically the distribution of the SRS and PILT payments (seesee Figure 5)4). Table 6 65 Mark Haggerty, “Rethinking the Fiscal Relationship Between Public Lands and Public Land Counties: County Payments 4.0,” Humboldt Journal of Social Relations, vol. 1, no. 40 (2018), pp. 116-136. 66 For more discussion, see CRS Report R42439, Compensating State and Local Governments for the Tax-Exempt Status of Federal Lands: What Is Fair and Consistent?. Congressional Research Service 22 link to page 28 Secure Rural Schools and Community Self-Determination Act: Background and Issues . Table 6 shows the payments that each state received in FY2019.⁷⁷FY2022.67 The BLM SRS payment is made to one state—Oregon—for the O&C lands, and Oregon received the largest FS SRS payment. In total, Oregon received one-fifthnearly 30% of the total SRS payments made in FY2019FY2022. The next-largest SRS payments were in California and Idaho, which both received 1211% and 109% of the SRS payment that year, respectively. PILT payments are more evenly distributed, with no state receiving more than 10% of the total payments.

California receiving the largest share (11%) in FY2022. Oregon received the highest combined SRS and PILT payment in FY2022 (12%), followed by California (11%) and Idaho (7%). The preponderance of payments going to western states is in large part reflective of the large percentage of federal lands located within those states.⁷⁸

68 Figure 54. PILT, BLM, and FS Payments Made in FY2019 FY2022 (sum total of all payments shown on the map)

per state) Source: Prepared by CRS from data reported in Table 6. Notes: The data reflect payments made in FY2019FY2022. This includes the FY2019FY2022 Payments in Lieu of Taxes (PILT) payment, and the FY2018FY2021 Bureau of Land Management (BLM) and Forest Service (FS) payments made in FY2019. FY2022. The FS payments include the revenue-sharingbased payment and FS SRS Title I and Title III payments. The BLM payment consists of the SRS Title I and Title III payments ($32.6 million), which were, which are paid to the Oregon and California (O&C) counties in Oregon only. 67 This includes the FY2021 SRS payment and the FY2022 PILT payment. 68 For more information on the federal estate, see CRS Report R42346, Federal Land Ownership: Overview and Data. Congressional Research Service 23 link to page 28 Secure Rural Schools and Community Self-Determination Act: Background and Issues Oregon only.

Congressional Research Service 24 link to page 29 Secure Rural Schools and Community Self-Determination Act: Background and Issues Source of Funds Source of Funds

As noted above, the FS 25 Percent Payments and BLM'’s O&C payments are permanently appropriated mandatory spending, with the funds coming from eligible agency receipts. Congress specified that the SRS payments are to first come from discretionary appropriations, then agency receipts, and if agency receipts are not sufficient to cover the entire payment, the remainder of the payment comes from the General Fund of the Treasury.⁷⁹69 Congress has funded SRS through discretionary appropriations only one time (FY2007).⁸⁰70 Agency receipts have never been sufficient to cover the entire SRS payment, so a portion has been derived from the Treasury every year SRS payments have been authorized (seesee Figure 6).5).71 The amount of funding that comescame from the Treasury has declined, however, in part duedeclined for several years, corresponding to the declining full fundingpayment level but also due to fluctuations in the level offset by receipts.

Critics of SRS are concerned about the continued availability of Treasury funds, given the desire of some Members to reduce government spending or spend money on other priorities. On the other hand, proponents of SRS argue that continuing Treasury funding is fair compensation for the presence of the national forests or O&C lands in their jurisdictions.

Figure 65. Source and Distribution of Forest Service (FS) Payments (FY2009-FY2015)

Sources (FY2009-FY2021) Sources: CRS. Compiled from data provided to CRS by FS legislative affairs and from FS,  FY2010-FY2016 FY2024 Budget Justifications, available at  http://www.fs.fed.us/aboutus/budget/. Notes: Due to reporting changes, more recent data are not available. budget/. Notes: Figures reflect the proportion of the payment that is derived from either receipts or the Treasury. The x-axis is the Payment Year, which reflects fiscal year in which the payment was made, although the payment is based on and named for the previous year (e.g., the FY2009 data reflect the FY2008 payment that was made in FY2009). Because SRS payments were not authorized for FY2016, the only payment made that year was the 25% payment derived from receipts. The figures do not directly correspond to other FS reports on their payments, 69 16 U.S.C. §7112(b)(3). 70 P.L. 110-28, §5401. 71 For more information, see the “Revenue, Receipts, and Transfers” table provided in the FS’s annual budget justifications, for example, on p. 30a-15 of the FY2024 Budget Justification. Congressional Research Service 25 Secure Rural Schools and Community Self-Determination Act: Background and Issues FY2009). The figures do not directly correspond to other FS reports on their payments, and CRS was unable to reconcile the differences. For example, the FS budget justification reported that the FS total payment made in FY2009 iswas $527.6 millionmil ion (reflected above), $2.1 millionmil ion less than the $529.7 million mil ion total payment reported in FS reports on Secure Rural School (SRS) payments (e.g., the All Service Receipts reports (ASR-10-01, ASR-18-03), which are the source for the SRS data throughout this report). The discrepancies range from less than $1 millionmil ion to up to $20 millionmil ion. Thus, precise figures are not provided, and the bars should be considered an illustrativeil ustrative, but not definitive, breakdown of payment sources.

Authorized and Required Uses of the Payments

Under the revenue-sharingbased programs, the O&C payments are available for any local governmental purpose; the CBWR payments are available for schools, roads, highways, and bridges; and the FS payments are to be used for the benefit of roads and schools. Compared to the revenue-sharing based programs, SRS modified how the counties could use the payments by requiring (for counties with at least $100,000 in annual payments) that 15%-20% of the payments be used for other specified purposes: certain local governmental costs (Title III) or federal land projects (Title II). Although Congress has enacted modifications to the required allocations, counties have not had the opportunity to change their SRS payment allocations since FY2013.

Some have supported the use of the Title II funds as "reinvesting"“reinvesting” agency receipts in federal land management, but opponents argue that this reduces funding for local schools and roads or other governmental purposes. Further, some of those funds have been forfeited back to the Treasury due to issues with the RAC membership requirements. These Title II projects were also intended to provide local employment opportunities, and it's is not clear ifwhether that objective has been evaluated.⁸¹

achieved.72 The authorized uses for Title III funds have changed several times since SRS was first authorized, potentially causing confusion on what is an appropriate use for those funds. Counties are supposed to certify their Title III expenditures annually, and the agencies are supposed to review the certifications for compliance. A 2012 report from the Government Accountability Office (GAO), however, found inconsistent compliance with those requirements, resulting in issues with agency oversight and county use of SRS Title III funds.⁸²

73 The U.S. Department of Agriculture Office of Inspector General (OIG) also examined and reported issues with the distribution and use of Title II and Title III funds.⁸³74 To address these issues, both GAO and OIG have recommended FS and BLM issue regulations implementing the program, as directed by the original authorization enacted in 2000.⁸⁴75 Neither FS nor BLM have done so, with FS citing the sporadicimpermanent nature of the program and subsequent reauthorizations as prohibiting its commitment of resources.⁸⁵

76 Reauthorization and Duration of the Programs

Other policy questions that arise from the SRS payments are related to the reauthorization and duration of the program. SRS was originally enacted as a six6-year program that expired on September 30, 2006, but was extended an additional 1316 years through seven8 separate reauthorizations. As noted earlier, SRS payments are set to expire on September 30, 20202023, with the final payment made in FY2024made in FY2021. The last four reauthorizations have been for one or two years, and counties have not had the opportunity to elect between the SRS or the revenue-sharing payments since FY2013. In contrast, the 25 Percent, O&C, and CBWR payment programs are permanently authorized. 72 Forest Counties Payments Committee Report, 2003. 73 GAO, Payments to Counties: More Clarity Could Help Ensure County Expenditures Are Consistent with Key Parts of the Secure Rural Schools Act, GAO-12-775, July 2012, at https://www.gao.gov/products/GAO-12-775. 74 USDA OIG 2017. 75 16 U.S.C. §7151. 76 USDA OIG 2017, pp. 4-7. Congressional Research Service 26 Secure Rural Schools and Community Self-Determination Act: Background and Issues The uncertainty about the continuation of the SRS program, and the annual changes in the authorized funding level, may concern those interested in providing a consistent and predictable payment for local governments. On the other hand, the opportunity to revisit the SRS reauthorization at more frequent intervals may be of interest to those wanting to review federal spending more broadly, among other potential reasons. Congressional Research Service 27 Secure Rural Schools and Community Self-Determination Act: Background and Issues Appendix A. SRS Reauthorizations Through FY2017 The following sections briefly describe each SRS reauthorization through FY2018. SRS payments were not authorized for FY2016, though payments were reauthorized in FY2017. permanently authorized.

COVID-19

Appendix A. Historical Proposals to Change the Revenue-Sharing System

Appendix B. SRS Reauthorizations Through FY2015

FY2007 Reauthorization

FY2007 Reauthorization SRS expired at the end of FY2006, with final payments made in FY2007. Legislation to extend the program was considered in the 110^th110th Congress; various bills would have extended the program for one or seven years. An initial version of an emergency supplemental appropriations bill for FY2007 would have extended SRS for one year, but the bill was vetoed by President George W. Bush.⁸⁸77 Congress then passed and the President signed a new version of the emergency supplemental appropriations act for FY2007, which included a one-year extension of SRS payments.⁸⁹78 The extension authorized payments of $100 million from receipts and $425 million from discretionary appropriations to "“be made, to the maximum extent practicable, in the same amounts, for the same purposes, and in the same manner as were made to States and counties in 2006 under that Act."⁹⁰”79 Thus, preliminary FY2007 payments were made at the end of September 2007, with final payments made at the end of December 2007. This is the only time SRS payments have been made using discretionary appropriations.

Four-Year Extension Through FY2011

In October 2008, Congress passed the Emergency Economic Stabilization Act (P.L. 110-343), which extended SRS payments for four years (through FY2011) and made several changes to the program.⁹¹80 Changes included providing full funding that declined over four years; altering the basis for calculating payments; providing transition payments for certain states; and modifying the use of SRS funds for Title II and Title III activities.⁹²81 In addition, Section 601(b) modified the original FS 25 Percent Payment program by basing the payment on the average revenue generated over the preceding seven years.

One-Year Extension Through FY2012

SRS was set to expire at the end of FY2011, with final payments made at the end of December 2012 (FY2012). Legislation to extend the program for five years was considered in the 112^th 112th Congress but not enacted.⁹³82 However, the Moving Ahead for Progress in the 21^st21st Century Act (MAP-21) contained a one-year extension for SRS.⁹⁴83 MAP-21 authorized an FY2012 SRS 77 110th Congress, H.R. 1591, the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007. 78 P.L. 110-28, H.R. 2206, the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007. 79 P.L. 110-28, Title V, Chapter 4, Section 5401. 80 P.L. 110-343, Section 601(a). 81 The authorized uses for Title III funds include reimbursing the participating county for search, rescue, and emergency services performed on federal land and fire prevention and county planning activities, such as developing community wildfire protection plans or activities under the Firewise Communities program (16 U.S.C. §7142(a)). 82 The County Payments Reauthorization Act of 2011 (S. 1692 and H.R. 3599) would have extended SRS through FY2016 and included provisions to slow the decline of the full funding levels to 95% of the preceding fiscal year. Neither the Senate nor the House version was reported out of committee. 83 P.L. 112-141, §100101. Congressional Research Service 28 link to page 35 Secure Rural Schools and Community Self-Determination Act: Background and Issues MAP-21 authorized an FY2012 SRS payment set at 95% of the FY2011 level ($344 million) and included requirements for the counties to select their payment option in a timely manner.

One-Year Extension Through FY2013

SRS was again set to expire at the end of FY2012, with final payments made in February 2013 (FY2013). In the first session of the 113^th113th Congress, Congress enacted the Helium Stewardship Act of 2013, which included a one-year extension of SRS through FY2013 at 95% of the FY2012 SRS payment ($329 million).⁹⁵84 The payments were disbursed in early 2014.

The 113^th The 113th Congress also conducted oversight on the SRS program, particularly regarding the sequestration of the FY2012 SRS payment (see Appendix CB).85 ).⁹⁶

Two-Year Extension Through FY2015

SRS expired after the FY2013 payments were made in early 2014. Although the 113^th113th Congress considered options for reauthorizing or modifying SRS for FY2014,⁹⁷86 the program was not reauthorized prior to adjournment.

In April 2015, Congress passed and the President signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (P.L. 114-10), which included a two-year reauthorization of mandatory spending for SRS payments in Section 524. Payment amounts were to continue at 95% of the funding level for the preceding fiscal year. P.L. 114-10 provided that counties that elected to receive an SRS payment for FY2013 would automatically receive SRS payments for FY2014 and FY2015. The FY2014 payment was to be made within 45 days of enactment and take into account the revenue-sharingbased payment already disbursed to the counties.

After the FY2015 payments were made, the 114^th114th Congress considered, but did not enact, several additional options to extend or modify the expired SRS program, so no payments were made for FY2016. Two-Year Extension Through FY2018 SRS payments were reauthorized for FY2017 and FY2018 in the Stephen Sepp Wildfire Suppression Funding and Forest Management Activities Act, enacted as Division O of the Consolidated Appropriations Act, 2018 (P.L. 115-141, commonly referred to as the FY2018 84 P.L. 113-40. 85 House Natural Resources Committee, press release, November 5, 2013, at http://naturalresources.house.gov/news/documentsingle.aspx?DocumentID=360388http://naturalresources.house.gov/news/documentsingle.aspx?DocumentID=360388. 86 The House passed the Restoring Healthy Forests for Healthy Communities Act (113th Congress, H.R. 1526), which would have directed FS and BLM to distribute a payment to eligible counties in February 2015, essentially an FY2014 SRS payment. The payment amount would have been equal to the FY2010 payment for the counties receiving FS payments. For the O&C counties, the payment amount would have been $27 million less than the FY2010 payment. After that payment had been made, county payments would have returned to a revenue-based system. The bill would have established Forest Resource Revenue Areas within at least half of the National Forest System and created a fiduciary responsibility to generate revenue by removing forest products for the beneficiary counties. The bill also would have changed the calculation for the FS revenue-based payment. It would have changed the payment from 25% of average gross receipts over the past seven years back to the original calculation of 25% of current-year gross receipts. The Senate did not take up the measure. Congressional Research Service 29 link to page 32 Secure Rural Schools and Community Self-Determination Act: Background and Issues omnibus).87 The reauthorization was signed into law on March 23, 2018, after the FS and BLM had distributed the FY2017 revenue-based payments to the states and counties. Because the revenue-based payment had already been distributed for the year, the reauthorization included provisions for a “make-up” FY2017 SRS payment.88 This make-up payment was set at 95% of the FY2015 SRS payment level, since there had been no payment for FY2016 on which to base or calculate the annual decline. The counties received a payment that was the difference between the revenue-based payment they already received and their authorized SRS payment. In effect, the counties received their FY2017 SRS payment in two installments. The FS SRS payment (Titles I and III) was $223.7 million for FY2017, and the payment was $213.2 million for FY2018. BLM does not officially include the $18.5 million revenue-based payment made prior to the reauthorization of the SRS payment for FY2017 as part of the total SRS payment for that year. Instead, BLM reports the FY2017 SRS total payment to be $14.0 million.89 This is a departure from how the FY2014 SRS payment was reported, which was also reauthorized after the revenue-based payment had been disbursed. For consistency in this report, the revenue-based payment was included in the Title I payment. Thus, the BLM SRS payment was $31.3 million for FY2017 and was $27.6 million for FY2018. Combined, the FS and BLM SRS payment was $255.0 million in FY2017 and $240.8 million in FY2018. 87 The Consolidated Appropriations Act, 2019 (P.L. 116-6), amended the FY2018 omnibus and renamed the title of Division O. 88 Similarly, SRS payments were reauthorized for FY2014 after the revenue-based payment had been distributed, and the reauthorization specified that the SRS payment would be offset by the amounts already received by the counties pursuant to the revenue-based payment. For more information, see Appendix A. 89 $11.9 million Title I, $1.2 million Title II, $0.92 million Title III. Congressional Research Service 30 Secure Rural Schools and Community Self-Determination Act: Background and Issues Appendix B. FY2013 Sequestration Issues Section 302 of the Budget Control Act (BCA)90 required the President to sequester, or cancel, budgetary resources for FY2013, if Congress did not enact a specified deficit reduction by January 15, 2012.91 Congress did not enact such deficit reduction by that date, and on March 1, 2013, the Office of Management and Budget (OMB) determined the amount of the total sequestration for FY2013 to be approximately $85 billion.92 Under the BCA, half of the total reduction for FY2013 was allocated to defense spending, and the other half to nondefense spending.93 Within each half, the reductions were further allocated between discretionary appropriations and direct spending.94 Discretionary appropriations are defined in the BCA as budgetary resources provided in annual appropriations acts.95 In contrast, direct spending was defined to include budget authority provided by laws other than appropriations acts.96 The BCA further required OMB to calculate a uniform percentage reduction to be applied to each program, project, or activity within the direct spending category.97 For the direct spending category, OMB determined this percentage to be 5.1% for FY2013. Section 102(d)(3)(e) of SRS directed that payments for a fiscal year were to be made to the state as soon as practicable after the end of that fiscal year, meaning that the FY2012 payment was made in FY2013.98 Because the authority to make these payments is not provided in an annual appropriations act, such payments are not discretionary spending for purposes of the BCA. These payments were classified as nondefense, direct spending for purposes of sequestration.99 The BCA exempts a number of programs from sequestration; however, the payments under SRS were not identified in the legislation as exempt.100 Consequently, these payments were subject to sequestration as nondefense, direct spending. However, BLM and FS managed the sequestration of the FY2013 payments in different ways. BLM Sequestration of SRS Funds BLM issues SRS payments only for the O&C lands in Oregon. In February 2013, BLM distributed $36 million to the 18 O&C counties in Oregon for FY2012 SRS payments. However, the Department of the Interior (DOI) had held back 10% of the scheduled payments across all three titles in anticipation of the possibility of sequestration. The reduction to DOI’s SRS program 90 P.L. 112-25, as amended by P.L. 112-240. 91 2 U.S.C. §901A. The sequester was originally supposed to be ordered on January 2, 2013, but was delayed by the American Taxpayer Relief Act of 2012, P.L. 112-240, until March 1, 2013. For more information on sequestration issues, see CRS Report R42972, Sequestration as a Budget Enforcement Process: Frequently Asked Questions, by Megan S. Lynch. 92 This amount was identified based on a formula set forth in Section 302 of the BCA. 93 2 U.S.C. §901A(4). 94 2 U.S.C. §901A(6). 95 2 U.S.C. §900(7). 96 2 U.S.C. §900(8). Budget authority is further defined as “the authority provided by Federal law to incur financial obligations.” 2 U.S.C. §622. 97 Although not relevant here, additional restrictions are placed on the degree by which Medicare payments in the direct spending category may be reduced. 2 U.S.C. §901a(8). 98 16 U.S.C. §7112(e). 99 2 U.S.C. §900(8). 100 2 U.S.C. §905. Congressional Research Service 31 Secure Rural Schools and Community Self-Determination Act: Background and Issues required by sequestration was 5.1% of the total payment, or $2.0 million.101 Since the sequestered amount was less than the amount withheld, DOI-BLM owed an additional SRS payment for the difference. In May 2013, BLM distributed the remaining 4.9% of the payment, resulting in a total of $38 million for the SRS payment to the O&C counties for FY2012.102 Forest Service Sequestration of SRS Funds The Forest Service distributed the full FY2012 SRS payments in January and February 2013, without withholding any amount in preparation for the potential sequester order. On March 19, 2013, the Forest Service announced it would seek to recover from the states the 5.1% of the payments that were subject to sequestration.103 In letters sent to each affected governor, the Forest Service outlined two repayment options and asked for the states to respond by April 19, 2013, with how they planned to repay. Invoices for repayment were not included. In addition to repaying the 5.1%, the FS offered the states the option of having the full sequestered amount taken out of Title II funds (for those states with enough Title II money). Three states—Alaska, Washington, and Wyoming—publicly indicated their intention not to repay the SRS funds.104 In an April 16, 2013, hearing before the Senate Committee on Energy and Natural Resources, the FS indicated that invoices for the repayment would be sent in late April 2013. On August 5, 2013, the Forest Service sent additional letters which included invoices for the repayment to the governors of the 18 states with insufficient Title II money to cover the sequestered amount.105 The invoices outlined three options for the affected states to take within 30 days: pay the debt in full; agree to a payment plan; or petition for administrative review of the debt. The invoices also included a Notice of Indebtedness to the U.S. Forest Service and Intent to Collect by Administrative Offset, which describes the basis of the indebtedness and the Forest Service’s intent to offset future payments—without assessing penalties—from future Forest Service and Department of Agriculture state payments. As of May 21, 2014, two states had remitted an SRS sequester-related payment—New Hampshire paid $27,884.17 and Maine paid $3,648—and no collection efforts have been initiated by the Forest Service or Department of the Treasury in the remaining 16 states.106 On August 20, 2013, the Forest Service sent additional letters to the governors of the 22 states that had sufficient Title II money to cover the sequestered amount.107 The letters informed the governors that the Title II allocations were reduced by the sequestered amount. 101FY2016.

Appendix C. FY2013 Sequestration Issues