Report reveals OMB confusion over whether to apply sequestration to county payments

E&E News
By Phil Taylor
January 14, 2014

The White House Office of Management and Budget initially didn't believe the across-the-board sequester cuts should apply to roughly $300 million in payments to timbered communities in 2013, but it later changed its mind and ordered the Forest Service to seek repayment of nearly $18 million from states, according to a report released today by the House Natural Resources Committee.

The report chronicles correspondence the committee received from OMB and the Agriculture Department regarding its decision to retroactively sequester about 5 percent of Secure Rural Schools funds, which for more than a decade have compensated counties for the decline in federal timber sales.

"It's taken many months and the issuance of subpoenas to extract some truth and transparency from the Obama Administration about its decision to demand states and rural communities return funds for schools and local law enforcement," Natural Resources Chairman Doc Hastings (R-Wash.) said in a statement today ahead of a hearing on the issue. "We can't forget that the impact of these actions falls on schoolchildren, teachers, police officers and small communities that the federal government has already failed by not keeping its promise of responsible timber harvests."

But committee Democrats complained that although they, too, disagreed with the Obama administration's decision to sequester SRS funds, there is no evidence of political wrongdoing, and the committee's time would be better spent discussing bipartisan ways to extend SRS and increase jobs in national forests.

"The point is, this wasn't some sort of plot; it was bureaucratic confusion," said Rep. Peter DeFazio (D-Ore.), the committee's ranking member. "It's nothing really to investigate here."

Moreover, although DeFazio disagreed with the administration's application of sequestration, he said much of the blame rests on Congress for ordering sequestration in August 2011.

"You create a bad law, the administration applies the bad law," he said.

All members and a USDA witness agreed that the disbursement of full SRS funds in January 2013, followed by the Forest Service's request that a portion be returned, harmed rural communities that depend on the funds to build roads, schools and other services.

But Robert Bonnie, USDA undersecretary for natural resources and environment, said the administration was simply following what it believed to be the law.

"We acknowledge implementation of sequestration for Secure Rural Schools program was very complex, as it was for several USDA programs," he said. "While we would rather Secure Rural Schools was not subject to sequestration in [fiscal] 2013, we have to follow the law."

While sequestration will not apply to fiscal 2014 SRS disbursements, some of those funds could be withheld to satisfy a remaining balance of $888,000 in unpaid fiscal 2013 sequestration bills, Bonnie said.

Bonnie said USDA ultimately concurred with OMB's decision that sequestration applied to the 2013 disbursement of SRS funds, even though they were authorized in 2012.

However, the committee's report found that one OMB official had "misgivings" about the Forest Service's decision to disburse the full SRS payment while sequestration was pending.