27 



No good can come of poor communication. Issues must be ad- 

 dressed and readdressed in order to reach compromises to suit all 

 citizens involved. Affirmative actions must start in order to insure 

 the future of small businesses that help keep the social economic 

 environment stable and the forest ecosystem healthy, thereby 

 making the Black Hills National Forest a well-managed forest for 

 future generations. 



Thank you. 



[The prepared statement of Mr. Meredith follows:] 



Prepared Statement of David Meredith 



My name is David Meredith. I am the president of McLaughUn Sawmill Company 

 of Spearfish, SD. We are considered a small business entity. McLaughlin Sawmill 

 currently employs 30 people directly, and spends $850,000 on the service and supply 

 industry annually. In addition, we contract with 15 loggers who also spend a consid- 

 erable amount supporting the service and supply industry in the area. Our sawmill 

 uses approximately 4 percent of the Annual Cut on USFS land from past years. The 

 sawmill has been in operation for 35 years. 



Currently at risk in the Black Hills are 25 forest products companies involving 

 nearly 1,700 employees and contractors. Most of these companies are small business- 

 es. In 1991, the wages and payments from these companies was over $65,000,000 and 

 the total value of wood products was over 105,000,000. But the key statistic is that 

 the Black Hills forest product industry depends on the Black Hills National Forest 

 for two-thirds of their timber supplies. Therefore, any decrease in availability from 

 the National Forest severely affects the industry. 



The pressures preservationists are placing on public land are not only impacting 

 businesses directly involved on public lands, but also those businesses which support 

 sawmills, ranchers, miners, and recreationists. 



Within the past 6 months, the Black Hills National Forest's timber program's al- 

 lowable cut has gone from 118 MBF to 85 MBF (Refer to Figure 1) as a result of a 

 National Forest Service planning service which continues to operate in a vacuum 

 and administrative budget cuts. The Black Hills National Forest was once one of the 

 worst offenders concerning the Below Cost issue. With cooperation, it has now 

 become an extremely profitable forest for the tax payer, as well as a multiple use 

 forest for wildlife, recreation, water resources, and range. And from this result of 

 working together? Reduced available volume, intense competition, and diminished 

 opportunity for the small business owner. 



"These pressures are impacting all businesses, but small businesses especially, be- 

 cause of the lack of financial capital available to outlast the artificial restriction of 

 timber supply due to court appeals, budget cuts, etc. With an artificial shortage of 

 timber availability, competition drives up the cost of the prices paid for timber of 

 national forest land. However, additional pressures have increased the cost of doing 

 business with the government. 



The United States Forest Service currently requires a performance bond that is 

 good for the life of the contract plus 1 year. Bonding companies are only willing to 

 issue bonds 1 year at a time, with renewal after reviewing yearly financial state- 

 ments. This fact alone often eliminates small businesses from even considering bid- 

 ding on USFS timber. 



In comparing a sale that was purchased in 1986, the Minnie Timber Sale, to one 

 purchased in 1993, the Roost Timber Sale, the figures display a substantial contrast. 

 (Refer to figure 2.) The difference in cash deposits required for the two sales is 

 $83,100. The difference in performance bonds required is $68,000. The difference in 

 payment bonds is shown to be $121,000, hardly an insignificant number. These num- 

 bers combined gives an increase of $272,000 in required payments before one tree 

 may be harvested, according to USFS policy. 



The United States Forest Service timber appraisal system continues to escalate 

 minimum bid prices without considering the local markets or the artificial pressures 

 which are disrupting the timber program. Thus adding further deterrents to small 

 businesses with restricted cash reserves. 



Appeals have finally taken their toll on the Black Hills National Forest. The in- 

 dustry has continued to voice its concern. This concern is evident in consideration of 

 the backlog of timber sales that will be available for sale. Environmentalists said 

 the industry was "Crying wolf," but apparently the administration has never read 

 that story before and has continued to "bury their heads in the sand," ignoring the 



