41 



recover their costs on those forests. That is why we would advocate 

 that we look at a sale-by-sale approach, because we think it would 

 be very draconian and counterproductive to communities and to 

 the Government as a whole to shut down a forest because the total 

 balance sheet at this point shows a negative balance. Using the 

 Black Hills National Forest as an example, you wouldn't have a 

 timber sales program in place to take advantage when prices 

 changed and you could have a majority of profitable sales in the 

 forest. Therefore, the Forest Service should be looking at this issue 

 on a sale-by-sale basis. From the Forest Service information avail- 

 able we have determined that at gate one in the timber planning 

 process, the Forest Service has enough information to judge wheth- 

 er a particular sale is going to be above or below cost. The Forest 

 Service ought to make those types of judgments and not just taking 

 the amalgamated data on the forests to make a judgment as to 

 whether the Black Hills or the Targhee are above or below cost. 



Senator Daschle. The example I cited was sales, but the issue is 

 flexibility. I hear Mr. Leonard saying that he feels there is flexibil- 

 ity, that there are adequate opportunities in the management plan 

 to adapt to the varying demands and needs that we have in each 

 forest, whether it be sales or the ecosystem or not. 



What I thought I heard Mr. Riley say is that there is not ade- 

 quate flexibility to do that, and I am trying to find out where the 

 real facts lie here. Is there any clarification that somebody can pro- 

 vide? I am still somewhat confused as to the flexibility. 



Mr. Leonard. Mr. Chairman, if I could talk about the sale-by- 

 sale approach, certainly, we can keep track of the status of the 

 sales, and we can make some pretty good estimates up ahead of 

 time as to what that program is. 



When we develop our forest plan, we make an estimate of the 

 viability of the sale program that is being proposed, and in most 

 cases, our forest plans have identified the program levels that we 

 have projected are positive. 



The problem with the sale-by-sale approach is that in many of 

 our forests, particularly in the northern Rocky Mountains, we have 

 an industry that is closely tied to the production levels in that 

 forest. If you go through and selectively eliminate a few sales, you 

 may be eliminating a mill. In other words, you can't offer part of 

 the program. For one thing, the costs of the remaining part of the 

 program go up. But also, if your industry is tied to a particular 

 timber sale program and then, because of where you are in the 

 market cycle, or because you have included some less economic 

 sales in that, you eliminate those sales, then the total volume that 

 had been planned by that industry is not going to be there. 



So we think there is some merit in looking out ahead at the indi- 

 vidual sales, but there also is merit at looking at the total sale pro- 

 gram that the industry is going to be dependent upon. 



Senator Daschle. I want to give Senator Craig plenty of time to 

 ask questions as well. Let me just ask one more for now, and that 

 relates to a comment that Mr. Francis made, and I think Senator 

 Baucus made as well, regarding the large proportion of road con- 

 struction costs that are not considered currently in the accounting 

 system. I think Mr. Francis used the figure 69 percent, and Senator 

 Baucus made reference to 70 percent of total road costs excluded 



