APPENDIX 



WESTERN GOVERNORS ASSOCIATION RESOLUTION 93-016, JUNE 22, 1993, 



TUCSON, AZ 



SPONSORS: Governors Andrus and Sullivan 



SUBJECT: Below-Cost Timber Sales on the National Forests 



A. Background 



1. The U.S. Forest Service is legally obligated to manage for multiple use benefits 

 from the national forests, not to maximize timber production profits at the expense 

 of other uses. The Multiple Use Sustained Yield Act of 1960 requires "coordinated 

 management of the various (national forest) resources . . . and not necessarily the 

 combination of uses that will give the greatest dollar return or the greatest unit 

 output." 



2. The U.S. Forest Service sells timber at competitive auction from dozens of Na- 

 tional Forests in the Western United States. Many western communities are heavily 

 dependent on Federal timber sale programs for logging and manufacturing employ- 

 ment. The minimum acceptable bid for the timber to be sold is set by a Forest Serv- 

 ice appraisal which estimates what a reasonably efficient timber operation can 

 afford to pay and still make a fair profit. Below-cost sales occur when the Forest 

 Service's cost of conducting timber sales, including sale administration, road build- 

 ing, and managing the forests are not covered by the revenues from timber sales. 



3. The Forest Service's accounting system to report revenues and expenses of the 

 timber sale program for each national forest has been criticized for attempting to 

 hide some losses by not accounting for all expenses. Other critics argue the Forest 

 Service charges multiple use costs against timber and makes otherwise profitable 

 sales appear below cost. 



4. The administration's proposed reduction and eventual phase-out of below-cost 

 timber sales is purported to save $274 million over 5 years in decreased appropria- 

 tions, offset by $202 million in lost timber sale revenues for a net "savings" of $72 

 million. 



5. However, the proposed reduction in the timber sales level could also cause a 

 loss of an additional $120 million in Federal income tax revenues as dependent 

 forest products firms are affected and in some cases, cease operations. Increased 

 Federal costs in unemployment compensation, worker retraining and other pro- 

 grams will further add to the Federal losses. These costs have not been included in 

 the calculations on the impact to the Federal Treasury. There will also be increased 

 impacts on State-financed unemployment and social benefit programs which have 

 not been evaluated. 



B. Governors ' Policy Statement 



1. The Forest Service Timber Sale Program should continue to be based on the 

 principle of multiple use, not maximization of revenue. Issues surrounding timber 

 sales and logging should be resolved based on applicable laws and policies which 

 govern the national forests, including laws to protect the environment and initia- 

 tives to move toward ecosystem management. 



2. Cost considerations are an important, but secondary, issue. The Forest Service 

 needs to be diligent with respect to improving management efficiency and capturing 

 the value of timber resources, but these objectives are secondary to, and should not 

 replace, the multiple use mandate and ecosystem management. 



3. Evaluation of Federal timber sale programs from a cost standpoint should en- 

 compass the economic and community development effects, and not be limited to a 

 comparison of direct revenues and expenses from the timber sale. 



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