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sales on our national forests. We appreciate the attention of the 

 subcommittee to this important issue, which has considerable envi- 

 ronmental consequences as well as economic ramifications for tax- 

 payers throughout the country. 



The national forests were established at the turn of the century, 

 a time when private loggers had ravaged forests in the East. Calls 

 for reform were led by the first chief of the Forest Service, Gifford 

 Pinchot who was instrumental in establishing the profession of for- 

 estry in America. He also was a leading proponent of the philoso- 

 phy of utilitarian conservation. The purpose of conservation, ac- 

 cording to Pinchot, was to ensure the sustained use of natural re- 

 sources through active management of the land. This philosophy 

 had a profound influence on the outlook and development of the 

 Forest Service. 



The 1897 Organic Administration Act authorized the sale of Fed- 

 eral timber "at not less than the appraised price." The expectation 

 was that the public forests would be financially self-sustaining 

 through timber sales. Unfortunately, it has been 96 years since the 

 passage of the Organic Act, and the national forests have not yet 

 covered the costs of selling timber. 



The prevalence of below-cost sales has been documented in nu- 

 merous studies by the General Accounting Office (GAO), Congres- 

 sional Research Service (CRS), and others. As early as 1985, the 

 Office of Management and Budget estimated that expenditures for 

 national forest timber and mineral programs exceeded receipts by 

 $621 million; virtually all of the losses were attributable to logging 

 activities. The General Accounting Office found that below-cost 

 sales are particularly common in the Rocky Mountains on lands 

 that are low in productivity, support trees that have little market 

 value, have steep terrain, and require extensive, and expensive 

 road construction (GAO/RCED-84-96). 



In 1984, Congress directed the Forest Service to develop a new 

 accounting system for the timber program. This directive was in re- 

 sponse to mounting concerns of money-losing timber sales on the 

 national forests and the agency's lack of capacity to account prop- 

 erly for timber costs and revenues. 



When the Timber Sale Program Information Reporting System 

 (TSPIRS) was finally tested on all national forests in 1987 and 

 1988, it came as no surprise that nearly two-thirds of the national 

 forests lost money from logging. These results are consistent with 

 the earlier findings by the GAO, CRS, the Natural Resources De- 

 fense Council, The Wilderness Society, and the Forest Service 

 (Barlow 1980, USDA-Forest Service 1983, GAO 1984, Sample 1984, 

 Wolf 1984, Bueter 1985). More significant, however, is the fact that 

 those two-thirds of the national forests have been below cost for the 

 past 5 years. 



Mr. Chairman, the Forest Service's financial reports provide 

 clear evidence that the agency has ignored the intent of Congress. 

 The National Forest Management Act of 1976 reaffirmed Congress' 

 intention that timber programs be economically justifiable, and yet 

 the agency continues to ignore this mandate. 



Under the law, the Forest Service was directed to identify lands 

 that are unsuitable for timber production based on economic and 

 other factors. As advanced by its sponsors in 1976, the intent of the 



