34 



has been going on for a very, very long time and it is tough to live 

 with. 



The Chairman. But I see four boxes of permits issued there and 

 you have met most all of those requirements, have you not? 



Mr. Lewis. Yes, and 



The Chairman. At what cost? 



Mr. Lewis. Hundreds of thousands, millions of dollars. 



The Chairman. That might help. I have one more question. 

 Owen, you said something I didn't ask the Forest Service about, 

 supply of timber and how short you have been since TTRA. 



Mr. Graham. Yeah. 



The Chairman. Are we — ^you are not receiving what was really 

 intended in there? What is the problem? 



Mr. Graham. No, we have been short, I don't know, an average 

 of — it would depend on how far back you go, anywhere from 30 to 

 50 million board feet per year from what our contract volume is. 

 We have been getting 80 percent of the volume, but that other 20 

 percent we need to operate those mills. And as a result of not hav- 

 ing it, the mills have been forced to operate intermittently. We 

 have had pulp mill closures and sawmill closures both. 



The Chairman. I keep hearing from the Forest Service they are 

 putting it up, they are offering it. Why isn't it getting to the mill? 



Mr. Graham. Well, they have been offering quite a bit less than 

 what the contract allows for. 30 to 50 million feet, that is how 

 much below the contract level their offer has been. In addition, be- 

 cause of changes the courts are making in the way they design 

 their timber sales, it takes two to three years to harvest a timber 

 sale. When they release timber to us, all we get is a piece of paper 

 that says you can go into some remote area and move men and 

 equipment in and build a campsite, place for the men to live, and 

 then build roads and then harvest timber. All that takes two to 

 three years. 



Consequently, we can only harvest each year about half of what- 

 ever our pipeline of timber is. Right now we have just under 300 

 million feet of timber, but 250 of that 300 we received in less than 

 a year, and so we can't harvest it at a rate greater than about 150 

 million a year, which is 40 million below our contract level. The 

 Forest Service 



The Chairman. What about lawsuits? 



Mr. Graham. Pardon? Lawsuits are another concern. That is part 

 of the reason why the Forest Service is unable to provide us with 

 our full contract volume. Of the 300 million in the pipeline there 

 is 105 million, I think, right now that is under a pending injunc- 

 tion. We are waiting to see what happens later this month. 



The Chairman. It is my — Mr. Miller, I am going to suggest that 

 we are going to recess and go on with these three witnesses — when 

 we come back, we will still be on the panel and Mr. Miller will be 

 asking questions. We will recess now until approximately five min- 

 utes after three. 



[Recess.] 



The Chairman. The meeting will come back to order. Mr. Miller. 



Mr. Miller. Thank you, Mr. Chairman. Mr. Lewis, in your testi- 

 mony on page 2 you say that this legislation is crucial to the long- 

 term survival of KPC. The first one is allow you to invest up to 



