30 



out of business. We have come forth to try to have this operation 

 continue. Part of that request is the 15-year extension which will 

 allow us to make the capital and expenditures necessary to stay up 

 with the marketplace. Our competitors are doing that. We must 

 also do that. And, you know, other than saying that we have sup- 

 port of the governor and the rest of the town and the committee, 

 that we hope the committee is listening to us and will help us con- 

 tinue, because we want it to operate. I want it to operate and we 

 want the town to have some year-round employment. It will dev- 

 astate it if we are gone. 



The Chairman. Are you through? 



Mr. Lewis. I am through, sir. 



[Statement of Ralph Lewis may be found at end of hearing.] 



The Chairman. Thank you, Ralph. 



Mr. Lewis. I am here for questions. 



The Chairman. Thank you for keeping within your time. I am 

 going to go through the other witnesses. Then we will ask ques- 

 tions. Owen, you are up. 



STATEMENT OF OWEN GRAHAM, TIMBERLANDS MANAGER, 

 KETCHIKAN PULP COMPANY 



Mr. Graham. Thank you. I am Owen Graham, the Timber Divi- 

 sion Manager for Ketchikan Pulp Company. I have got a brief 

 statement. I came primarily to answer questions. 



We have been short of timber volume since TTRA was enacted. 

 And as a result, our mills have operated intermittently. This un- 

 even, inadequate supply delivery of timber volumes harms the gov- 

 ernment also. The cost of preparing timber sales and administering 

 those sales is higher because of the contract changes that were im- 

 posed. The Forest Service also has admitted that to me recently. 

 Further, the cost of producing lumber and pulp in the mills has 

 risen dramatically as a result of this intermittent operation. And 

 as a consequence stumpage rates are down more than they would 

 have been otherwise. 



I can't quite reach this. 



The Chairman. We can hear you. 



Mr. Graham. You can hear me all right? The volume issues that 

 we would like to see corrected include the amount of timber, the 

 volume itself, the timing of that volume and the criteria for select- 

 ing that timber. For the first 40 years, the Forest Service agreed 

 with us that the volume on our contract was 8-1/4 billion board 

 feet overall and 192 million board feet per year. Only in the last 

 two years has the Forest Service developed a new position that the 

 contract volume is only 154. In addition, prior to the Tongass Tim- 

 ber Reform Act, we received fixed volumes at fixed dates, certain 

 dates that we could rely on. Since then, the Forest Service has pro- 

 vided timber at random times and at random volumes, ranging 

 anjrwhere from around 40 million per year to over 200 million per 

 year. 



In addition, since the long-term sale was not marked on the 

 ground ahead of time as is normally done for independent sales, 

 the contract has selection criteria to assure that KPC receives eco- 

 nomically viable timber. That is not a guarantee of profit, but a 

 guarantee of an opportunity for profit. Similarly, the pricing of the 



