28 



we did in the past. In fact, they probably wouldn't have harvested 

 an area like that, would they? 



Mr. Leonard. I think that what you would have seen is what 

 you had prior to those long-term sales pulp mills. Some small high- 

 grade operations that went out for the very high quality spruce. 

 And I think you probably could still have a little, but you are not 

 going to see a general timber sale program. You are not going to 

 see maintenance of the small, independent mills in Alaska without 

 that big mill. 



The Chairman. Realistically, George, as you have been a Forest 

 Service retiree, how can the Forest Service even think about hav- 

 ing a sale now if there isn't a processing plant? How could anyone 

 bid on a project or on a sale without using the pulp wood trees, too? 

 I mean, would they just go in and take out the good trees? 



Mr. Leonard. Well, in theory you could require that they be re- 

 moved and they could go into the chip market, but putting those 

 into the chip market not only doesn't meet your employment objec- 

 tives, but it is going to return less value to the stump in that area 

 and therefore make much of the area uneconomical. 



The Chairman. OK, I am bidding. I am the bidder. I am an inde- 

 pendent entrepreneur. I'll hear later on from this group; I want to 

 have an entrepreneur in the — logging investor. I am bidding on a 

 stand of relatively good timber. The stumpage rate goes up, but I 

 also have to take out the pulp wood trees to have them chipped. 

 I don't get any money for that, so that means I have to bid awfully 

 high and it makes it uneconomical, would that be correct? 



Mr. Leonard. Well, you will get some revenue from the sale of 

 the chips. 



The Chairman. But very little, not to pay the cost of 



Mr. Leonard. Historically chips have not paid for removal from 

 those remote market locations. 



The Chairman. I just — one last question and then I want to ask 

 you if you have any questions. One of the things — they'll say — I 

 want for the record. Do you think the long-term contract is good 

 for the government? 



Mr. Leonard. I think so. I think so. It permits utilization of a 

 very valuable resource in Alaska. It meets the needs of those com- 

 munities for year-round emplojrment which is not supplied by the 

 recreation or the fisheries industry. I think the two long-term sales 

 did provide and have provided stability to those communities in 

 Alaska and I think that is the public interest. 



The Chairman. The gentleman from California. He has no ques- 

 tions. The gentleman — Mr. LaHood. I want to thank — Scott, I want 

 to thank you for bringing up the legal aspect of it. Mr. Crapo did 

 cover it pretty well. I still don't think Congress recognizes the li- 

 ability that was imposed upon it by the Tongass Reform Act, re- 

 gardless of the language written in there. 



Mr. HORNGREN. Let me put it this way. After the Winstar case 

 a week and a half ago, I now take those cases on a contingency be- 

 cause I think the company is going to 



The Chairman. And believe me, if lawyers take it on a contin- 

 gency, there is a pretty good chance of winning. 



Mr. HoRNGREN. Yes. 



