21 



In fact, over the last decade we have had record harvests of 

 salmon in Southeast, but both recreation and the salmon fishery 

 are very much seasonal industries. You have two and a half to 

 three months of employment in the summer season from those two 

 industries. The only long-term, year-round employment, has been 

 offered by the timber industry and particularly by the pulp mills; 

 and I think that stability and continued operation of the pulp mills 

 is essential. 



Mr. Chairman, I have several suggestions to make about changes 

 that I believe should be made in this legislation to improve it, to 

 be made more workable from a technical standpoint, but I strongly 

 believe it should be done. 



The Chairman. George, I am going to tell you, you are about 

 ready to run out of time. And I was going to ask you that first 

 question, what would you suggest. And when I come back to you, 

 be ready for me. 



Mr. Leonard. Yes, sir. 



The Chairman. If you don't mind. Scott, you are up next. 



STATEMENT OF SCOTT W. HORNGREN, LAW FIRM OF 

 HAGLUND AND KIRTLEY, PORTLAND, OREGON 



Mr. HoRNGREN. OK, my name is Scott Horngren. I am a partner 

 in the law firm of Haglund and Kirtley in Portland, Oregon. I am 

 testifying on behalf of the Northwest Forest Resource Council, a co- 

 alition of timber trade associations in the Pacific Northwest. Our 

 firm has represented timber sale contractors in Federal contract 

 claims cases. 



I am here today to discuss the implications of a recent Supreme 

 Court decision decided July 1 entitled the United States versus 

 Winstar Corporation as it relates to Forest Service contracts and 

 the issues here. The Winstar case is a culmination of over half a 

 decade of litigation over government contract liability for statutory 

 and regulatory changes to minimum capital requirements for sav- 

 ings and loans. The Winstar decision has implications for contracts 

 throughout the Federal Government and particularly for timber 

 sale contracts. 



Federal timber purchasers are being bombarded by regulatory 

 and policy changes like those that were at issue in Winstar, and 

 these changes include adoption of the President's Forest Plan, 

 adoption of PACFISH, INFISH, California spotted owl, Mexican 

 spotted owl and Northern goshawk protection standards. 



The Winstar decision should leave little doubt that the govern- 

 ment will be contractually liable to the timber purchasers for re- 

 duction or elimination of timber sold under the contract. I would 

 first like to summarize the Supreme Court's decision in Winstar 

 and then apply those principles to timber sale contracts. 



The Winstar Decision: During the savings and loan crisis in the 

 mid-'80's, Congress enacted the Financial Institution Reform Re- 

 covery and Enforcement Act, FIRREA. The Act forbid thrifts from 

 counting goodwill capital — good will as capital credits in computing 

 the required minimum capital reserves. The plaintiffs in the case 

 were three Federal thrifts, two of which were seized and liquidated 

 by the Federal regulators for failing to meet the new capital re- 

 quirements. The thrifts sued the Federal Government contending 



