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Appraisals and Rates 



Prior to the Forest Service implementation of TTRA in 1991, the KPC long-term 

 sale agreement provided for both upward and downward stumpage rate adjustments, 

 whereas independent sales have only downward adjustments. The upward adjustment 

 mechanism in the long-term sale contract put a ceiling on the amount of profit that KPC 

 was allowed to make. Any excess profit margin was returned to the Forest Service as 

 Increased stumpage. Independent sales have no such ceiling. 



After the Forest Service Imposed changes to the long-term sale contract, the 

 Forest Service begem charging what was termed "Comparability Charges". These 

 charges are derived from an inaccurate and inappropriate analysis of what the 

 independent sales stumpage charges were from a prior time period (not the period 

 during which KPC was harvesting or processing timber). 



Further, the charges are greatly affected by speculation, skewed bidding, 

 variations in the species mix the Independents harvest from time to time, and 

 differences between the actual species mix and the Forest Service appraised species mix 

 for both the long term and Independent sales. In addition, the Forest Service maikes 

 only upward charges. The stimipage rates are never lowered even when the peculiar 

 "comparability" formula indicated adownward adjustment is warranted. These charges 

 have greatly reduced KPC's profitability to a point where its future is now in jeopardy. 

 Section 2(c)(4) of this legislation corrects these problems. It allows KPC to remain 



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