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Mr. J. Michael Lunn 

 September 21, 1990 

 Page 2 



October 1, 1989 to only 54 mmbf on September 17, 1990. 

 Likewise, the volume prepared but not yet released has fallen 

 from 73.1 mmbf on October 1, 1989 to 26.7 mmbf on September 

 17, 1990 (see Attachment "A") . 



The amount of timber available for us to harvest has become 

 intolerably small. We have only a couple of months of timber 

 roaded ahead and only a month of road released ahead of our 

 construction crews. Through no fault of KPC, we have been 

 forced to cut back our logging operations at Naukati, 

 Labouchere, Coffman Cove and Thorne Bay. Many workers have 

 been laid-off, and many of our construction crews have been 

 able to work only intermittently all year. Our harvest costs 

 have become unreasonably high this year because of the inter- 

 mittent shutdowns caused by Forest Service failure to provide 

 necessary timber volumes in a timely fashion, the reduced 

 level of operations and the lack of planning opportunities 

 available to us. 



All of these operational problems are a result of not having 

 sufficient timber prepared ahead to permit proper planning and 

 management of our business. We had planned to harvest about 

 205 mmbf this year, but it is obvious now that we will not 

 come close to that level. It appears more likely that we will 

 be able to harvest about 175 miobf. We have made an effort to 

 replace this fiber loss with outside purchases. We have- paid 

 a premium for the additional fiber and we are still critically 

 short. One or both of our sawmills will likely suffer consid- 

 erable down time which could occur by late 1990 or early 1991. 

 Furthermore, if the Forest Service does not get caught up with 

 their sale preparation work immediately there is serious risk 

 that our pulp mill will be without fiber in the fairly near 

 future. 



The Forest Service assured us at our May 10, 1990 meeting they 

 would be back on schedule with our Annual Operating Plan by 

 September. . Instead, as of September 1990, the volume released 

 was 238 mmbf behind what was approved in the Annual Operating 

 Plans for 1989 and 1990 (see Attachment "B"). We request that 

 you immediately investigate whatever possible Forest Service 

 activities there may be that are contributing to this con- 

 tinuing problem of delayed releases. We request again that 

 you take the steps necessary to get back on schedule immedi- 

 ately so that our company will not suffer further damages. 



Another related problem is the fall-down in acreage and volume 

 and economics from what was approved in the Record of Deci- 

 sion. Through September 1, 1990, the new units that have been 



