95 



But that market situation has changed. There is a strong 

 demand for Alaskan forest products today. That demand is being 

 reflected in production levels, in prices, and in employment on the 

 Tongass, all of which are at the highest levels since 1980. We be- 

 lieve the economic outlook for the decade of the nineties is very fa- 

 vorable. 



A GAO report a couple of years ago concluded that the employ- 

 ment objectives of ANILCA were not being achieved, but that situ- 

 ation has changed. In fiscal year 1988 we estimate that the harvest 

 of Tongass National Forest timber, not the native timber — resulted 

 in about 3,400 direct, indirect and induced jobs in the dependent 

 communities of southeast Alaska. 



The strong demand for timber is being reflected in the payment 

 for timber harvested. Revenue from timber harvest increased by 85 

 percent from 87 to 88. Now, it is true the program lost money in 

 this period, but the loss in 1988 was only 19 percent of that experi- 

 enced in 1987. We expect that revenues will exceed costs in 1989. 



Much concern has focused on the two long-term contracts. Mr. 

 Chairman, we have renegotiated the terms of the long-term con- 

 tracts with Ketchikan Pulp Company. One of the changes was to 

 make prices more responsive to market conditions. As a result, the 

 average price to be paid under the Ketchikan contract has in- 

 creased from $2.12 per thousand to $49.14 per thousand, a twenty- 

 fold increase. 



We are currently negotiating similar changes with Alaska Pulp 

 Company, and we expect a complete modification to that contract 

 shortly. We expect prices on that sale will increase to about the 

 same amount. 



Mr. Chairman, in view of the need to harvest some economically 

 marginal timber stands to meet the needs of the dependent mills, 

 we have felt the availability of the Tongass timber fund to be desir- 

 able. However, it has been the focus of controversy and in fact has 

 been brought into the appropriations process in the last two years. 

 Therefore, we do not object to eliminating the fund and bringing 

 the Tongass into the normal appropriations process as proposed in 

 S. 237. 



We believe the clarification of Congressional intent with regard 

 to making the sale program responsive to market conditions as pro- 

 vided in S. 237 is desirable. 



We believe that changes beyond those proposed in S. 237 are not 

 warranted on the facts and are particularly untimely. We are cur- 

 rently involved in a major reevaluation and replanning effort on 

 the Tongass. This is the regular revision process envisioned by the 

 National Forest Management Act. 



Within ten months we will have completed the draft plan for 

 public comment. This reevaluation, based on updated resource in- 

 ventories, current research, and current economic conditions will 

 provide a sound factual basis for decision on future management of 

 this forest. We urge the Congress to defer actions beyond those pro- 

 vided in S. 237 until the plan is available. 



Mr. Chairman, that completes my statement. I will be pleased to 

 respond to any questions. 



[The prepared statement of Mr. Leonard follows:] 



