443 



3 



constraints, the Forest Service chronically does not come close 

 to recovering its costs in making timber available to industry. 

 A 1986 study published by The Wilderness Society found that U.S. 

 taxpayers incurred sizable losses from Tongass timber sales in 

 every year from 1977 through 1984, particularly in 1983 and 1984, 

 when Forest Service expenditures exceeded sale receipts by well 

 over $50 million annually.^ In those two years, the Treasury 

 took back less than 10 cents for each federal dollar spent to 

 sell and access timber in Southeast Alaska. 



Significant budgetary savings may result also from section 

 104 of S. 346, which requires termination of the 50-year timber 

 purchase contracts currently held by Louisiana Pacific/Ketchikan 

 (LPK) and the Alaska Pulp Corporation (APC) . These contracts, 

 unique to the National Forest System, were originally designed to 

 attract wood processing investments to Southeast Alaska but, as 

 discussed below, have only failed to produce a sustainable 

 industry. Instead, they have fostered unjustified subsidies and 

 anticompetitive practices. 



In particular, special rate redeterminations under those 

 contracts have prevented the federal government from obtaining 

 fair market returns on its timber sale investments in the 

 Tongass. For example, APC has been paying an astonishingly low 

 $1.48 per thousand board feet of Tongass timber since 1982, 

 notwithstanding substantially higher prices paid by independent 



The Wilderness Society, America's Vanishing Rain Forest 6-7, 

 (1986) . 



