156 



One issue that has been distorted in earlier testimony in 

 Congress is the adjustment of stumpage rates during the 

 five-year operating period. The KPC contract does provide for 

 both upward and downward adjustment of stumpaae rates during 

 the relevant five-year period, if there is a determination 

 within the period of substantial changes in markets or other 

 pertinent economic conditions affecting the Forest Service 

 appraisal. Statements to the contrary are simply wrong. We 

 have already noted the effect of just such a recalculation by 

 the Forest Service effective August 1, 1988. 



Another issue which has been distorted relates to the 

 so-called "high-grading" issue. Section 2(b)2 of the KPC 

 Contract provides for quarterly recalculation of stumpage rates 

 based on actual species volumes harvested if at variance with 

 the species estimates used by the Forest Service in its 

 appraisal. Again, statements to the contrary are simply wrong. 



CANCELLATION OF THE KPC CONTRACT IS UNWARRANTED AND BAD POLICY 



Earlier in this testimony I have tried to explain the 

 importance to KPC of its long-term agreement with the United 

 States — and the importance of the continued viability of our 

 pulpmill operations to the timber industry and overall economy 

 of Southeast Alaska. I have described the contents of that 

 agreement and hopefully have shown that our current contract 

 meets alleged concerns that have been expressed earlier by some 

 who seemingly have not read our contract and clearly do not 



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