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Senator Burns. Now this long-term contract, does it contain 

 some of the environmental protection clauses that short-term con- 

 tracts contain that are written in the lower 48? 



Mr. PiHL. The long-term contract is up to date, in every respect 

 with NFMA and the other management provisions and acts. Keith 

 Robertson of the Forest Service confirmed that in his testimony. 



Our contract recently has been adjusted so stumpage is adjusta- 

 ble up and down and the species vary from the Forest Service esti- 

 mates is adjusted thereto and under those provisions our stumpage 

 has been set by the Forest Service back to August 1st at $68 from 

 $2.12, that's a 32-fold increase. Now $68 times 200 million is 13 or 

 14 billion a year. 



Senator Burns. I think there was a concern of the Southeast 

 Alaska Conservation Council in their testimony in Washington, 

 D.C., about high grading. They have made some statements in that 

 regard. How do you respond to that? 



Mr. PiHL. There are two charges in high grade: the first charge 

 comes in the selection process and I just want to say that in the 

 selection process we nominate areas based on our experience and 

 people in the field all the time, we nominate them to the Forest 

 Service for the five-year plan. 



The Forest Service takes those and goes through a study of alter- 

 natives, they make and control the final selection so high grading 

 in terms of selection, I do not believe it is a legitimate characteriza- 

 tion. 



The other aspect of high grading is — deals with the change in the 

 species and this is a high value — spruce is a high value trade, as is 

 yellow cedar, and if your removal of timber varies from the cruise 

 that the Forest Service uses in setting stumpage rates it could be 

 effective. In the case of our contract if that happens they re-adjust 

 the stumpage on a quarterly basis so if there is any high grade we 

 pay for it; we pay for the actual scale of the species that we 

 remove. 



Senator Burns. I think the questions of Senator Wirth are 

 worthy questions and they need to be answered and I think when 

 we answer some of his concerns, in fact all of his concerns, when- 

 ever it comes to dealing with public land policies, I think that they 

 were well put and I would say that we are seeing some in the ap- 

 peals process and this type of thing, we have a real tight supply 

 right now. In Montana we have got two mills that are going to shut 

 down. They are going to shut down so the long-term contract I be- 

 lieve in because nobody can make any claims to make a popular 

 investment and process on this renewable resource unless they do 

 have a long-term contract so I find that I still think that of course 

 hindsight is always twenty-twenty and I really believe that those 

 environmental issues that have been focused on today are of con- 

 cern to all of us and have to do with making decisions on public 

 land policy. We know we are in a tight supply and I would hate to 

 see some part of the country get into the same supply problem that 

 we have in the State of Montana so I appreciate your testimony 

 and I have no further questions. 



Senator Wirth. Thank you very much, Mr. Burns. I might just 

 have one final point, to make sure that the record is clear on this 

 and maybe I am not correct on this but in response to your answer 



