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My Turn: A tale of two timber sales

Posted: Tuesday, July 13, 2004

In June the House of Representatives passed a subsidy amendment that removed Forest Service funding for the planning, engineering, and construction of new logging roads on the Tongass National Forest. It will now be up to the Senate to also pass the subsidy amendment when they vote on the Interior Department budget this month. There are facts about the Tongass timber program that Southeast Alaskans should be aware of as this amendment is debated. The history of two timber sales, one current, and one from the recent past, illuminates these facts.

In the case of the Humpback-Gallagher Timber Sale the Forest Service spent millions of dollars for a 21.3 million board foot sale and received a single bid of $55,000 dollars (1/4 cent per board foot) from Whitestone Logging. The sale is located on Chichagof Island south of Point Adolphus and was originally part of the Alaska Pulp Company's 50-year contract. When APC closed down the sale was re-analyzed and subsequently sold in 1997. The Tongass Timber Program has been losing money for 50 years and the 1990s were no exception. Indeed, from 1992 to 2002 the Forest Service lost an average of $157 dollars for every one thousand board feet of timber cut. For the Humpback-Gallagher sale this would calculate out proportionately to more than $3 million in losses. As the Forest Service allocates $101 per thousand board feet for Tongass timber sales they knew when the sale was planned that Humpback-Gallagher could be expected to cost over $2 million but still went ahead with it. However, even at 1/4 cent per board foot Whitestone was still losing money, in spite of the Forest Service allowing them to export half of what they cut un-processed. And so, after cutting 10.1 million board feet, they abandoned the sale, leaving 300,000 bf rotting on the ground. They were allowed to do this without penalty because Sen. Stevens passed a rider saying they could. But there is more. When a sale purchaser builds the roads that access the sale units, they get to apply their construction costs to a portion of the price they paid for the sale. When construction costs exceed the purchase price they are issued credits that they can apply to the purchase of future timber sales. So Whitestone logging is not only able to walk away from the sale, but they can also walk away with $277,000 in road credits. The subsidy amendment would eliminate this practice.

The second sale is Finger Point. It was put out for bid this June and is located near Petersburg. Its volume is 10,488,600 bf and the minimum bid is $68,000.00, or two-thirds of a cent per board foot. This sale has been offered before and a conservative estimate of what the Forest Service has spent on it would be at least $1 million. It was originally sold to Gateway Forest Products as the South Lindy Mountain sale. When the Gateway veneer mill went bankrupt (after blowing away $20 million dollars of public funding) the sale was returned to the Forest Service uncut. It was re-offered in July of 2003 but received no bids. In an effort to attract bidders for the current version of the sale the Forest Service has done a number of things. They have dropped the volume by eliminating 56 acres of helicopter units. They have exempted purchasers from requirements to remove slash, small logs, and treetops. Worst of all they are spending $680,992 of taxpayer dollars to pre-road the sale. These roads are being built on the taxpayer's dime before the Forest Service even knows if they will receive a bid for the sale. The practice of pre-roading timber sales would end if the subsidy amendment becomes law.

Both the Humpback-Gallagher and Finger Point timber sales are in roadless areas. These kinds of sales are expensive to produce and rarely receive more than two bids. In contrast small sales on the existing road system cost less to produce and often receive several bids. This results in higher bid prices per board foot than roadless area sales. The subsidy amendment would put an end to the abuses illustrated by this tale of two timber sales.

• Mark Rorick is the chair of Juneau Group of the Sierra Club.



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