Federal Land Management:

Estimates of Value and Economic Effects of Canceled and Suspended Timber Sale Contracts in the Pacific Northwest

RCED-98-18R: Published: Oct 6, 1997. Publicly Released: Oct 20, 1997.

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Pursuant to a congressional request, GAO obtained estimates of the value of the timber associated with timber sales contracts cancelled to protect the habitats of the spotted owl and the marbled murrelet, as well as the projected effects of cancelling these contracts on jobs, payrolls, and taxes.

GAO noted that: (1) the federal government paid about $8.6 million to settle contractors' claims for the value of replacement timber and for damages resulting from the cancellations of nine timber sale contracts in the Pacific Northwest; (2) in addition to these cancelled contracts, the Forest Service and the Bureau of Land Management (BLM) suspended a total of 85 timber sale contracts; (3) the Forest Service plans to offer replacement timber for most of its 62 suspended contracts; (4) BLM subsequently lifted the suspension on its 23 contracts, and the timber has been or is being harvested; (5) although contractors have filed several lawsuits over the suspensions, the Forest Service and BLM did not have estimates of the potential costs to the federal government attributable to these suspensions; (6) the estimates of the value of the remaining uncut timber associated with the nine cancelled contracts varied with the methods of estimation and the assumptions used; (7) the Forest Service used the original bid price to estimate the value of the timber remaining under its eight cancelled contracts, while BLM performed an appraisal to estimate the value of the timber remaining under its single cancelled contract; (8) the agencies' estimates totalled about $6.5 million; (9) the various contractors used comparable sales and other market data to estimate the value of their individual contracts; (10) their estimates totalled about $9.4 million; (11) the estimates of forgone employment range from a low of 264 jobs to a high of 360 jobs potentially associated with the cancelled contracts; and (12) GAO found only two estimates of forgone payrolls and taxes; the Vice President of the Northwest Forestry Association estimated that the pay for each job directly related to timber harvesting would range between $20,000 and $40,000 annually, and the Forest Service estimated that the federal tax revenue could be $60,000 annually.

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