Money-Losing Timber Sales: Tongass National Forest

Money-Losing Timber Sales: Tongass National Forest

Article  | Research & Analysis
Mar 18, 2015  | 7 min read

The U.S. Department of Agriculture's Forest Service (“USFS”) manages 193 million acres of public forests and grasslands collectively known as the National Forest System. The Tongass National Forest (“Tongass”) is the largest national forest in the United States at 16.9 million acres, roughly the size of West Virginia, and is located in southeastern Alaska.

The USFS has a long history of mismanaging money in the Tongass, with an average loss to taxpayers of $21.7 million per year from 2008-2013.[1] Ongoing timber sale planning could lock in taxpayer losses for many years to come.

Historical Losses

Publicly-owned timber is regularly sold from federal forests managed by the USFS to private logging corporations. While the buyers harvest their purchased timber, and the USFS receives some revenue for the sales, the government spends considerable taxpayer money preparing and administering these sales.

From 2008 through 2013, the USFS spent $139.1 million on timber sales (including road construction) in the Tongass and received $8.6 million in proceeds from these sales, a net loss of $130.5 million.[2]

The USFS accounts for its timber spending in two different budget line items: Timber Sale Management/Forest Products, which refers to timber sale preparation and administration, and Roads Capital Improvements & Maintenance, which is largely used for logging roads. Of the 5,000 miles of Tongass forest roads, only one-quarter are open to the public, while the rest are reserved exclusively for timber access and extraction.[3]

The Forest Service’s budget also includes mandatory spending accounts, which are funds created by Congress (separate from regular appropriations), set aside for specific purposes, and funded from specific sources such as timber sale revenues and recreation fees. The USFS’ Tongass budget includes three mandatory spending accounts funded by timber sales that it lists under receipts: Knutson-Vandenberg (K-V) Sale Area Projects, the Restoration Trust Fund (RTF), and Salvage Sales. Including these mandatory spending accounts’ as ‘receipts,’ the Tongass National Forest reported a total of only $613,233 in timber-related revenues in FY2013, compared to $22.3 million in timber-related expenditures, creating a net loss to taxpayers of $21.7 million for the year.[4]

Big Thorne Project

In 2013, the USFS issued its Record of Decision for the Big Thorne Project, which allows for the harvest of 148.9 million board feet (mmbf) over a 10-year period from approximately 6,186 acres of old-growth and 2,299 acres of young-growth timber in the Tongass.[5] This one sale will roughly equal the total amount of timber sold  in all Tongass sales from 2008 through 2012.

The indicated bid value for the timber is $2.6 million. Including sale preparation, sale administration, and engineering support, the USFS estimates a net loss of $13.1 million for the sale, or $0.09 per board foot sold.[6] Historical loss rates for the Tongass, however, suggest losses from the sale will be much higher.

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Between 2008 and 2012, the USFS sold 145.4 mmbf of timber in the Tongass.[7] During this period, it reported a loss of $108.7 million dollars on timber projects, or $0.75 per board foot sold.[8] Based solely on aggregate expenditures and receipts reported by the USFS for past timber projects, a more accurate estimate of losses for the Big Thorne sale would be at least $110 million, almost ten times what the USFS has projected.[9] With the Big Thorne sale, the USFS is merely continuing its policy of underestimating costs, inevitably leading to more taxpayer losses.

The USFS has stated that it “believes the [Big Thorne sale] could help stabilize the timber industry in Southeast Alaska as the Tongass makes a shift toward young growth timber harvests in the future,”[10] and that “the Big Thorne project could provide an opportunity for 600-689 jobs in logging, sawmilling, transportation, and support businesses.”[11] While the expectation of local economic stimulus from a sale as large as Big Thorne is justifiable, it does not rationalize the excessive taxpayer losses this sale will produce. The USFS should price federal timber accurately.

Conclusion

The federal government has a responsibility to ensure a fair return to the public for development of taxpayer-owned resources. The USFS is losing more than $20 million per year from timber sales on the Tongass, year after year. Timber spending in the Tongass is too wasteful to continue, and its burden should be shouldered by the companies that benefit from timber sales, not by taxpayers.

 


[1] USFS. “State of the Tongass Financial Reports,” for fiscal years 2008-2013. Available at: http://www.taxpayer.net/library/article/u.s.-forest-service-tongass-national-forest-financials

[2] Ibid.

[3] Taxpayers for Common Sense. “Timber Sale Giveaways.” Lost in the Forest. 2002, p. 7. http://www.taxpayer.net/wp-content/uploads/ported/images/Lost_In_The_Forest_-_TCS_-_2002.pdf

[4] Ibid, Note 1.

[5] USFS. “Big Thorne Project.” Tongass National Forest. July 1, 2014. Accessed March 12, 2015. http://www.fs.usda.gov/detail/tongass/home/?cid=STELPRDB5425811.

[6] USFS. “Big Thorne EIS FEIS Vol I Chapter 3 Part 1 Issues 1 and 2.” Big Thorne EIS. Page 3-37.  http://a123.g.akamai.net/7/123/11558/abc123/forestservic.download.akamai.com/11558/www/nepa/66284_FSPLT3_1446935.pdf.  Using ($5,978,379) net loss under Scenario 3 in Table TSE-14 + NEPA costs of $7.1 million, calculated from ($48/MBF x 148,900 MBF).

[7] USFS. “Big_Thorne_FEIS_Vol II_Appendix_A: REASONS FOR SCHEDULING THE ENVIRONMENTAL ANALYSIS OF THE BIG THORNE PROJECT FY 2013.” Big Thorne EIS. 2014. Page A-4, Figure A-1. http://a123.g.akamai.net/7/123/11558/abc123/forestservic.download.akamai.com/11558/www/nepa/66284_FSPLT3_1446939.pdf.

[8] Calculation based on Tongass Financial Reports for fiscal years 2008-2013. Ibid Note 1.

[9] Ibid. Note 1.

[10] Ibid, Note 5.

[11] “Big Thorne Briefing Document.” USFS – Tongass National Forest. June 28, 2013. http://www.fs.usda.gov/Internet/FSE_DOCUMENTS/stelprdb5426311.pdf.