Senator NELSON. May I interrupt a moment. Does your proposal apply to any timber sale contract that required the construction of a road? Is it your suggestion that the construction of the road be put up for bids, and that the logger be permitted to bid if he wants to, but anybody else can bid on the construction?

Mr. BRANHAM. It should be at his option, whether he prefers to build a road or not.

Senator NELSON. Has there been a significant change in policy since 1976?

Mr. BRANHAM. Not to my knowledge.

Senator NELSON. In the road construction policy?

Mr. BRANHAM. Over $20,000 the prospective purchaser has the option in the bidding to require someone else to build. Under $20,000, he has no option.

Senator NELSON. And, most of the Chequamegon, Nicolet and probably Michigan, Minnesota States are probably much under $20,000 anyway?

Mr. BRANHAM. Yes.

Senator NELSON. I guess the Forest Service will have those figures. Mr. BRANHAM. Further, a comprehensive look should be taken of the whole timber sale agreement the logger who buys a timber sale is required to sign and adhere to. If we in private industry were to make a logger on a private timber sale sign a comparable agreement, the Government would forthwith determine that an employeremployee relationship existed, and make us liable for all the taxes, regulations and so forth, inherent therein. This is made mandatory by the timber sale agreement.

In that connection, I am adding to this statement a list of points in the Forest Service timber disposal contract which in the opinion of many loggers should be corrected, modified or removed entirely. Senator NELSON. Do you have a copy of that?

Mr. BRANHAM. Yes. I do.

Senator NELSON. Are you submitting that for the record?

Mr. BRANHAM. There are others as well, but this gives an idea of the difficulty to a small business logger in complying with its provisions. That ends my comment.

[The following is the conclusion of Mr. Branham's statement, not read into the record:]

1. Specified roads: Under $20,000: Now the purchaser of the sale must build the road, at not to exceed the cost specified in the contract. Over $20,000-Purchaser can elect to have the Forest Service do it, if this election is made clear on the initial bid.

We seek to change

A. Purchaser option-to build roads or not.

B. Urge the Timber Producers Association to work on a change as above. C. Meet with Obey and other political leaders to secure their understanding and backing.

D. Push to have our concerns made known to Forest Service heads-not just political leaders.

E. Specified roads built by logger should have same pay allowance as if they were built by an outside contractor.

F. A subcommittee should be set up of two or three men to meet with Obey, Proxmire and others, to acquaint them with our problems and

concerns.

G. If road approaches are to be gravelled, credit should be allowed for it.

2. Slash disposal:

A. Some flexibility should be allowed to vary disposal requirements according to differing local conditions in a given area. Some decision making to be left between timber purchaser and area forester.

3. A written plan of operation required within 60 days, besides an annual operating schedule:

A. The timber purchaser is a logger, not an architect. Cutting will be determined by available markets, weather and soil conditions, etc. Under present requirements a logger can do little or nothing without Forest Service approval. If this were a private timber disposal agreement, the Internal Revenue Service and any other Government Agency would most likely class it as an employeremployee relationship, because of the degree of control involved.

B. Require at most a generalized statement of operation intent, without going into specifics on all aspects of the operation. Obviously, a reasonably good overall job must be done, and this is mandatory, with plenty of safeguards inherent in the contract, including a retention of deposit or bond until job is completed satisfactorily.

4. Felling of substandard material: A. Should be a purchaser election.

B. Credit should be allowed if he elects to fell material. Has this been approved yet? (Page 3 of Timber Operator Workshop Evaluation.)

5. Errors in timber volume estimating: A positive adjustment should and must be allowed to permit significant errors in cruise volume to be corrected within the local forestry unit-not through the regional office. As error is an error, and should be corrected promptly when discovered. A logger should be able to place some reliance on official cruise figures.

6. Required removal of low value species with no market: If the logger is required to cut and pile this material, then he should be allowed to store it on the sale area and remove it within a reasonable time when a market develops. Forfeiture of the wood is totally unfair.

7. Performance bonds required:

A. Forest Service can and should provide more help in obtaining such bonds. B. Consideration should be given to requiring a lower money amount. This would provide plenty of funds to guarantee proper completion of the sales. 8. Roadside decking of wood:

A. Consideration should be given to allowing this if the wood is piled properly and in such a way as not to obstruct the road, except momentarily during loading.

B. Forbid it only on relatively high use roads.

C. Require restoration of area to pre-piling condition.

9. Timber sales damaged by acts beyond purchaser's control: Adjust stumpage volume accordingly, both in rate and volume.

10. Sale timing:

A. Prospective purchaser should have a full 30 days to inspect sale prior to bid opening.

B. Until changes are made, specified road sales should be advertised in other than snow months.

C. Give more thought to when sales are offered during the year, such as predominantly Pine sales, Aspen or Hardwood sales.

11. More sales should be set aside for small loggers.

12. Growth should be added to a sale only after contract period is over, and an extension gone into.

13. Forest Service scale on Chequamegon on log timber should be in 8′ increments only.

Senator NELSON. Thank you very much, Mr. Branham.

Mr. BAY. I have a written one, but he has covered most of it. Senator NELSON. You can submit it for the record, and if you want, just make some extemporaneous comments.

STATEMENT OF ROBERT BAY

Mr. BAY. I am a logger, myself, and I built some of these roads, and I think we didn't have to use, to build all these roads. And, I'd like to state, that since we have been building them, it's added a lot.

32-140 - 78 - 2

We have to put out a lot, not only seeing if the timbering is good, but see if we can build this road and still bid on a sale. We have to look at eight or nine sales before we get one, and it is added expense to the logger.

Senator NELSON. What was your experience prior to 1976? Did the Forest Service build more roads or did they require the logger to build fewer of the roads than they do now?

Mr. BAY. You more or less just had to get permission. Now there are specific roads, according to their specifications. It's more complicated. Before, we pick out where we thought the road should be, like 10 feet wide. Now there are ditches, culverts, grates and gravel. And for one instance, I think not all bad, I'm not all against them, but I think the sales are too small for what they're trying to put in them. For 100 or 1,000 cords of pulp, you have to load 100 truckloads of gravel. You have to wait until the road is dry enough to haul 100 truckloads of gravel, when it would have been dry enough to haul the pulp itself. You're not really gaining, except for roads later on. For the logger, it isn't really to his benefit.

Senator NELSON. What is the average cost-is there an average cost or figure you could give us, as to the cost of roads that you build, in an ordinary purchase?

Mr. BAY. I'd estimate maybe $2.000. Well, this again makes it tough. You can't get many road construction guys even to think about $2,000. They can't move their equipment for that, so you're stuck and you can't get anybody to build them. You almost have to get the equipment yourself.

Senator NELSON. Under these circumstances, you would have to buy your own equipment?

Mr. BAY. Yes. And, they figure the sales, more or less, on what they are bid on their bigger roads that, you know, where they can have big equipment and this, and their estimates are usually under what you can do it at with smaller equipment.

Senator NELSON. You say the average cost construction of a road on an average bid is $2,000?

Mr. BAY. Well, I'm estimating that. Some are $400, some are $1,400 I'm coming up with $2,000.

Senator NELSON. What's the longest road you've had to build?

Mr. BAY. About a mile and a half. Two different roads on the same property.

Senator NELSON. Mile and a half?

Mr. BAY. Mile. Some of them are a half-mile. Some are just touch up old roads.

Mr. BRANHAM. I know some places where the cost ran $12,000, $15,000-$18,000, on specified roads. It's a great deal of trouble, because of wet weather and the cost is going to be quite a bit more than the board says it should be.

Senator NELSON. All right.

STATEMENT OF KENNETH C. GILES, PARTNER, GILLES BROTHERS LOGGING, MEDFORD, WIS.

Mr. GILLES. This is a statement by Ken Gilles, Partner of Gilles Bros. Logging. In regards to section 14 (i) which states construction

of permanent roads with estimated cost in excess of $20,000 the purchasers have the option to build or not to build this road.

Most small loggers bid on timber sales with roadbuilding under this amount, leaving the small logger no alternative but to build the road.

When the logger gets a timber sale, he bonds the sale, then buys a timber sale unit and on top of this, has to hire a road contractor to build the road. By now he has borrowed thousands of dollars and not hauled one cord of wood. I'm sure this will put an end to the small logger.

My suggestion on this matter is whatever these permanent roads cost, the logger should have the option to build or not to build them. There is another item of interest, that is to set aside sales for small loggers, or so it seems, if you can call 500 employees a small business. My suggestion would be in order to bid on these sales, you should have no more than 50 employees.

That's the end of this written statement.

Now, the Forest Service has in their rules and regulations, if you have 500 or less employees, you are eligible to bid on small set-aside sales. They don't set enough sales aside for small business.

Senator NELSON. I see.

Mr. GILLES. And, ordinarily to bid on these sales, you should have 50 or less. Most of these guys operate with two to three men, four to five. These guys, they'll be left out. They're not gonna be around

anymore.

Senator NELSON. You say the set-aside, for the number of employees, is too high?

Mr. GILLES. Five hundred enmployees in northern Wisconsin-you take 90 percent of the loggers in northern Wisconsin, here, are probably three to five men.

Senator NELSON. Yes.

Mr. GILLES. I mean, this is ridiculous. And, as far as building these roads, the experience we had last fall, we moved from one job down to build this road, which takes perhaps a day or day and a half to get everything there. We take off the vegetation of the road, which it calls for the brush so far out, and then it starts raining. It gets wet. We can't gravel this road, so we move back to the job we had previously been on. Time involved is money involved. The logger has not been paid for his time, on these sales projects. He has to look them over and then he's got these road projects. Half of these roads would not have to be built. Why they are being built, I don't know. The gravel shouldn't be put on these roads. I worked on a lot of road construction. I know what it takes to have a good road. These logging roads are good enough for most of the logging. You people talk about wilderness. When they put in these gravel roads, that takes away some of the wilderness.

Senator NELSON. Well, the suggestion made by Mr. Branham was that all the road construction be put out on bids and the question then occurred that the logger be permitted to bid if he wishes to. Mr. GILLES. I think this is what it should be.

Mr. BRANHAM. The Forest Service can leave the road go, or build it themselves.

Mr. BAY. They have the equipment and the men and engineers. They probably could synchronize things better than a logger.

Mr. BRANHAM. The logger can build a road adequately for removing the woods himself.

Mr. GILLES. The big problem is putting the gravel on. Putting the base court gravel on is it. As far as the small loggers, they probably have a small cat, but when it comes to hauling the gravel in, and shaping it up and putting it to their specifications, that's where the time is involved and they do not allow enough cost for this, because you end up, perhaps a mile away, and this is costly. The truck has to back up. You can't turn that truck around. He has to back all the way in that 1 mile, and their estimated costs, hard surface roads where they don't have to end up, they can dump the gravel and make this turn. But, when this contractor backs all the way in, his costs are quite high, and this reflects on the logger and the timber sale.

Senator NELSON. Well, thank you very much, gentlemen. We appreciate you taking the time to come and give your testimony. I think it's been very informative.

Our next two witnesses are Mr. William Kurilla and Mr. Carl Peters. Now, if you gentlemen would identify yourselves for the reporter here.

Mr. PETERS. Carl Peters. Independent logger, Route 1, Mason, Wis. Mr. KURILLA. William Kurilla. Independent logger, Route 1, Mason, Wis.

Senator NELSON. Do you gentlemen have prepared statements, or do you just wish to speak extemporaneously?

Mr. PETERS. I have a prepared statement here, to the U.S. Senate. If you want me to read it

Senator NELSON. Sure. Go ahead. And then, if you wish to add to it, just feel free to do so.

STATEMENT OF CARL PETERS, INDEPENDENT LOGGER,

MASON, WIS.

Mr. PETERS. I personally feel that the Planning Act Amendments of 1976, Public Law 94-588, is of no use or discriminates against the timber producers of this area, as we have little or no roads to construct that exceed $20,000.

This law, or act, as the majority of the regulations that the USDA Forest Service is geared or constructed for our Western loggers or operators.

In the West, we have very large sales and very few small independent operators in comparison to this area. What I mean there, is you have just a few big, large companies. Here, we are mostly independent, family-type logging operations.

Western sales run into the millions of board feet and thousands of acres. And, a $30.000 road is not considered large, but in the Chequamegon National Forest, this area, a 4.000 to 6,000 cords of varied species of timber on a sale is considered larger than average. Yet, the specified roads rarely exceeds $10,000. Yet, because we are mostly independent family operators, $10,000 becomes a large figure, and still, we cannot get a small business loan, because the amount we need to