A legislative plan to excuse timber companies in the Northwest from federal logging contracts could cost the government more than $2 billion in lost income, according to a study by the Congressional Research Service (CRS).
The Agriculture Department's Forest Service has estimated that the plan would cost $1.3 billion, but the CRS study said USDA's record-keeping is so unreliable that sound estimates cannot be made.
While the plan is being promoted by legislators and industry as vital to beleaguered timber firms in the Northwest, CRS said that the region and many of the companies that would be aided are not the neediest in the country.
Sens. Mark O. Hatfield (R-Ore.) and James A. McClure (R-Idaho) are chief sponsors of the industry-prepared plan designed to excuse logging companies from federal contracts signed when timber prices were higher in the late 1970s.
They now contend that with prices down and lumber demand off the Northwest companies cannot fulfill their contracts and still turn a profit. Current federal policy is to extend, but not terminate, contracts that have not been fulfilled because of market conditions.
Hatfield and McClure, according to aides, are looking for an appropriate legislative "vehicle," most likely an appropriations bill, for their proposal, to avoid time-consuming hearings and debate.
The Senate Agriculture Committee, which has jurisdiction over Forest Service issues, plans no action on the contract idea, although a group of North Carolina tree farmers has called on Sen. Jesse Helms (R-N.C.), the chairman, to hold hearings.
The Northwest proposal, although drafted as a "courtesy" by the Forest Service, could find some resistance within the Reagan administration. The president's Council of Economic Advisers is on record as opposing such bailouts. And, according to Douglas MacCleery, a deputy assistant secretary of agriculture, USDA has a number of reservations about the plan.
Hatfield and McClure would allow logging companies to cancel up to 40 percent of a federal timber contract without penalty and permit a five-year extension on the rest of an unfulfilled contract.
Another feature of the plan, demanded by some elements of the industry in return for their support, would permit timber purchasers to transfer "effective road credits" from one national forest to another.
Federal contractors currently receive credit for building roads in areas where they are cutting federal timber. Road costs in some cases exceed timber sales, so the contractor gets a "road credit" that applies to other contracts, but only as long as they are in the same forest.
CRS calculated that this could cost the goverment more than $50 million a year and, in some cases, would have the effect of forcing the Forest Service to pay to have its own timber cut instead of receiving the minimum price.
Rep. John F. Seiberling (D-Ohio), chairman of the House Interior subcommittee on public lands and national parks, warned that the McClure-Hatfield plan faces tough going in the House if it passes with the road-credit provision.
"That is the most outrageous part. It is a blatant giveaway to the timber industry," Seiberling said. "There may be some merit to contract cancellations, for a lot of the smaller companies cannot afford to harvest timber in this depressed market situation."
The CRS study, however, raised doubts about the Northwest producers' claims of poverty. It said, "The presumption that the western producers who buy federal timber have all the problems is not a proven fact."
It said that the Pacific Northwest, while hard hit economically, appears to be faring better than other hardwood and softwood producing areas around the country.
"If the situation is in need of treatment, then what may be required for equitable consideration is a system of 'tree stamps,' which grants specific relief of a defined nature to any firm that is judged to be 'truly needy,' " the CRS report said.