The legislation is intended to eliminate a problem that this administration and the Congress have acted upon forthrightly to resolve; namely, the severe economic distress that much of the forest products industry in the Pacific Northwest finds itself in as a result of high timber prices and inflation in 1979 - 1980. This legislation provides broader relief to purchasers of timber from these Federal lands than those measures already taken by the administration under the authority of existing law. Many holders of these contracts, most of which were bid in the period 1977 - 1980 and are now held at contract rates significantly higher than the current market, face the unavoidability of defaulting the contracts and perhaps being forced into bankruptcy if they are required to pay damages for the default. It was to avoid serious economic disruption to the industry and the resulting adverse impact to communities dependent upon a strong forest products industry that in July 1983 I authorized administrative relief in the form of 5-year extensions of those contracts with no interest payment requirement. We expected that under this program most purchasers would be able to work their way out of financial difficulty. We viewed this program as the most equitable form of relief to all purchasers of Federal timber.

It now appears that our successful efforts to control inflation mean that market prices for wood products will not rise enough to prevent severe economic hardship to many forest-dependent communities unless the provisions of this new law are implemented. This legislation requires timber purchasers who will utilize its provisions to pay a charge in return for the relief provided.

Under all the circumstances, the legislation provides a balanced approach to resolving a many-faceted and difficult problem. Thus, I have signed the bill.

Note: As enacted, H.R. 2838 is Public Law 98 - 478, approved October 16.