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According to this report from Bloomberg Businessweek, the Forest Service is cancelling timber contracts in an attempt to save Colorado's 3 remaining sawmills. The report indicates that the contracts are no longer viable for the mills due to the beetle outbreak and the economy, but doesn't exactly explain why. The report quotes Senator Udall as saying that the "Contracts with the federal government before the recession don't provide them with enough money to cover the costs of cutting trees and turning them into lumber and other wood products".
A better report from the Denver Post indicates that the cancelled contracts will allow the loggers to focus on the dead and dying beetle-killed trees before they are no longer commercially viable.
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