04/05/1994 01:40 PM Senate L&C

  CHAIRMAN TIM KELLY  called the Labor and Commerce Committee meeting     g    
 to order at 1:40 p.m.  He brought  SJR 51  (SUPPORT FOR SITKA                 
 FIBERBOARD PLANT) before the committee as the only order of                   
 business.                                                                     
                                                                               
 SENATOR ROBIN TAYLOR, Chairman of the Senate Judiciary Committee              
 which sponsored SJR 51, testifying in support of the resolution,              
 explained that it encourages the federal government to proceed and            
 allow the development of a medium density fiberboard plant in                 
 Sitka.  That community seeking to recover from the recent closure             
 of their pulp mill in every way they can.                                     
                                                                               
 Alaska Pulp Corporation (APC) is proposing to develop a medium                
 density fiberboard plant (MDF) in lieu of the original facility.              
 Preliminary studies have shown that an MDF facility is feasible,              
 however, a further more exhaustive examination is necessary and is            
 taking place.                                                                 
                                                                               
 The Alaska Industrial Development and Export Authority (AIDEA) is             
 working with Alaska Pulp to fully examine this project.  A portion            
 of the economics of the project involves the 50-year contract to              
 harvest timber in the Tongass National Forest.  If this contract is           
 cancelled unilaterally by the Forest Service, there is a concern              
 that the fiberboard plant will not be economical.                             
                                                                               
 The Chief of the U.S. Forest Service has set a deadline date of               
 April 15 for a decision as to whether to allow the contract to                
 continue or to cancel it.  Support for Alaska Pulp's efforts is the           
 basis of SJR 51.                                                              
                                                                               
 SJR 51 asks that the contract be continued to allow for the                   
 completion of this study, and if proven feasible, to permit an MDF            
 pulping facility to operate in Sitka.                                         
                                                                               
 Senator Taylor urged the prompt consideration and passage of SJR
.                                                                           
                                                                               
 Number 061                                                                    
                                                                               
 SENATOR KELLY asked it further legislation would be required if               
 AIDEA were to try to bond this project.  SENATOR TAYLOR                       
 acknowledged that it would if, in fact, AIDEA would need to have              
 more than $10 million of authority.  He said he understands that if           
 the feasibility study that is currently being conducted proves to             
 show a very feasible economic operation, the banking institutions             
 of Japan have already indicated that they will finance the venture.           
                                                                               
 Number 090                                                                    
                                                                               
 ANDY ROMANOFF, representing the Southeast Alaska Conservation                 
 Council (SEAC), expressed their frustration that there was no                 
 teleconference capability for the hearing on SJR 51.                          
                                                                               
 Mr. Romanoff directed attention to and described a U.S. Forest                
 Service map representing a portrayal of vegetation on the Tongass             
 in the year 2140.  He said the APC contract was written to provide            
 5 billion board feet of timber to the mill.  At present, there are            
 approximately 2.1 billion board feet left.  He said in looking at             
 the map, it raises serious question as to what is going to be left            
 for any economic base in the future.  The contract is designed, in            
 a sense, to liquidate the forest so quickly that once all of the              
 old growth of commercially viable forest land is gone, there will             
 be no timber available.                                                       
                                                                               
 Mr. Romanoff related that U.S. Forest Service has determined that             
 an allowable sale quantity, which is how much timber can be cut               
 each year in a certain area, is around 64 million board feet per              
 year in the Chatham area.  Presently, 90 million board feet are               
 being cut in the Chatham area.                                                
                                                                               
 Mr. Romanoff said the 375 jobs that were lost in Sitka by the                 
 closing of the pulp mill were lost before there was any talk of               
 terminating the 50-year contract.  He noted that Sitka received $1            
 million in federal assistance for retraining laid off workers and             
 to encourage a study of alternative economic ideas and options.               
                                                                               
 Mr. Romanoff stated that SEAC does not oppose the MDF plan, but               
 they do not believe it needs a long-term contract to make it a                
 viable option.                                                                
                                                                               
 Number 230                                                                    
                                                                               
 RON FLINN, Southeast Regional Office, Department of Environmental             
 Conservation, said SJR 51 is primarily aimed at economic                      
 consideration and doesn't really address environmental concerns               
 that DEC might have, but they have no objections to the continued             
 operation of the mill.  However, there is not much information as             
 far as what the operation of a MDF facility would mean as far as              
 the statutes and regulations that DEC implements.                             
                                                                               
 Number 259                                                                    
                                                                               
 SENATOR LINCOLN asked if DEC has looked at this in terms of                   
 environmental concerns such as the fisheries, etc.  RON FLINN                 
 responded that DEC has worked with the mill for a long time on                
 water quality issues, solid waste issues and air quality issues.              
 However, they have not had an opportunity to evaluate the current             
 proposal to operate  as a MDF facility because APC hasn't got that            
 far into the project and hasn't submitted any information for the             
 department to review.                                                         
                                                                               
 Number 290                                                                    
                                                                               
 There being no further witnesses present to testify on SJR 51,                
 SENATOR KELLY asked for the will of the committee.                            
                                                                               
 SENATOR SHARP moved that SJR 51 be passed out of committee with               
 individual recommendations.  SENATOR LINCOLN objected, stating that           
 there was not an opportunity for interested people to testify on              
 the resolution via the  teleconference network.  The roll was taken           
 with the following result:  Senators Sharp, Rieger and Kelly voted            
 "Yea" and Senator Lincoln voted "Nay."  The Chairman stated the               
 motion to move SJR 51 out of committee had carried.                           
                                                                               
 There being no further business to come before the committee, the             
 meeting was adjourned at 2:00 p.m.