Legislature(1995 - 1996)

02/18/1995 09:05 AM House RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
               HOUSE RESOURCES STANDING COMMITTEE                              
                       February 18, 1995                                       
                           9:05 a.m.                                           
                       Ketchikan, Alaska                                       
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Joe Green, Co-Chairman                                         
 Representative Bill Williams, Co-Chairman                                     
 Representative Scott Ogan, Vice Chairman                                      
 Representative John Davies                                                    
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 Representative Alan Austerman                                                 
 Representative Ramona Barnes                                                  
 Representative Pete Kott                                                      
 Representative Eileen MacLean                                                 
 Representative Irene Nicholia                                                 
                                                                               
 OTHER LEGISLATORS PRESENT                                                     
                                                                               
 Speaker Gail Phillips                                                         
 Senator Mike Miller                                                           
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 Presentation on Timber/Forestry Issues                                        
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 JOE AMBROSE, Aide                                                             
 Senator Robin Taylor                                                          
 State Capitol, Room 30                                                        
 Juneau, AK   99801                                                            
 Phone:  465-3873                                                              
 POSITION STATEMENT:  Made comments and asked questions                        
                                                                               
 JIM AYRES, Chief of Staff                                                     
 Office of the Governor                                                        
 P.O. Box 110001                                                               
 Juneau, AK   99811-001                                                        
 Phone:  465-3500                                                              
 POSITION STATEMENT:  Made comments and asked questions                        
                                                                               
 CLIFF SKILLINGS, General Manager                                              
 Alaska Lumbermen's Association                                                
 81 Phillips Lane                                                              
 Ketchikan, AK    99901                                                        
 Phone:  225-0947                                                              
 POSITION STATEMENT:  Made comments and answered questions                     
                                                                               
 STEVE SELEY, JR., Owner & President                                           
 Seaborne Lumber Co.                                                           
 P.O. Box 6157                                                                 
 Ketchikan, AK   99901                                                         
 Phone:  225-2181                                                              
 POSITION STATEMENT:  Made comments and answered questions                     
                                                                               
 FRANK AGE, Owner & President                                                  
 Pacific Rim Cedar                                                             
 P.O. Box 1498                                                                 
 Wrangell, AK   99924                                                          
 Phone:  874-2772                                                              
 POSITION STATEMENT:  Made comments and answered questions                     
                                                                               
 KIRK DAHLSTROM, Partner & Manager                                             
 Viking Lumber                                                                 
 P.O. Box 670                                                                  
 Craig, AK   99921                                                             
 Phone:  755-8880                                                              
 POSITION STATEMENT:  Made comments and answered questions                     
                                                                               
 TROY REINHART, Employee Relations & Public Affairs Manager                    
 Ketchikan Pulp Company                                                        
 P.O. Box 6600                                                                 
 Ketchikan, AK   99901                                                         
 Phone:  225-2151                                                              
 POSITION STATEMENT:  Made comments and answered questions                     
                                                                               
 ROBERT LINDEKUGEL, Conservation Director                                      
 Southeast Alaska Conservation Council                                         
 419 Sixth Street, Ste. 328                                                    
 Juneau, AK   99801                                                            
 Phone:  586-6942                                                              
 POSITION STATEMENT:  Made comments and answered questions                     
                                                                               
 DAVID SALLEE                                                                  
 P.O. Box 1219                                                                 
 Ward Cove, AK   99928                                                         
 Phone:  247-9557                                                              
 POSITION STATEMENT:  Made comments                                            
                                                                               
 JACK LEE, Past Chairman                                                       
 Tongass Sportfishing Association, Chapter 573                                 
   of Trout Unlimited                                                          
 P.O. Box 1081                                                                 
 Ward Cove, AK   99928                                                         
 Phone:  247-8156                                                              
 POSITION STATEMENT:  Made comments                                            
                                                                               
 DALE PIHLMAN, Representative                                                  
 Alaska Wilderness Recreation & Tourism Association                            
 P.O. Box 7814                                                                 
 Ketchikan, AK   99901                                                         
 Phone:  225-3498                                                              
 POSITION STATEMENT:  Made comments                                            
                                                                               
 BRUCE WALLACE                                                                 
 P.O. Box 8572                                                                 
 Ketchikan, AK   99901                                                         
 Phone:  225-6547                                                              
 POSITION STATEMENT:  Made comments                                            
                                                                               
 BILL THOMAS                                                                   
 P.O. Box 5196                                                                 
 Ketchikan, AK   99901                                                         
 Phone:  225-4833                                                              
 POSITION STATEMENT:  Made comments                                            
                                                                               
 K.A. SWIGER, Executive Director                                               
 Stand Up!                                                                     
 P.O. Box 23645                                                                
 Ketchikan, AK   99901                                                         
 Phone:  225-8627                                                              
 POSITION STATEMENT:  Made comments                                            
                                                                               
 KATHI LIETZ, President                                                        
 Alaska Timber Trackers                                                        
 Thorne Bay, AK  99919                                                         
 Phone:  828-3986                                                              
 POSITION STATEMENT:  Made comments                                            
                                                                               
 ALAIRE STANTON, Mayor                                                         
 City of Ketchikan                                                             
 334 Front                                                                     
 Ketchikan, AK   99901                                                         
 Phone:  225-3111                                                              
 POSITION STATEMENT:  Made comments                                            
                                                                               
 DENNIS WATSON, Mayor                                                          
 City of Craig                                                                 
 Craig, AK   99921                                                             
 Phone:  826-3438                                                              
 POSITION STATEMENT:  Made comments                                            
                                                                               
 DUANE GASAWAY, City Administrator                                             
 City of Wrangell                                                              
 4th Avenue                                                                    
 Wrangell, AK   99929                                                          
 Phone:  874-2642                                                              
 POSITION STATEMENT:  Made comments                                            
                                                                               
 ERNESTA BALLARD, President                                                    
 Ketchikan Chamber of Commerce                                                 
 705 Main Street                                                               
 Ketchikan, AK   99901                                                         
 Phone:  247-0846                                                              
 POSITION STATEMENT:  Made comments                                            
                                                                               
 PHIL JANIK, Regional Forester                                                 
 Region 10, U.S. Forest Service                                                
 709 W. 9th                                                                    
 Juneau, AK   99801                                                            
 Phone:  586-8806                                                              
 POSITION STATEMENT:  Made comments and answered questions                     
                                                                               
 FRED WALK, Director                                                           
 Timber Management                                                             
 U.S. Forest Service                                                           
 709 W. 9th                                                                    
 Juneau, AK   99801                                                            
 Phone:  586-8806                                                              
 POSITION STATEMENT:  Made comments and answered questions                     
                                                                               
 RALPH LEWIS, President & General Manager                                      
 Ketchikan Pulp Company                                                        
 P.O. Box 6600                                                                 
 Ketchikan, AK   99901                                                         
 Phone:  225-2151                                                              
 POSITION STATEMENT:  Made comments and answered questions                     
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 95-18, SIDE A                                                            
 Number 000                                                                    
                                                                               
 The House Resources Committee was called to order by Co-Chairman              
 Williams at 9:05 a.m.  Members present at the call to order were              
 Representatives Green, Williams, Ogan and Davies.  Members absent             
 were Representatives Austerman, Barnes, Kott, MacLean and Nicholia.           
                                                                               
 CO-CHAIRMAN BILL WILLIAMS welcomed everyone and made introductions.           
 He thanked those present for taking the time on a Saturday morning            
 to come together and help try to find solutions to the problems               
 facing Southeast communities.  He said the focus of the meeting is            
 the forest products industry, particularly on the timber supply               
 problem which has already resulted in the loss of many jobs.  He              
 stressed everyone needs to recognize there are many different                 
 interests and user groups in the Tongass National Forest.  However,           
 everyone also knows that the timber industry makes up a large part            
 of the economy in Southeast Alaska.                                           
                                                                               
 CO-CHAIRMAN WILLIAMS stated various panelists have been invited to            
 help the committee learn about the problems, and hopefully to hear            
 how solutions can be found.  He said the committee wants to hear              
 ideas from the different points of view represented on these                  
 panels.  He pointed out that by listening and asking some                     
 questions, all who came to listen may be better able to find                  
 solutions to the problems facing the timber-dependent communities             
 in Southeast Alaska.                                                          
                                                                               
 CO-CHAIRMAN WILLIAMS stated five different panels will be                     
 presenting testimony.  They are the Independent Operators,                    
 coordinated by Cliff Skillings; the Long Term Timber Contractor,              
 led by Ketchikan Pulp Company (KPC) President Ralph Lewis; the                
 Grass Roots Community Panel, including representatives from the               
 Southeast Alaska Conservation Council (SEACC) and Stand UP!; the              
 Community Leadership Panel, including representatives from Craig,             
 Wrangell, and Ketchikan along with the Ketchikan Chamber of                   
 Commerce; and the Regional Forester, Phil Janik and his staff.                
                                                                               
 CO-CHAIRMAN WILLIAMS announced the meeting would begin with a slide           
 presentation put together by the United States Forest Service                 
 (USFS).  He stated the presentation provides a good history of land           
 use in the Tongass National Forest.  (May be listened to on tape              
 95-18, Side A, House Resources Committee Meeting, February 18,                
 1995, available in House Records.)                                            
                                                                               
 SPEAKER GAIL PHILLIPS thanked everyone for attending and thanked              
 Co-Chairman Williams for putting the meeting together in Ketchikan.           
 She noted when Co-Chairman Williams asked if a meeting could be               
 held in Ketchikan, she said yes on one condition--she be allowed to           
 attend also.  She stated it is important for people in Southeast              
 Alaska to recognize and realize that the House of Representatives             
 is committed to working towards economic security for the people in           
 Southeast.                                                                    
                                                                               
 SPEAKER PHILLIPS stated everyone has seen what has happened to the            
 forests of Southeast Alaska over the years.  She said with the                
 economic crisis being experienced in this region, and with the                
 mills that are closed down, anyone who states that 320 million                
 board feet is enough to utilize is not looking at the economic                
 reality of the area and what it means to the state.  She stressed             
 she will be there for whatever support is needed.                             
                                                                               
 SPEAKER PHILLIPS said the House of Representatives is taking a few            
 small steps to correct the measure.  She pointed out that Co-                 
 Chairman Williams introduced new legislation HB 121, a small forest           
 bill called the salvage timber bill.  She noted she lives on the              
 Kenai Peninsula and the forests there are devastated with the                 
 spruce bark beetle infestation.  This bill will allow moving up the           
 schedule of timber sales on those devastated forests.  She stated             
 HB 121 is just a small step, yet the human outcry from people who             
 think the forests are better off unattended and unproduced is                 
 amazing to her.                                                               
                                                                               
 SPEAKER PHILLIPS stated she read an article indicating that                   
 Washington State is in the process of revamping their entire forest           
 practices act.  She noted the flak taken over one little bill for             
 dead trees is unbelievable.  She stressed if Alaskans do not stand            
 together strong to fight for their responsibility to develop the              
 state's resources, the economic viability of the state will be                
 lost.  She said anyone coming into her office and signing the guest           
 book will face a sign which reads, "Without production there is no            
 economy and without economy, civilizations fail."  She stressed she           
 will not allow the civilization in Alaska to fail.                            
                                                                               
 JOE AMBROSE, AIDE, SENATOR ROBIN TAYLOR, stated Senator Taylor                
 sends his regrets he cannot be present due to a death in the                  
 family.  He said a lot of what is going on in Southeast is a matter           
 of credibility and trust.  He pointed out when the Knowles                    
 Administration's change in position on the habitat conservation               
 areas (HCAs) became public, the Governor's Chief of Staff asked Lew           
 Williams at the Ketchikan Daily News whether he thought the Knowles           
 Administration could trust the USFS.  Mr. Ambrose felt there is a             
 pattern developing.                                                           
                                                                               
 MR. AMBROSE said the U.S. Fish & Wildlife Service (USFWS) announced           
 on Thursday they had no scientific basis for establishing HCAs for            
 the wolf.  They also revealed there had been an agreement since               
 December between the USFWS, the USFS, and the Alaska Department of            
 Fish and Game (ADF&G) which ultimately would achieve the areas                
 anyway.  He noted the Clinton budget shows an introduction for                
 timber harvest based on the establishment of HCAs, which are the              
 areas everyone had been told no plan had been made.  He commented             
 the credibility factor is there.                                              
                                                                               
 MR. AMBROSE stated when the President established his forest plan             
 in the Pacific Northwest, it took 85 percent of the land base out             
 of harvest.  Congressional withdrawals removed 38 percent of what             
 was available in the Tongass, other actions took that up to 63                
 percent, and if the 21 percent proposed for HCAs is added, the                
 total is 84 percent which is within 1 percentage point of what the            
 President has proposed for the Pacific Northwest.  He did not                 
 believe that is a coincidence.  Rather, he felt it was a concerted            
 effort and what remains will not sustain the economy of the area.             
                                                                               
 MR. AMBROSE said Mr. Janik told the Governor the USFS would make              
 available 320 million board feet in the coming year, which everyone           
 knows is not adequate to open the mill in Wrangell.  He noted that            
 amount is what will be made available and does not mean it will not           
 be challenged and the timber supply will be further reduced by                
 those challenges.  He stressed the area is in a crisis and folks              
 need to know, at least from Senator Taylor's standpoint, the                  
 agencies being dealt with are being less than candid.  He stated              
 Senator Taylor's office has asked on numerous occasions if the USFS           
 or the agencies looking for the Goshawk had looked at established             
 wilderness areas.  From the top, they are assured they are.  If one           
 goes down a couple of notches and talks to someone who is actually            
 doing the work, they say no--they do not have the budget for that.            
 Rather, they are looking at areas where timber surveys are being              
 conducted to prepare for harvest.                                             
                                                                               
 SENATOR MIKE MILLER stated it was good to be back in Ketchikan as             
 he spent a lot of time there during the campaign.  He said during             
 that time, he got a handle on some of the issues facing Southeast             
 Alaska and Ketchikan specifically, especially the timber issues.              
 He noted many people in the Interior would like to start a timber             
 industry with the forest lands there.  He pointed out the dynamics            
 there are a little different--they are dealing with state lands               
 versus federal lands, the trees in Southeast are much larger than             
 in the Interior, etc.  He felt many of the things learned in                  
 Southeast can be applied to Interior Alaska.                                  
                                                                               
 SENATOR MILLER stressed a strong statewide economy is needed in               
 order to make everything work.  Not only is a strong timber economy           
 needed but also needed is a strong mining economy, fishing economy,           
 and tourism economy because they all work together to make a strong           
 economy for Alaska so Alaskans can have a good living.  He said he            
 was born in Alaska and intends to stay in Alaska but he wants to              
 make sure there are jobs so his children, should they choose to               
 stay in Alaska, can also stay in the state and make a living.                 
                                                                               
 SENATOR MILLER stated there is a need to develop the timber economy           
 in the state and he will do whatever he can in his position in the            
 state Senate to do that.  He thanked Co-Chairman Williams for the             
 invitation and enabling him to continue to stay involved in the               
 issues.                                                                       
                                                                               
 JIM AYRES, CHIEF OF STAFF, GOVERNOR TONY KNOWLES, stated he was               
 happy to be back in Ketchikan.  He said he appreciated the previous           
 speaker's talk about a strong sustainable economy, which is what              
 the Governor talked about during the campaign, as did Senator                 
 Miller.  He pointed out the essence of the issue is how to build a            
 strong and sustainable economy.  The Governor is committed to jobs            
 and families.  He hoped it would be possible to figure out how to             
 get to a meaningful process which includes the communities,                   
 meaningful information, and concerned people to determine a way to            
 have a sustainable fishing, timber, and tourism industry.                     
                                                                               
 CLIFF SKILLINGS, GENERAL MANAGER, ALASKA LUMBERMEN'S ASSOCIATION,             
 thanked Co-Chairman Williams and Co-Chairman Green, and guests for            
 giving him the opportunity to express concerns of the Small                   
 Business Administration (SBA) timber industry and its respectful              
 federal timber sale program.   He said he could not help but notice           
 the fine wood products used to support picket signs that morning.             
 He stated he was pleased to know that form of sign support will not           
 melt in the rain.                                                             
                                                                               
 MR. SKILLINGS explained the Alaska Lumbermen's Association is an              
 organization of SBA timber operators and Southeast Alaska                     
 businesses and individuals who wish to see a productive and viable            
 SBA federal timber sale program on the Tongass.  He asked committee           
 members that while they listen to testimony, to remember just two             
 aspects about the timber industry and respectful timber sale                  
 program.  First, the 80 million board foot demand that will be                
 heard is a real demand by the SBA timber industry.  Eighty million            
 board feet is an attainable target volume to subside the industry,            
 agreed upon by both the SBA and USFS two decades ago; it is a                 
 volume that is processable by the regional SBA sawmills; and it               
 represents an integral part of the entire Southeast Alaska timber             
 industry as a whole.                                                          
                                                                               
 MR. SKILLINGS said the second aspect is HCA legislation, a                    
 regulatory action which has a devastating trickle down effect upon            
 the SBA timber operators on the Tongass.  HCAs deplete the timber             
 harvest base from both the long term contract holder and the SBA              
 independent timber operators.  He stressed HCAs are causing a                 
 significant impact to the timber industry by deferring and                    
 canceling timber sales in both sale programs.  In so removing                 
 certain sales from both programs, the SBA timber industry is                  
 affected the hardest when the USFS must remove prepared timber                
 sales from the sale program and release them to the long term                 
 contract holder to meet contractual obligations.  He stated this is           
 simply not fair, especially when the sales removed are in the                 
 Ketchikan and Prince of Wales vicinity and any replacement volume             
 is located in the Northern Chatham region.                                    
                                                                               
 STEVE SELEY, JR., OWNER & PRESIDENT, SEABORNE LUMBER, thanked                 
 Chairmen Williams and Green and the committee for holding this                
 public forum and allowing him to testify on behalf of the SBA                 
 timber operators on the Tongass.  He stated he has spent 40 years             
 of his life in Southeast Alaska--primarily the Prince of Wales                
 Island and Ketchikan communities.  He grew up on Prince of Wales              
 Island in a timber harvesting family and in 1978, established Seley           
 Incorporated.  This company grew from a four man "jippo" operation            
 to a multi-faceted timber business involving road construction, hi-           
 lead logging, marine transportation, whole log chipping and sawmill           
 operations.                                                                   
                                                                               
 MR. SELEY stated in 1993, with the promise of a guaranteed timber             
 supply from the federal government SBA timber sale program, he                
 began the construction of the sawmill facility now operated as                
 Seaborne Lumber Company.  He said the SBA timber sale program was             
 designed in 1973 to ensure that regional small business timber                
 operators would have a supply of timber to meet the demand of their           
 processing facilities, eliminating larger corporate intervention.             
 This concept was formalized in an agreement entered into on March             
 18, 1977, between SBA representative Art Mason and then regional              
 forester John Sandor and was called the "Agreement Between                    
 Department of Agriculture and the Small Business Administration For           
 The Development and Operation of a Small Business Program In The              
 Sale Of National Forest Timber Related Products".  He pointed out             
 this marked the beginning of the SBA version of a long term timber            
 sale contract.  The agreement stated that "the USFS and SBA have              
 agreed to a set-aside program of approximately 80 million board               
 feet of saw timber (average annual target volume) for the Tongass."           
                                                                               
 MR. SELEY said in 1986, this agreement was amended to cause the               
 USFS to follow closer the target volume of 80 million board feet,             
 especially since the entire industry had just witnessed depressed             
 timber volumes in the previous 1984 and 1985 timber sale years.  It           
 was again amended in 1993 due to two SBA mill shutdowns--Mitkof               
 Lumber in Haines and Klawock Timber in Klawock--at which point the            
 USFS stated they felt demand was significantly lower than the                 
 target volume of 80 million board feet.  He stated the new                    
 amendment called for cyclical six month meetings between the USFS             
 and SBA representatives to identify mill capacity and meet SBA                
 demand.  He noted that to his knowledge, these meetings have never            
 involved regional SBA timber operators and the 80 million board               
 feet demand still has not been met.                                           
                                                                               
 MR. SELEY told committee members that with these agreements and               
 legislative wording placed in the Tongass Timber Reform Act of 1990           
 to help support SBA timber operators, he proceeded to build a new             
 sawmill facility to process timber harvested from the Tongass                 
 National Forest.  He stated Seaborne Lumber now employs 31 loggers            
 and 54 mill workers.  The sister company, Seaborne Marine Service,            
 employs an additional 20 men and women.  He said his sawmill                  
 processes raw timber into cants, flitches, squares and produces               
 chips from residual slabs and low quality logs.                               
                                                                               
 MR. SELEY stressed his primary concern lies with the current supply           
 of SBA timber and the fact that the fiscal year 1995 timber sale              
 schedule falls short of meeting the USFS commitment to the Small              
 Business Administration and those who depend on that supply of                
 timber.  He said Seaborne Lumber has an annual saw log demand of 26           
 million board feet.  In addition, Seaborne Lumber has the capacity            
 to chip an additional 11.5 million board feet for a total need of             
 37.5 million board feet of timber.                                            
                                                                               
 MR. SELEY stated Seaborne Lumber's operations have been severely              
 affected over the course of 1994 due to a log supply shortage                 
 brought on as a result of extreme pressure from environmental                 
 groups striving to curtail the harvest of timber on the Tongass.              
 The USFS's lack of desire, inability or lack of funding necessary             
 to combat this pressure has resulted in a shortfall in meeting the            
 SBA industry demand for logs.  He said HCAs have posed the biggest            
 threat to the SBA timber supply due to their impacts on the entire            
 industry.  Harvest areas have been deferred even though they have             
 passed all National Environmental Policy Act (NEPA) gates, have               
 been funded for the entire preparation period of 2-4 years, and are           
 ready for immediate advertisement.  He noted that HCAs have further           
 posed a problem for the timber industry because when harvest areas            
 are deferred or withheld from the long term contract holder, the              
 USFS will remove timber sales from the SBA and independent timber             
 sale pipeline to meet the long term sale contractual obligation and           
 not replace the volume.  He pointed out that today, the SBA                   
 pipeline is nearly empty.                                                     
                                                                               
 MR. SELEY gave an example of his company's need for timber.  On               
 December 1, 1994, they cut the last log in their yard and curtailed           
 sawing operations.  The Bushy Island Salvage Sale was bid on                  
 December 28, 1995.  Seaborne Lumber was the successful bidder from            
 six companies competing for the sale containing approximately 400             
 million board feet.  The sale was awarded one week after the bid.             
 Two days later, they had cutters on the island.  Three days after             
 that a camp had been mobilized and equipment was at the site.  He             
 said 31 days from the date of the bid opening, the entire volume              
 had been harvested and all equipment and logs were removed from the           
 sale area and delivered to Ketchikan.  Unfortunately, the timber              
 from the sale will provide only 3.7 days of cutting at his mill.              
                                                                               
 MR. SELEY told committee members that Seaborne Lumber invested $1.4           
 million in 1994 to upgrade its facility, allowing them to expand              
 their product line with higher valued lumber.  These improvements             
 include the latest technology in computerized set works to insure             
 accurate sizing, a new carriage and drive system capable of                   
 operating three times faster than the equipment it replaced,                  
 helping reduce manufacture costs at that machine center, an edger             
 with both shifting and gang saws that provide for efficient                   
 breakdown of cants to a multitude of semi-finished products, and a            
 new trim station with the capability to accurately even end trim              
 all lumber that is produced.  In addition to the sawmill equipment,           
 Seaborne Lumber designed and built a drum chipping system that will           
 take a defective log end of any diameter up to six feet in length             
 and cut it to chips acceptable for sale to Ketchikan Pulp Company,            
 helping meet their fiber needs.  He stressed that each additional             
 machinery center not only adds to their flexibility and                       
 profitability, they also add jobs to the community.                           
                                                                               
 MR. SELEY stated the SBA timber industry is not restricted to                 
 certain sales as the USFS may think.  The USFS has stated that the            
 SBA industry does not have the capability to process the volume               
 needed to meet the 50 percent SBA primary processing clause placed            
 on all SBA timber sales.  He said currently, Seaborne and Viking              
 Lumber have chipping capabilities along with cutting facilities to            
 insure that the 50 percent primary processing clause can be met by            
 SBA owned companies.  The USFS has stated the SBA operators cannot            
 locate adequate funding to cover the cost of performance bonds,               
 pre-roading, and harvest costs for larger sales.  He pointed out              
 that regional financial institutions such as the National Bank of             
 Alaska and First Bank stand ready to assist SBA timber operators              
 with their financial needs.  Mr. Seley stated finally, the USFS has           
 stated the smaller operators will have a harder time finding or               
 creating markets for their products.  He said the majority, if not            
 all, regional SBA mills have contracts with one or several                    
 purchasers for the products they produce.                                     
                                                                               
 MR. SELEY stressed there is a viable and thriving SBA timber                  
 industry in Southeast Alaska.  He said the timber industry adds to            
 community socioeconomic levels and provides employment for many               
 Southeast Alaska residents.  He stated the level of timber the USFS           
 plans to offer the SBA timber operators over the next two years               
 falls short of meeting the SBA processing capacity.  The volumes              
 for both years, as currently planned, will fail to meet the 80                
 million board feet promised which is so desperately sought.                   
                                                                               
 MR. SELEY said the three mills represented, if operated at full               
 production levels, have the capacity to cut all 80 million board              
 feet.  However, there are 36 other smaller SBA classified                     
 processing facilities in Southeast Alaska who also seek to share in           
 the federal SBA timber sale program.  He stressed it is imperative            
 the USFS adhere to an 80 million board feet yearly target volume so           
 as to maintain the viability of the mills sector of the industry.             
 He stated the mills have demonstrated the ability to survive and at           
 the same time pay the highest average stumpage prices and                     
 continually upgrade and improve manufacture capabilities to meet              
 the market demand for a variety of products.  Coupled with this 80            
 million board feet demand should come timeliness of SBA timber sale           
 offerings, sales areas located geographically equal to the total              
 volumes sold off the Tongass and timber sales that are economically           
 viable.  He stressed without these demands met, the SBA timber                
 industry and supporting operators will be eliminated.                         
                                                                               
 FRANK AGE, OWNER & PRESIDENT, PACIFIC RIM CEDAR, stated Pacific Rim           
 Cedar owns and operates a sawmill facility in Wrangell.  He said he           
 came to Alaska in 1991 after his Oregon mill was forced to shut               
 down following an extensive timber reduction due to the spotted owl           
 legislation.  He started Age Cedar Products in Wrangell with a                
 small mill processing cedar shakes and shingles.  He started with             
 five employees and operated profitably until the high delivery cost           
 of his logs created an uneconomical situation for his mill.  In               
 1993, after reviewing market trends and congressional oversight to            
 provide for an economical supply of timber to regional SBA timber             
 operators, he created Pacific Rim Cedar with the purpose of                   
 manufacturing logs from the Tongass into marketable wood products.            
 He explained his employment base has grown since 1991 from 5                  
 employees to 14 employees encompassing milling, log transportation            
 and sort yard operations.  He noted currently Pacific Rim Cedar is            
 the only operating sawmill in the township of Wrangell.                       
                                                                               
 MR. AGE told committee members over the course of 1994, Pacific Rim           
 Cedar has made numerous upgrades in an attempt to produce a better            
 product for a lower manufactured cost.  These upgrades to facility            
 and heavy equipment have cost in excess of $450,000.  With these              
 improvements, Pacific Rim Cedar was able to increase productivity             
 approximately 15 percent.  He stated the Pacific Rim Cedars milling           
 operation relies heavily on the USFS obligation to provide an                 
 economically viable timber supply of 80 million board feet for                
 regional SBA timber operations use.  Pacific Rim Cedar has a saw              
 log volume capacity of 10-12 million board feet per year annually.            
 He said they are currently cutting spruce and hemlock but would               
 prefer to be processing Western Red and Alaska Yellow Cedar should            
 there be a shift in the USFS policy surrounding cedar export                  
 provisions.                                                                   
                                                                               
 MR. AGE stated this shift in policy would need to require primary             
 processing of all cedar in regional sawmills; essentially the same            
 provisions as are found with hemlock and spruce.  He said everyone            
 is acutely aware of the timber supply problems facing all sawmills            
 in Southeast Alaska.  He noted his mill can flourish cutting only             
 cedar which would leave the spruce and hemlock they are now cutting           
 for other sawmills in the region.  He stressed it is economically             
 unfeasible to process these cedar logs and compete to sell the sawn           
 products produced while cedar logs in their round form of similar             
 quality are allowed to be exported.  He said the export of cedar in           
 the round must be stopped and those logs kept at home for                     
 manufacture in regional facilities.                                           
                                                                               
 MR. AGE pointed out that over the last 10 years, industry has                 
 exported 430 million board feet of cedar or an average of 43                  
 million board feet per year.  An average mill can process                     
 approximately 3.2 thousand board feet of lumber per man per day.              
 This represents 13,437 man days of employment exported to other               
 areas each year.  Converted to payroll, Southeast Alaska                      
 communities lost $2,526,000 in payroll last year alone and if that            
 process is continued for the next 10 years, the region can expect             
 to lose another $25,000,000.                                                  
                                                                               
 TAPE 95-18, SIDE B                                                            
 Number 000                                                                    
                                                                               
 MR. AGE stated Pacific Rim is here to beg the USFS to make good on            
 their promise to provide the 80 million board feet required by the            
 timber industry.  He expressed appreciation for the opportunity to            
 express his concerns regarding the timber industry.                           
                                                                               
 KIRK DAHLSTROM, PARTNER & MANAGER, VIKING LUMBER, stated Viking               
 Lumber currently owns and operates the sawmill facility outside the           
 town of Klawock.  Viking Lumber purchased the Klawock Sawmill in              
 June 1994.  He thanked the committee for the opportunity to                   
 testify.  He thought when he moved to Alaska eight months ago that            
 his testifying before committees would be over, as he did not want            
 to do it anymore.  He told committee members he had been testifying           
 for five years in Washington State trying to fight the spotted owl.           
                                                                               
 MR. DAHLSTROM said his partners and him saw the potential for a               
 thriving processing facility, putting people to work from                     
 surrounding communities and raising community economic levels.                
 This whole idea was contingent upon a supply of timber that he                
 presumed would be available due to prior SBA and USFS agreements              
 and wording added to the Tongass Timber Reform Act (TTRA) language            
 which directed the USFS to provide a supply of timber that would              
 meet SBA market demand and mill capacity--a supply of 80 million              
 board feet.  He commented he should have known better.                        
                                                                               
 MR. DAHLSTROM stated he and his partners have had an old growth               
 hemlock sawmill on the Olympic Peninsula of Washington State for 17           
 years--buying, logging, and processing USFS timber for the first 13           
 years.  He noted that mill is still running because they have                 
 learned to survive on scraps and junk for the past four years.  He            
 said the cut on the Olympic National Forest has gone from 239                 
 million board feet per year to 10 million board feet of scraps and            
 junk because of the lies of the enviros and the attitude and                  
 gutlessness of the USFS.  This loss of available timber has                   
 devastated the community where he was born and raised, forcing him            
 to either become depressed and despondent or move to Alaska,                  
 risking everything he owned and try again.  The small logging                 
 communities in Alaska have no idea what will happen to them if the            
 USFS does the same thing in Alaska they did to the Pacific                    
 Northwest using the lies about the spotted owls and marbled                   
 murrelets.                                                                    
                                                                               
 MR. DAHLSTROM said after purchasing the mill, spending $800,000 and           
 six months on reconstruction, Viking began operation of the sawmill           
 two months ago in December.  He added their whole log chipping                
 operation will start operating in April with an investment of over            
 $2 million.  These two operations will need 50-70 million board               
 feet of timber to run at full production.  He stressed the sawmill            
 produces lumber for value added products.  Every million board foot           
 produced will put 20 people, yearly, to work in manufacturing                 
 plants, making doors, windows, and moldings.                                  
                                                                               
 MR. DAHLSTROM pointed out that the SBA timber sale program was                
 designed to alleviate the apparent one-sidedness that larger timber           
 firms had on the timber industry in the mid-1970s.  The program was           
 devised by both the SBA and the USFS and provided that 80 million             
 board feet was an extremely workable and agreeable figure for a               
 timber sale program target for the SBA timber operators.  In the              
 process of agreeing that 80 million board feet would be the target            
 volume, the SBA representative and Regional Forester engaged in a             
 written agreement ensuring that the USFS would seek to meet 80                
 million board feet for SBA preferential bid.  He said amendments to           
 this agreement were made in 1986 and 1993 which parallel industry             
 trends and accommodate the industry.  He stressed a problem has               
 always existed in the USFS's ability to meet this target volume.              
                                                                               
 MR. DAHLSTROM stated a timber crisis was felt extremely hard in               
 1994 when the USFS became incompetent in meeting any SBA timber               
 operator demand.  Multiple sales from the Prince of Wales area were           
 canceled, deferred, or removed and offered for contractual                    
 obligations to the long term contract holder.                                 
                                                                               
 MR. DAHLSTROM said HCAs are both unwarranted and unnecessary.  Land           
 Use Designations II (LUD IIs) and wilderness land set-asides                  
 preserve massive habitat acres with the intent of deferring timber            
 harvest in those areas.  This further action is blatant                       
 preservation actions designed to protect two species which are                
 currently not threatened or endangered.  He stated this HCA action            
 is being implemented even though it has (1) not been signed into              
 action by the Regional Forester; (2) not proceeded through any                
 formal Tongass Land Management Plan (TLMP ) amendment process; (3)            
 and regarded by the USFS as nondetrimental to current timber                  
 harvest.  He guessed when there is no current timber harvest, a               
 federal regulatory agency can say their actions are nondetrimental            
 to timber harvest.                                                            
                                                                               
 Number 130                                                                    
                                                                               
 TROY REINHART, EMPLOYEE RELATIONS & PUBLIC AFFAIRS MANAGER,                   
 KETCHIKAN PULP COMPANY (KPC), noted that in the audience was Ralph            
 Lewis, President and General Manger, KPC; Allen Hayes, KPC Mill               
 Manager; and Owen Graham, KPC Timber Manager.   He stated KPC has             
 almost 1000 employees, consisting of 5 logging camps, 2 sawmills,             
 and 1 pulp mill.  KPC sells their products to 20 countries and                
 generates $40 million in annual payroll.  He stressed one thing has           
 not changed in almost four decades and that is KPC's commitments to           
 Ketchikan, Prince of Wales Island, and the Southeast Alaska region.           
 KPC is committed to being a continued part of the social fabric and           
 economic reality of the region.                                               
                                                                               
 MR. REINHART stated KPC has a partnership with the USFS--a                    
 partnership built on KPC's commitment to Southeast Alaska, through            
 the creation of continuous year-round jobs and the commitment of              
 the USFS to provide KPC with 8.25 billion board feet over 50 years            
 at economical prices.  KPC has and will continue to hold up its               
 part of the partnership.  He stressed KPC has built and operated a            
 pulp mill, two sawmills, and all the camps and facilities needed to           
 harvest the regions great renewable resource.  He added that KPC's            
 investment in the region, the people and facilities is not                    
 complete.                                                                     
                                                                               
 MR. REINHART said in the next three years, KPC will invest between            
 $60-70 million in its facilities.  These investments will include             
 an extended marine out fall to Tongass Narrows providing for better           
 discharge of treated wastewater, process changes to create the                
 world's first chlorine free dissolving pulp process and new                   
 pollution prevention measures, to contain any spills which may                
 occur on its properties.  He stated all these investments are a               
 commitment to the future and continued operations of KPC                      
 facilities.                                                                   
                                                                               
 MR. REINHART stressed a partnership is a two-way street.  He said             
 KPC cannot continue to operate its facilities on thin air.  KPC               
 requires a predictable, certain, and economically priced supply of            
 timber.  For the first 35 years of KPC's partnership with the USFS,           
 the partnership was met.  Over the last five years, the USFS has              
 not upheld their part of the agreement.  He noted three trends                
 which have occurred over the last five years.  First, in only two             
 years out of the last six has the Tongass met the minimum annual              
 contractual timber offering to KPC.  Second, the amount of timber             
 under contract has decreased significantly over the last five years           
 to levels which leave KPC no flexibility due to weather or markets,           
 and in addition, the amount of road construction to perform                   
 harvesting has increased.  Third, the USFS timber offerings to KPC            
 have been moved to the end of the fiscal year, which effectively              
 means timber offerings are not accessible for another six to twelve           
 months, due to timing restrictions and road building.                         
                                                                               
 MR. REINHART stated KPC is not asking for any more than is called             
 for by KPC's partnership with the USFS.  KPC is not asking for                
 additional volume, but only the timber volume promised and                    
 contractually agreed to.  He stressed KPC is committed to being               
 part of this region's life style for years to come but only with              
 the legislature's assistance in compelling the USFS to meet their             
 commitment in KPC's partnership agreement will that be possible.              
                                                                               
 MR. REINHART said he would use charts to outline KPC's contract               
 with the USFS's past performance and needs for the future.  He                
 stated (referring to chart number 1) there are three very important           
 numbers to consider.  The first is 8.25 billion board feet, the               
 total timber volume which KPC is entitled from the USFS per the 50-           
 year contract which expires in the year 2004.  He stated 192.5                
 million board feet is the average annual offering (at a minimum)              
 that the USFS is supposed to provide KPC.  He explained because of            
 the shortfalls in offerings, the USFS must offer KPC 225 million              
 board feet each year until the year 2004 to meet their 8.25 billion           
 board feet contract volume commitment.                                        
                                                                               
 MR. REINHART stated charts 2, 3, and 4 show the accomplishment                
 record of the USFS over the last 10 years.  He said in only two of            
 the last six years has the USFS met the contract volume.                      
 Therefore, there is reason to be skeptical in the future.  He noted           
 of the 176 million board feet received last year, KPC was only able           
 to harvest approximately 110 million board feet because a large               
 significant part of the offering came at the end of the year.  He             
 told committee members the delay in USFS offerings has resulted in            
 no flexibility for planning KPC's operations to keep the timber               
 pipeline flowing and people working.  He noted the current sale               
 plan the USFS has given KPC this year continues to decrease in the            
 amount of volume and the sales being offered are getting later and            
 later in the timber sale program.  A large part of the volume KPC             
 will get in 1995 will again be in September and October when it is            
 too late to harvest or begin building roads.                                  
                                                                               
 MR. REINHART commented on the importance of having a timber                   
 pipeline, having extra timber in the pipeline enabling flexibility            
 and the need to get the timber sale offerings earlier in the year.            
 He said in 1989, KPC had to build .37 mile of road for each million           
 board feet harvested.  He stated through last year, KPC is up to              
 almost three-quarters of a mile of road.  He explained it takes               
 longer to get access to the timber--previously it took a year to              
 get all the roads in and now it takes two years to get all the                
 roads in.  He said that is why flexibility is so important and why            
 the timber sale offerings are needed earlier.                                 
                                                                               
 MR. REINHART stated chart 5 shows typical timing restrictions.  The           
 red area shows the times where KPC's operations are curtailed for             
 varying reasons--inability to build roads or bridges, inability to            
 actually harvest timber.  He said it can be seen that if everything           
 is overlapped--things like goat winter range, goat kidding                    
 restrictions, swan restrictions, wolf den restrictions, eagles,               
 fish, etc., the only free window available starts in September                
 which again causes problems with building roads and causes a                  
 flexibility problem.                                                          
                                                                               
 MR. REINHART told committee members that KPC works with the USFS to           
 try to find ways to meet the intent of the timing restrictions,               
 protect the resources and still keep its operations running and has           
 been successful in some cases and not successful in others.  He               
 said the bottom line for the community is simple.  Because of the             
 lack of timber received from the USFS, the deficiency that is                 
 within the timber sale pipeline and the timing of those timber                
 sales, people are out of jobs, the sawmill at Ward Cove is shut               
 down due to lack of timber, most of the production at the hemlock             
 mill in Metlakatla is down, and KPC is currently trying to find               
 enough wood to provide work through April so as to prevent having             
 a temporary extended shutdown at the pulp mill.                               
                                                                               
 MR. REINHART stated in 1993, KPC's pulp mill shut down for 100 plus           
 days due to a lack of timber volume.  In 1994, a shut down did not            
 occur but only because KPC was able to purchase chips from the                
 Wrangell Sawmill and pulp logs from the Sitka pulp mill.  Now that            
 the Alaska Pulp Corporation contract has been canceled by the USFS,           
 this source of fiber supply has vanished.  He said unless the USFS            
 speeds offerings and begins to meet their commitments to KPC, more            
 temporary closures may occur in the future.                                   
                                                                               
 MR. REINHART pointed out that the leadership of the USFS is now               
 taking steps to limit timber supply through HCAs.  While no final             
 decision has been made on HCA implementation, HCAs are being                  
 illegally implemented, taking over 400 million board feet of timber           
 which could have been offered off the market.  Even worse, the                
 decision on HCAs was made on bad science.  He stressed the science            
 is weak for the idea of HCAs.  He noted when HCAs are discussed,              
 goshawks and martens are being talked about, if one follows the               
 readings of the viable population committee (VPOP).  Looking at the           
 current assessment of goshawks being done by the USFS, they are               
 showing that almost none of the telemetry points are appearing in             
 the interior productive old growth.  Rather, they are predominately           
 found at the edge of openings created by clearcutting.                        
                                                                               
 MR. REINHART added that the Draft Plan Amendment map for HCAs shows           
 that only 3 percent of located goshawk nests fall within the HCA              
 system.  He said in answer to the question do goshawks need large             
 tracks of old growth, the answer is no.                                       
                                                                               
 MR. REINHART stated marten are an introduced species to Southeast             
 Alaska.  Hence, there is no legal obligation for the USFS to manage           
 for them.  The National Forest Service Management Act implementing            
 regulations call for ensuring habitat to have viable populations of           
 Native and desired non-Native species.  He said there are numerous            
 Natives in Southeast Alaska who suggest marten have hurt the                  
 ptarmigan and grouse populations, species some Natives consider               
 important.  He stressed the bottom line is that the so-called                 
 evidence supporting an HCA strategy to ensure viable wildlife                 
 populations is crumbling beneath the USFS's feet and their                    
 hypothesis has been shown to be false.  There is no evidence that             
 an additional 21 percent of timber needs to be taken out of the               
 Tongass timber base.                                                          
                                                                               
 MR. REINHART told committee members HCAs are not the only problem             
 as the Goshawk Guidelines are also of concern.  He said the HCA               
 Plan Amendment calls for 8.4 mile circles around goshawk nests,               
 with no harvest allowed within the 95 percent harmonic mean of the            
 telemetered areas.  He stated the October 1994 Goshawk workshop               
 talked about having 2.9 mile radiuses of no timber harvest around             
 the goshawk nests.  He pointed out that current goshawk assessment            
 underway by the USFS shows that few telemetry points reside in                
 interior old growth.  He added there have been active goshawk nests           
 in second growth documented on Douglas Island.  He stressed the               
 bottom line is there is no scientific evidence showing that large             
 tracks of land need to be set aside for the protection of the                 
 goshawk.                                                                      
                                                                               
 MR. REINHART stated the only logical choice for Regional Forester             
 Janik is to select the no action alternative in implementing HCAs.            
 He said currently 400 million board feet of NEPA approved timber              
 has been taken from the timber industry.  He noted even if the USFS           
 agreed there is no supporting evidence for HCAs and goshawk                   
 guidelines, they would point the finger at conserving biodiversity.           
 He said the USFS would also point the finger at the Peer Review of            
 the VPOP Report done a year ago as evidence that there is a need to           
 do more for viable populations and biodiversity.  He advised                  
 committee members to note that only two members of the VPOP                   
 committee visited Southeast Alaska.  Their lack of background led             
 them to discuss Southeast Alaska caribou and tundra on the Tongass            
 National Forest.                                                              
                                                                               
 MR. REINHART stressed that common sense needs to be brought into              
 the process.  He felt there was too much agenda science.  He said             
 HCAs are based on the President's plan for the Pacific Northwest to           
 lock up more timber on the Tongass National Forest.  He noted that            
 the 1979 TLMP, as amended by the TTRA, has 38 percent of the                  
 productive old growth in congressional withdrawals; of the 3.14               
 million acres of productive old growth outside of congressional               
 withdrawals, only 1.94 million is suitable to consider for timber             
 harvest--hence there is 1.2 million acres of timber that will not             
 be harvested; therefore, about 63 percent of the productive old               
 growth on the Tongass National Forest will never be logged.                   
                                                                               
 MR. REINHART said based on common sense, protecting 63 percent of             
 the old growth on the Tongass National Forest is ample to meet the            
 implementing regulations of the National Forest Management Act, for           
 habitat to ensure wildlife viable populations and biodiversity, and           
 the Endangered Species Act.  KPC believes that is balance and                 
 suggests the American public voted out last November the nonsense             
 everyone talks about in HCAs.                                                 
                                                                               
 MR. REINHART noted many people talk about whether the Tongass is              
 overcut.  He showed two graphs.  The first showed the sustainable             
 level of harvest which could be cut off the suitable timber lands             
 on the Tongass National Forest.  The second graph showed the                  
 percent of forested land on the Tongass which has been harvested.             
 He said in 1952, 0.2 percent of the Tongass had been harvested, by            
 1972, it was two percent, and by 1992, 3.6 percent of the Tongass             
 has been harvested.  He stated the scare tactics of other groups              
 that the Tongass is being overharvested is not true.                          
                                                                               
 MR. REINHART stressed that KPC wants to stay in Ketchikan and                 
 continue to be a productive part of it but help is needed to break            
 the gridlock of overlapping environmental laws and frivolous                  
 lawsuits filed by preservationist groups.                                     
                                                                               
 Number 375                                                                    
                                                                               
 ROBERT E. LINDEKUGEL, CONSERVATION DIRECTOR, SOUTHEAST ALASKA                 
 CONSERVATION COUNCIL (SEACC) stated SEACC is a coalition of 15                
 volunteer citizen groups in 12 Southeast Alaska communities.  He              
 noted one of the member groups in Ketchikan, the Tongass                      
 Conservation Society, could not be present.  He said SEACC is                 
 dedicated to preserving the integrity of Southeast Alaska's                   
 unsurpassed natural environment, while providing for balanced,                
 sustainable use of the region's resources.                                    
                                                                               
 MR. LINDEKUGEL noted that SEACC understands the purpose of the                
 meeting is to consider what can be done to solve what the timber              
 industry calls a timber supply issue.  SEACC believes, however,               
 that the focus and format of this hearing prevents the committee              
 from understanding the complexity of the issues confronting users             
 of the Tongass and the interests of all users.  He noted everyone             
 has heard about how much productive old growth is in the forest.              
 However, only 15 percent of the Tongass has the medium and large              
 trees that fish, wildlife, the timber industry and all other forest           
 users depend on.                                                              
                                                                               
 MR. LINDEKUGEL said the most endangered species on the Tongass are            
 the workers and families who depend on a healthy ecosystem.  He               
 agreed that not a lot of the Tongass has been cut, but what has               
 been cut is the most productive portion of the Tongass.  He noted             
 that SEACC has invited representatives from the tourism, commercial           
 and sport fishing, and small timber operators to also speak,                  
 enabling the committee to understand the breadth of the issues and            
 the complexity of trying to address those issues.                             
                                                                               
 DAVID SALLEE, KETCHIKAN, stated he was born in Ketchikan in 1941              
 and is a lifelong Alaskan.  He said he logged in the area                     
 continuously for about 35 years, including a period of owning an A-           
 Frame/cold deck logging operation.  He stressed he is not                     
 comfortable with the present climate because it is too full of                
 contention.  He felt the small people have been wiped out.  He                
 commented that what is happening in the timber industry is a skimpy           
 manufacturing program--timber is cut into baby squares or into pulp           
 and is shipped overseas into other markets for remanufacture into             
 finished products.                                                            
                                                                               
 MR. SALLEE stressed there is a need to start doing a lot more                 
 manufacturing of the state's dwindling timber resources.  He would            
 like to see more small mom and pop businesses and more cabinet mill           
 little businesses.                                                            
                                                                               
 JACK LEE, PAST CHAIRMAN, TONGASS SPORTFISHING ASSOCIATION, CHAPTER            
 573 OF TROUT UNLIMITED, said his organization actively promotes               
 fisheries, conservation, and enhancement and addresses issues that            
 impact fisheries habitat and the recreation opportunities they                
 offer.  Unlike many fishing organizations, his organization has a             
 fairly diverse membership and its board of directors has seats for            
 sportfishers, charter operators, lodge and related businesses and             
 agency representatives from ADF&G and the USFS.                               
                                                                               
 MR. LEE stated his organization views the value of the fisheries              
 resource in terms of the $83 million spent on sportfishing                    
 statewide, with $61 million of that spent in Southeast.  This                 
 translates into over 1100 full-time jobs, 950 of which are in                 
 Southeast.  These are 1988 figures and have grown with the rapidly            
 growing tourism industry that sportfishing is an important element            
 of.                                                                           
                                                                               
 MR. LEE stressed that sportfishers, like loggers and others, are              
 being impacted by legislation such as the Endangered Species Act.             
 He said there may soon be major cutbacks in king salmon harvest               
 limits because of the problems with returns down south.  He asked             
 do people like it?  Is it fair?  Should the Endangered Species Act            
 be done away with?  He answered no to all points.  He felt it would           
 be far better to learn from the mistakes of others and avoid the              
 problems which made this legislation necessary.  Wise resource                
 management and habitat protection will assure a more prosperous               
 future for everyone, regardless of their chosen profession.                   
                                                                               
 MR. LEE said his organization is currently concerned with a local             
 situation illustrating this point.  Returns of wild steelhead have            
 been alarmingly low for the past several years.  The recent                   
 proposal by Senator Murkowski to allow the Landless Native Tribes             
 to select land in LUD II areas could drastically increase the                 
 problems with steelhead returns.  The LUD II areas were given                 
 protected status for their high recreation and high habitat value.            
 He stressed many of these areas support major runs of wild                    
 steelhead, and logging them could push steelhead populations a step           
 closer to threatened status.                                                  
                                                                               
 MR. LEE stated it is time to take off the blinders and deal with              
 the impacts of logging before they become problems.  He said if we            
 cannot learn from watching the fiasco going on with the timber                
 industry in the Northwest, there is not much hope.  The TTRA and              
 the establishment of LUD II areas was a good first step.  The                 
 establishment of HCAs will also help avoid future problems.  He               
 stressed the timber industry must learn to coexist with fishing and           
 tourism and their needs.  To do this, they must learn to operate              
 within the guidelines of recent reforms.  He urged everyone to stop           
 the finger pointing and name calling and work on realistic                    
 solutions.  In the past, the timber industry has received                     
 assistance helping them stay profitable.  He pointed out that if              
 everyone begins to view habitat maintenance and a clean environment           
 as part of the cost of doing business, perhaps some solutions can             
 be determined that everyone can live with.                                    
                                                                               
 DALE PIHLMAN, REPRESENTATIVE, ALASKA WILDERNESS RECREATION TOURISM            
 ASSOCIATION (AWRTA), stated he was born and raised in Ketchikan and           
 will make personal comments prior to commenting for AWRTA.  He said           
 he fished commercially for 20 years, primarily in Southeast Alaska            
 and worked for the state for 5 years as a fisheries management                
 biologist.  Currently he is in the visitor industry.  He expressed            
 concern about overharvesting.  He noted visitors are attracted to             
 Alaska primarily because of its image as a land of scenic grandeur.           
 However, as old growth timber is removed, the state has less                  
 appeal.  He pointed out that old growth timber is disappearing at             
 an alarming rate.                                                             
                                                                               
 MR. PIHLMAN said he appreciated having the opportunity to testify             
 and noted the small time allotted to the visitor industry versus              
 the timber industry.  He felt the situation is indicative of the              
 lack of appreciation for the economic contribution of tourism to              
 the state's economy.  For example, in 1993 the visitor industry               
 created 15,200 jobs and the logging industry only about 3,185.                
 Visitors to Alaska spend $1.5 billion, in contrast to the timber              
 industry's contribution of $565 million to the economy.  The                  
 tourism industry generated a payroll of $275-300 million while the            
 timber industry produced a payroll of about $140 million.                     
                                                                               
 MR. PIHLMAN stated the visitor industry is 2-3 times larger than              
 the timber industry.  Continued clearcut logging is adversely                 
 affecting the visitor industry.  He said on his tours he                      
 increasingly hears complaints about clearcut logging.  He felt if             
 excessive logging is not controlled soon, Alaska will be tainted as           
 a wilderness tour destination and the appeal of a precious                    
 resource, wilderness, will be lost.  He stressed wilderness is a              
 resource and must be protected or the Alaska visitor industry will            
 diminish in importance.                                                       
                                                                               
 MR. PIHLMAN said he bears no animosity toward the timber industry.            
 He noted he and every member of his family have worked either in              
 the timber industry or in a support industry.  He told committee              
 members he spent a considerable amount of time longshoring with               
 Representative Williams.  He stated he appreciates the frustration            
 the timber industry faces as the timber supply declines.  However,            
 it is beginning to bear the brunt of years of highgrading and                 
 overharvesting.  He urged everyone to take action to reduce                   
 overharvesting before irreversible damage is done to Alaska's                 
 tourism industry.                                                             
                                                                               
 MR. PIHLMAN noted AWRTA's comments.  He said economically, some               
 good things are happening in Southeast Alaska.  Between 1989 and              
 1993 tourism in Southeast increased 43 percent, providing more                
 business and job opportunities.  He stated AWRTA is concerned about           
 forest management practices that would adversely impact tourism               
 businesses, especially those in the tours recreation category that            
 rely on natural resources of the Tongass.  The current level of               
 harvesting will displace existing businesses and reduce the land              
 base available for recreation and tourism development.  The                   
 Landless Native bill in Congress would adversely affect Southeast             
 scenic quality and visitor satisfaction.                                      
                                                                               
 MR. PIHLMAN pointed out that tourism contributes more to the                  
 state's economy than the forest products industry.  He said the               
 tourism industry needs relief from the current high level of timber           
 cuts before losing its market share in a domestic and global                  
 marketplace.  AWRTA believes the Landless Native bill illustrates             
 the need to thoroughly evaluate the landless Native issue and                 
 propose a comprehensive solution rather than the proposed piecemeal           
 approach.  He stated tourism companies should receive compensation            
 for the loss of natural resources.  Public policy decisions that              
 allocate federal and state resources and affect other industries              
 should be made for the benefit of the full public input.                      
                                                                               
 BRUCE WALLACE stated he is a 30 year resident of Ketchikan and has            
 been a commercial fisherman for 25 years.  He said he has also                
 worked in construction, mining and at the pulp mill.  He described            
 one of the complications that any administrative decision will                
 impact.  He noted it is directly related to the long term industry            
 viability.  The commercial fishing industry has little or no                  
 disagreement with most of the sentiments expressed.  However, the             
 complication is based in salmon.  He pointed out there are 2,900              
 catalogued salmon systems within Southeast Alaska.  He added if               
 that were expanded to include the drainages and an overlay is done            
 against the USFS maps, one would find that salmon and therefore               
 commercial fishing has a direct and ongoing relationship with the             
 forest.  That relationship complicates everything which is in an              
 administrative decision within the USFS or the public and private             
 land sectors which the state controls.                                        
                                                                               
 MR. WALLACE said he was a member of the Board of Forestry for eight           
 years.  He stated whatever decisions are made, they must be made              
 with the reflection of the complexity of the interaction between              
 fish and forest.  That basic relationship reflects what is                    
 Southeast Alaska, both from the community and from the resource               
 base, and has to be a part of the solution.  He stressed it is                
 important to have an agreed data base and he felt that is a current           
 problem on trying to determine a solution.  He told committee                 
 members without agreed data, it is impossible to get a long term              
 resolution to the problem.                                                    
                                                                               
 BILL THOMAS, KETCHIKAN, said he was present to give some viewpoints           
 from the area of subsistence.  He stated subsistence is probably              
 the area having the potential for the greatest risk.  In order for            
 subsistence to survive, there must be good management, good                   
 stewardship, and responsible usage.  Subsistence is a good model              
 for the use of any resource.  He told committee members if they               
 handle subsistence like they handle their bank accounts, they most            
 likely would be comfortable for a lot longer than they would                  
 otherwise.                                                                    
                                                                               
 MR. THOMAS recalled the discussion about a sustained economy in               
 Southeast and Alaska.  At the same time, everyone hears about the             
 demise of the economic struggles occurring in other parts of the              
 country.  He said Washington, Oregon and northern California are              
 good examples.  The conditions which have become a failure for them           
 brings them to the only place they can salvage their livelihood,              
 Alaska.  He stated while Alaskans have been good stewards and                 
 hosts, he did not feel the state can continue to do that for every            
 part of the Lower 48 that runs into an economic problem.  He noted            
 it was done with the pipeline and many jobs were created.  However,           
 when the pipeline was completed, a large part of the population was           
 lost.                                                                         
                                                                               
 MR. THOMAS stressed in the effort to be a good steward and provide            
 good economics for everyone coming to the state to seek relief, it            
 places a burden on the resources available in the state.  He said             
 he will not speak to any issue of support or nonsupport but                   
 stressed he is committed to supporting those efforts to preserve              
 the availability and maintenance of subsistence.                              
                                                                               
 TAPE 95-19, SIDE A                                                            
 Number 000                                                                    
                                                                               
 K.A. SWIGER, EXECUTIVE DIRECTOR, STAND UP!, stated her organization           
 is a grassroots community oriented group advocating economic                  
 stability and natural resource development.  She said she is a                
 Southeast Alaskan, born and raised.  She told committee members               
 through the pioneering spirit of her family who set their Alaskan             
 roots nearly 50 years ago, she was raised to believe that Alaska is           
 a land of opportunity where one can make a respectable living and             
 enjoy the natural beauty and bountiful resources.  She stressed the           
 Tongass is home to those who have chosen to continue this pioneer             
 spirit.                                                                       
                                                                               
 MS. SWIGER stated her home, the largest National Forest in America,           
 is 17 million acres of more than 1000 islands, and 11,000 miles of            
 shoreline.  Accomplishments in this unique area are exemplary.  The           
 visitor industry grows at a rate of 6.4 percent annually--over                
 400,000 in Southeast last year.  She stressed these visitors are              
 astounded by the abundance and variety of animals in the area's               
 forest and water.  She noted none of the over 400 animal species              
 are endangered or threatened.  She said Alaska has one of the most            
 restrictive conservation management programs in the country.  One-            
 third of the land is designated wilderness and 80 percent of the              
 old growth forest is forever designated to wildlife.  She noted the           
 forest provides a sustainable yield of wood products on less than             
 one-tenth of its land base.  Value is added to this otherwise over            
 ripe commodity in the manufacture of pulp, cants, flitches, lumber,           
 shakes, shingles, guitar backs, piano sounding boards, and artistic           
 renderings.                                                                   
                                                                               
 MS. SWIGER told committee members the Tongass is site to numerous             
 fisheries enhancement projects, which are often the result of                 
 cooperative efforts between federal, state, private timber and                
 fishing interests.  Record catches have been enjoyed for many years           
 culminating last year in an all around record of 74 million fish in           
 Southeast.  Two-thirds of that catch comes from southern Southeast,           
 an area of concentrated timber harvest.  She stated the forest has            
 enormous potential as a source of hardrock minerals.  She observed            
 mining has enjoyed renewed interest this last decade.  She noted              
 that Greens Creek Mine on Admiralty Island is a model of successful           
 development within a sensitive area, and added that the state has             
 one of the largest known molybdenum deposits in the world.                    
                                                                               
 MS. SWIGER stated roads, transportation corridors, and service                
 infrastructure have been developed in the state to support the base           
 industries and communities which serve them.  She stressed people             
 are fortunate and proud to be part of such a richly unique region.            
 She said, "show me other communities nestled in a National Forest             
 with virtually no private land from which to develop a tax                    
 base...show me other communities whose seasonal and year-round                
 economies are so interrelated...show me other communities                     
 developing the natural wealth of the region in accordance with                
 humans and animals sharing the land.  Show me other communities who           
 must continually battle for existence with seemingly deaf-eared               
 forces 3,000 miles away."                                                     
                                                                               
 MS. SWIGER said the people of the Tongass are proud of where they             
 live.  They have demonstrated their commitment to the land by                 
 investing their livelihoods there.  The continued abundance of the            
 resources demonstrates their successful management.  They know what           
 is best for the region.  They know the forest can sustain a 450               
 million board foot yearly harvest, and that 320 million board feet            
 is not enough to sustain the current industry.  They know their               
 wildlife, and where they roam.  They know that 90 percent of the              
 Tongass is more than enough for their comfortable existence.  She             
 stressed as the mills close and families are put out of work, it is           
 hard to find credibility in a federal agency promising wood supply            
 without adequate funding, and a state administration changing its             
 policy contrary to affected populous leadership.                              
                                                                               
 MS. SWIGER told committee members that Stand Up! was forced into              
 existence because of the desire to continue to live and work while            
 using a small percent of the resources of the Tongass National                
 Forest.  Specifically, Stand Up! asks the committee for their help            
 in getting the USFS to change their opinion that HCA withdrawals              
 are insignificant to the region, to roll back the HCA                         
 implementations of June 30, 1994, and provide an adequate and                 
 reliable amount of timber to meet the needs of Southeast Alaska's             
 forest products industry.                                                     
                                                                               
 KATHI LIETZ, PRESIDENT, ALASKA TIMBER TRACKERS ALLIANCE OF THORNE             
 BAY, stated she came to Prince of Wales Island eight years ago to             
 earn college money and immediately fell in love with all that                 
 Alaska had to offer and never went back to school.  She met and               
 married her husband on Prince of Wales Island and they have three             
 children.  She said they would love to stay in Alaska forever but             
 are slowly realizing that the Alaskan dream they have is but a grim           
 reality.                                                                      
                                                                               
 MS. LIETZ told committee members that since 1990, she has been                
 employed by Black Bear Cedar Products, a cedar shingle mill in                
 Thorne Bay and handles all aspects of the office.  She noted that             
 Black Bear has seen some rough times.  The company has weathered              
 two fires and gone from three partners to one owner.  In the 5                
 years since she has been at Black Bear Cedar Products, she has seen           
 the business go from 12 employees and gross annual sales of nearly            
 $1 million to the all time low in 1994 of 4 employees and gross               
 sales of $300,000.  She stated where the company previously                   
 depended on KPC for at least 90 percent of its wood, it now is                
 searching and scraping for every log.  KPC only provided 40 percent           
 of Black Bear's wood last year.                                               
                                                                               
 MS. LIETZ stressed Black Bear takes only cull cedar logs that would           
 otherwise be burned or dumped and turns them into a quality                   
 finished product.  She worries each day whether or not her job will           
 be there when she gets to work.  Black Bear Cedar Products works              
 very closely with the other small mills in the area.  They share              
 business tips, wood information, and provide statistical support as           
 much as possible.  All of these businesses employ people who have             
 families and live in communities in Southeast.  She explained many            
 spouses of timber industry employees are themselves employed in the           
 timber industry or its support industries.  Timber dollars touch              
 every human life in the Tongass on a daily basis.                             
                                                                               
 MS. LIETZ stated the people whose livelihoods depend on the forest            
 are being held hostage.  Their futures are at the mercy of an over            
 zealous green movement and a lockup mentality that is all the rage            
 in places like New York, Washington, D.C., and Los Angeles.  She              
 asked are Sitka and Wrangell an ominous sign of what is yet to come           
 in the remaining communities of Southeast?  She stressed not if her           
 friends, co-workers, families and she has anything to say about it.           
 She said as always, the pleas of the people of the Tongass are                
 being drowned out by the big money voices of the Sierra Club,                 
 Wilderness Society and their cohorts.                                         
                                                                               
 MS. LIETZ wondered where the proverbial buck stops.  When will                
 families, jobs, communities and economic stability factor in?  Will           
 a human being ever be worth as much as a wolf or a goshawk?  She              
 felt her job, family and community are in more danger of extinction           
 than any other species of life within the Tongass National Forest.            
 She questioned where her family and thousands of others go?  She              
 said perhaps they can go into ecotourism, advertise in upscale                
 magazines and entice the socially and economically elite to get               
 back to nature in the wilds of Alaska.  She noted they can rough it           
 in a log cabin with no running water or electricity and only                  
 selectively harvested skunk cabbage leaves to wipe their privileged           
 tushes with.  She guessed her family could also sign up for                   
 welfare.  They would have good medical coverage, subsidized housing           
 and ample food stamps to feed them while they enjoy their hard                
 earned unemployment.                                                          
                                                                               
 MS. LIETZ found it ludicrous that the state's Governor feigns                 
 concern for the people of the timber industry, yet he openly                  
 supports the proposed HCAs.  She felt the HCA concept is rash,                
 reactionary and scientifically unfounded.  She said not nearly                
 enough time or facts were put into a decision that has such obvious           
 significant impact on so many lives.  She stressed the USFS owes it           
 to all the taxpayers they serve to do a full and proper study                 
 before implementing the HCAs.  It is their job to be stewards of              
 the lands, not gatekeepers.                                                   
                                                                               
 MS. LIETZ stated it was honorable of Mr. Janik to promise 320                 
 million board feet of available timber in fiscal year 1995.  She              
 wondered if it truly could be done.  She noted the fiscal year is             
 already one-third over.  Time coupled with budgetary restraints and           
 reinvention plans will make the 320 million board feet goal                   
 virtually impossible to meet.  She said the saddest part is that              
 320 million board feet is not nearly enough to operate those mills            
 which are still in operation, much less reopen the Sitka or                   
 Wrangell mills.                                                               
                                                                               
 MS. LIETZ urged committee members not to forget that trees are a              
 renewable resource.  She agreed that an old growth stand is                   
 beautiful but so is a properly managed second growth stand.  She              
 urged committee members to remember there are thousands of people             
 who depend on the forest for their livelihoods.  They are counting            
 on the USFS and government leaders to consider their well-being               
 when listening to the outside pressures of the environmental                  
 movement.  She stressed the people of the Tongass are counting on             
 the legislature to make wise decisions about the future of the                
 timber industry in Southeast.  She said they are not faceless                 
 beings, but people like committee members.  She urged the committee           
 to help win the battle for the Tongass, which is a significant part           
 of the war on the west.                                                       
                                                                               
 CO-CHAIRMAN WILLIAMS announced a recess.                                      
                                                                               
 CO-CHAIRMAN WILLIAMS called the meeting back to order at 11:07 a.m.           
                                                                               
 ALAIRE STANTON, MAYOR, KETCHIKAN, welcomed committee members to               
 Ketchikan and the new Ted Ferry Civic Center.  She stated what is             
 being discussed is economic stability, which she has spoken on many           
 times before.  She stressed she was quite speechless, partly                  
 because she is not sure the legislature can do anything about the             
 present situation, and partly because she wants to allow enough               
 time for the next panel to talk to everyone gathered about what can           
 really be accomplished in the Tongass.  She noted the committee               
 understands the situation and recalled the speakers thus far.                 
                                                                               
 MS. STANTON pointed out there are many people present who are part            
 of the Stand Up! organization and asked them to stand.  She stated            
 not all of those folks work in the woods and not all of them work             
 at KPC.  Many of them provide the service support for the timber              
 industry and for the rest of the people living in the community.              
 She told committee members she came to Ketchikan to work for KPC in           
 April 1954 and has remained in Ketchikan.  She stressed her family            
 now wants the community to have the stability they thought they               
 were going to have when they first came here as representatives of            
 the first year-round industry in the area.                                    
                                                                               
 MS. STANTON said they have children and grandchildren in Ketchikan            
 and would like for them to have jobs.  She stated if the committee            
 can help the community in talking to the federal government, the              
 USFS, and Congressmen who also understand the situation fairly                
 well, then she appreciates the committee being in Ketchikan.                  
                                                                               
 DENNIS WATSON, MAYOR, CRAIG, stated the Prince of Wales Island is             
 the most highly impacted area in connection with the timber harvest           
 in the Tongass.  He mentioned he arrived 20 years ago and at that             
 time there were approximately 1,000 people living on the island and           
 Craig had 250-300 people.  Today, the island has a seasonal high of           
 7,000 people and Craig has a seasonal high of 2,000 people.  He               
 said most of these changes are related to the timber industry.  He            
 stressed that timber supply is a major issue.                                 
                                                                               
 MR. WATSON mentioned he is a commercial fisherman and noted that              
 industry wants to be factored in because it is also connected with            
 the health of the forest.  He felt the two can coexist and can be             
 healthy together but there must be some input at the local level.             
 He hoped to see the state get in unison, from the Administration on           
 down, on the way Tongass issues are going to be addressed.  He said           
 it is extremely naive to believe that once the federal government             
 comes in and takes something it can never be returned.  He stressed           
 the timber industry, along with oil, has created the infrastructure           
 on the island.  He told committee members the contract paved the              
 way for a lot of small folks to get in.  Therefore, people cannot             
 fight amongst themselves on how the issue is going to be addressed.           
 Rather, everyone must determine a way to meet the needs of the                
 communities, while still keeping everybody in business.                       
                                                                               
 MR. WATSON stated the Prince of Wales Island is a thriving area and           
 percentage-wise is up there with the Mat-Su Valley.  He said the              
 island now has the infrastructure and facilities, getting the                 
 island near the 20th Century.  He noted the monies received from              
 the National Forest receipts--$400,000 for the city of Craig--is              
 big stuff and added that money goes for schools and roads.  He                
 stressed the need for that to continue.                                       
                                                                               
 DUANE GASAWAY, CITY MANAGER, WRANGELL, thanked the committee for              
 the opportunity to testify.  He said when Jack Ward Thomas visited            
 Wrangell, they were told, "The USFS has no legal obligation and no            
 intention of providing sufficient harvestable timber to supply the            
 processors currently in the market".  He noted thus far, that is              
 the only promise the USFS has fulfilled.  The Wrangell sawmill                
 closed December 1 throwing 225 people out of work, disrupting their           
 lives, families, and their 136 children in the Wrangell school                
 system.                                                                       
                                                                               
 MR. GASAWAY stressed the economic loss to the city of Wrangell is             
 staggering.  Wrangell has lost a $10 million annual payroll                   
 representing 33 percent of the total volume of dollars in the                 
 economy.  It is anticipated there will be a $330,000 loss in school           
 funding in the next budget.  He said current unemployment is 15-20            
 percent now and is expected to rise to 45 percent as indirect jobs            
 are affected.  The city, commencing December 1, began to lose                 
 $40,000 per month in its utility fund.  He stated 320 million board           
 feet of timber is not sufficient to open the Wrangell sawmill and             
 added it will not keep KPC running at full capacity.                          
                                                                               
 MR. GASAWAY told committee members that HCAs are based on science-            
 it is called political science being manipulated to serve a                   
 political agenda.  He said the environmental assessments in HCAs              
 ignore the hardship on communities and people in Southeast Alaska.            
 The environmental assessment is a perversion of the National                  
 Environmental Policy Act and the Endangered Species Act in favor of           
 special interests and political gain.  He stated the environmental            
 assessment is a trojan horse in the federal administration's                  
 economic war being waged upon Southeast Alaska, its communities,              
 and its people.  People in Southeast know they must diversify their           
 economy but they cannot do it overnight.                                      
                                                                               
 MR. GASAWAY stated there is a need for immediate timber for the               
 Wrangell sawmill to keep the community going while they diversify             
 their economy.  He said prior to leaving Wrangell the day before,             
 he received a telephone call from Washington, D.C. and was informed           
 that President Clinton's Office of Management and Budget had                  
 deleted from the federal fiscal year 1996 budget, Wrangell's                  
 proposal for an Army Corps recognizance study to expand the harbor.           
 Therefore, as the community looks to other areas of the economy to            
 expand, they find another front on which war is being waged upon.             
                                                                               
 MR. GASAWAY said Wrangell and Southeast Alaska in general faces a             
 crisis.  He mentioned a group was in Juneau a week ago, today the             
 committee is present to offer help, and he is there to reiterate              
 the need for that help.  He said on behalf of the citizens in                 
 Wrangell, he thanks the committee for the opportunity to speak.               
                                                                               
 ERNESTA BALLARD, PRESIDENT, KETCHIKAN CHAMBER OF COMMERCE (KCC),              
 stated the Chamber has approximately 400 members who collectively             
 provide 2,500 local jobs.  She said KCC is good at community                  
 participation and is respected and well known for presenting                  
 solutions to many community problems.  She stressed KCC has                   
 struggled to stay abreast of the planning process on the Tongass.             
 KCC has studied maps, read reports, and has testified at so many              
 public meetings she can no longer keep track.  She noted KCC does             
 the same thing about bond issues, garbage disposal, traffic                   
 improvements, etc., but does not get the same results.  Usually the           
 results are a logical outcome of the analysis.  Usually the results           
 are based on a fair assessment of what is known, what it shows, who           
 and what is affected, and what it will cost.  She stressed that is            
 not happening on the Tongass issue.                                           
                                                                               
 MS. BALLARD said in HCAs, KCC sees management measures put forward            
 that are based on a hypothesis.  KCC sees an environmental                    
 assessment which proposes there is no significant impact to the               
 withdrawal of 30 percent of the timber base but presents no                   
 quantification of the resulting economic loss.  She said the                  
 assessment proposed 8 mile radiuses for foraging protection around            
 goshawk nests but noted these birds are observed to hunt in open              
 areas, not in the interior forest which has been placed off limits            
 for their protection.                                                         
                                                                               
 MS. BALLARD stated KCC sees timber removed from the market pending            
 the outcome of revisions to Environmental Impact Statements (EISs)            
 --EISs they testified about, went to public hearings on, read the             
 maps, and studied the charts on.  She stressed these EISs are                 
 complete and now they are being revised.  KCC sees the marten                 
 showing up in viable population studies as an indicator species,              
 even though it is not native to Southeast Alaska and at the same              
 time, KCC sees public employees eagerly moving goats from one place           
 to the other perhaps so they can be protected in the future.                  
                                                                               
 MS. BALLARD noted PACFISH and in PACFISH, KCC sees the possibility            
 of additional fish habitat protection at a time when record salmon            
 runs are being experienced.  Fortunately, KCC also saw the wolf               
 proposal go down in defeat.  She said these actions on the Tongass            
 on the part of the USFS simply do not seem to be logically                    
 connected to the facts as observed.  She wondered how does KCC                
 participate as an organization representing 400 members, their                
 2,800 employees, and their families?  How does KCC participate in             
 a planning process that is spread out over so many fronts?  How can           
 KCC guess what the next issue will be?  She stated if every                   
 decision is going to be revised before the ink is dry, how does KCC           
 know where to look next?                                                      
                                                                               
 MS. BALLARD stated common sense says the Tongass is well managed.             
 Fish, timber, and tourism industries are all sustained.  Common               
 sense says there is enough land set aside from harvest to provide             
 habitat for wildlife.  Observation supports this conclusion.  She             
 stressed it is only hypothesis that denies it.  She said common               
 sense says the community's well-being is discounted in the Tongass            
 planning equation.  An annual harvest of 320 million board feet is            
 not enough to save the jobs provided by KCC's members and the                 
 families they support.                                                        
                                                                               
 MS. BALLARD said KCC urges the legislature and the Administration             
 to demand rational management of the Tongass.  She encouraged the             
 legislature to ask for a planning process that is fair...ask that             
 everything be put back on the table...ask for results that relate             
 to facts, support planning, support multiple use, support sustained           
 yield, and support timber harvest...ask for a no action decision on           
 the environmental assessment, a withdrawal of the HCAs, and a                 
 restoration of the timber that has passed through NEPA...and then             
 agree to participate in the next round of TLMP.                               
                                                                               
 MS. BALLARD stated KCC urges the USFS, when scoping for the TLMP,             
 to be sure that alternative sources for wood products are                     
 addressed.  Most of these are petroleum based and made from                   
 nonrenewable resources.  KCC urges USFS to be sure that the impacts           
 in Southeast Alaska are quantified to show what happens if 30                 
 percent of the economic base is lost.  KCC urges USFS to be sure              
 that the global impacts of moving timber production to less                   
 developed countries are compared to the extremely successful                  
 environmental protections now at work on the Tongass.  She said at            
 least in that way, there will be a fair debate about the issues.              
 What is being seen instead is a gradual dismantling of communities.           
 Timber harvest on the Tongass is being stalled and set back in                
 incremental actions which are each passed off as insignificant.               
 The big picture is hidden.                                                    
                                                                               
 MS. BALLARD said KCC looks forward to an opportunity to participate           
 in a fair planning process.  She thanked the committee for the                
 opportunity to express KCC's frustrations.  She noted there is no             
 private property base on which to build communities but the                   
 responsibility for education and public welfare and safety has been           
 assumed.  She stated it is desirable to be able to continue to                
 provide these from the private sector tax base.                               
                                                                               
 PHIL JANIK, REGIONAL FORESTER, ALASKA REGION, USFS, stated he                 
 appreciates the opportunity to appear before the committee and                
 provide information regarding the management and use of natural               
 resources on the Tongass National Forest.  He mentioned that with             
 him from the USFS is Fred Walk, Timber Director; Fred Norbury,                
 Ecosystem Planning and Budget Director; and Dave Rittenhouse,                 
 Forest Supervisor of the Ketchikan Area of the Tongass.  He said              
 the committee specifically asked him to address the timber program            
 on the Tongass.  He noted he will do so but added it is important             
 that it be done in the context of the entire Tongass and in                   
 conjunction with the other related resources and programs.                    
                                                                               
 MR. JANIK told committee members the Tongass National Forest offers           
 the Southeast Alaska panhandle beauty, value, and opportunities for           
 people.  Its value to people is diverse including economic,                   
 cultural, social, ecological, and spiritual.  He stressed the                 
 forest is a complex of land, water, and living resources that                 
 represents a splendor unparalleled anywhere else in the world.  It            
 is a special place of intense local, national, and international              
 interest and value.  He noted that people come from everywhere to             
 see its beauty and live the exceptional experiences the Tongass and           
 all of Southeast Alaska offer.  He stated the Tongass is a major              
 contributor to subsistence use and lifestyles of rural residents              
 and is extremely important to the cultural heritage of Alaska                 
 Natives.                                                                      
                                                                               
 MR. JANIK stated the Tongass is also a working forest, rich in                
 resources and opportunities having significant economic values,               
 such as minerals, timber, fisheries, and tourism.  Such resources             
 and use opportunities contribute significantly to domestic and                
 foreign economies and are of particular importance to the residents           
 of Southeast Alaska and dependent communities.  He mentioned a few            
 highlights from the Tongass.  About 80 percent of all salmon                  
 harvested in Southeast Alaska are produced in the streams and lakes           
 of the Tongass, providing the major source of salmon to the sport,            
 commercial, and subsistence fishers.  Timber harvesting on the                
 Tongass represents about 50 percent of timber harvested in                    
 Southeast annually.  The Tongass has some of the richest mineral              
 deposits and largest operations of its kind anywhere in the                   
 national forest system.                                                       
                                                                               
 MR. JANIK continued that the tourism industry and recreation use              
 now draw over 500,000 visitors a year to Southeast.  This use has             
 doubled in the past 15 years.  The Inside Passage is the most                 
 visited attraction in the state, much of this due to the beauty of            
 the Tongass.  In addition to simply Tongass-watching from a cruise            
 ship or marine ferry, the Tongass offers 149 cabins for recreation            
 and emergency use, 505 miles of hiking trails, numerous                       
 opportunities for canoeing or kayaking, helicopter tours, flight              
 seeing, fishing, and other adventure sports and wildland                      
 experiences.  He said the explosion of tourism in Southeast has               
 exceeded all expectations of economic benefits to communities,                
 while also challenging agency and communities in managing the                 
 increased use.                                                                
                                                                               
 MR. JANIK said given these exceptional opportunities on the                   
 Tongass, it is no wonder the Tongass is often an area of intensive            
 debate over what ought to be the appropriate combination of uses.             
 He stressed the USFS is bound by many laws which require that                 
 management of all forest resources be accomplished in a sustainable           
 manner.  The National Forest Management Act, Alaska National                  
 Interest Lands Conservation Act, Tongass Timber Reform Act,                   
 Multiple Use Sustained Yield Act, and the Endangered Species Act              
 are examples of laws that directly or indirectly document the legal           
 expectation of sustainability of all renewable resources.                     
                                                                               
 MR. JANIK told committee members that sustainability of all                   
 resources over the short and long term is fundamental to the                  
 multiple use mission of the USFS and the national forests the USFS            
 has been entrusted to manage.  Sustainability involves both land              
 stewardship and land uses, not one or the other.  He noted that               
 land stewardship is a precursor to sustained land uses.  He stated            
 sustainability is achieved through the analysis and deliberation              
 that occurs in examining and responding to the values, needs, and             
 wants of people within applicable environmental laws.                         
 Sustainability is also the key to long term economic stability and            
 predictability for natural resource industries and dependent                  
 communities.                                                                  
                                                                               
 MR. JANIK explained it is the job of the USFS, with the help of all           
 interests, and the state and other federal agencies to deliberate             
 and assist in resolving resource issues.  He said ideally, the                
 forum for resolution should be open, inclusive, and constructive,             
 with the participants helping shape the outcome in full                       
 appreciation of the governing laws, associated principles, values,            
 needs, and wants of people and the applicable science.  He noted              
 that an assessment of risks is also part of meeting the                       
 sustainability test.                                                          
                                                                               
 MR. JANIK stated the timber management program of the Tongass is              
 based on the Amended TLMP, which establishes an Allowable Sale                
 Quantity (ASQ) of 4,500 million board feet of timber per decade.              
 Under the National Forest Management Act, the ASQ is the maximum              
 amount that can be offered and sold each decade.  The amounts                 
 actually offered each year depend upon many factors such as the               
 level of appropriations, the time required to prepare timber sales            
 after appropriations are received, success in obtaining permits and           
 rights of way, objectives for other resources, and the issues                 
 raised by administrative appeals and legal challenges.                        
                                                                               
 MR. JANIK added that the USFS is also required by the TTRA to seek            
 to provide timber from the Tongass.  Section 101 of the Act reads,            
 "Subject to appropriations, other applicable laws, and the                    
 requirements of the National Forest Management Act of 1976, except            
 as provided in subsection (d) of this section, the Secretary shall,           
 to the extent consistent with providing for the multiple use and              
 sustained yield of all renewable forest resources, seek to provide            
 a supply of timber from the Tongass National Forest which (1) meets           
 the annual market demand for timber from such forest and (2) meets            
 the market demand from such forest for each planning cycle."                  
                                                                               
 MR. JANIK stated the USFS is required to provide a sustainable flow           
 of timber from the Tongass National Forest within the limits of the           
 law and regulations.  He stressed the USFS is not only required to            
 do so, but is also committed to doing so.  He said that commitment            
 includes USFS's contract obligation to KPC and timber for the                 
 independent program.  It is part of USFS's job and an important               
 part of the USFS multiple use mission.                                        
                                                                               
 MR. JANIK said the actions the USFS has taken on the Tongass are              
 for the purpose of ensuring the USFS meets the comprehensive                  
 sustainability test and does not contribute to taking any resource            
 below the sustainable level.  The actions are responsive to new               
 information that suggests if precautionary measures are taken now,            
 more severe and adverse effects can be avoided in the future.  He             
 stated the USFS's approach is one of prevention rather than costly            
 correction.  He noted the USFS has the opportunity to learn from              
 the lessons in the Lower 48 and address concerns and symptoms                 
 earlier on so they do not develop into events over which the USFS             
 may lose control.                                                             
                                                                               
 MR. JANIK stated concerns regarding some wildlife species on the              
 Tongass were raised by an interagency committee convened by the               
 USFS.  The committee was convened to assess the condition and trend           
 of old growth habitats and associated wildlife species on the                 
 Tongass.  He said the committee recommended HCAs, or HCA strategy,            
 as the best way to provide for old growth habitat requirements.               
 Their evaluation and recommendations were peer reviewed by a                  
 separate group of scientists through an agreement between then                
 Regional Forester, Mike Barton and Pacific Northwest Research                 
 Station Director, Charlie Philpot.  He noted the peer reviewers               
 endorsed the committee's work and also concluded that immediate               
 management actions were considered necessary to preserve options              
 while additional information was gathered and evaluated.  The                 
 committee's assessment focused on all species associated with old             
 growth habitat and did not just examine the goshawk and wolf                  
 habitat issues.                                                               
                                                                               
 MR. JANIK told committee members that more recently, the U.S. Fish            
 & Wildlife Service (USFWS) received petitions for listing the                 
 Alexander Archipelago wolf and the Queen Charlotte goshawk under              
 the provisions of the Endangered Species Act.  As shown by their              
 decision to accept the petitions, the USFWS indicated they were               
 giving serious consideration to the points raised in the petitions.           
 While the USFS was already evaluating the overall recommendations             
 for old growth habitats, the petitions for listing of the wolf and            
 the goshawk added to the significance of that evaluation.  He noted           
 that additional recommendations were received from a group of                 
 scientists regarding goshawk habitat.  The petitions also led the             
 USFS to recognize that interim measures could help prevent listing            
 of these subspecies and thus avoid additional complications to the            
 timber program that a listing could create.                                   
                                                                               
 MR. JANIK stated in December, the USFS, the USFWS, and the ADF&G              
 entered into a formal agreement that should help prevent listings.            
 He said that group pledged to work together cooperatively on                  
 habitat and species management concerns, including the examination            
 of available scientific information and its interpretation.  He               
 told committee members that the decision by the USFWS not to list             
 the wolf as a threatened species is a success story coming from               
 this commitment to work together.  USFS believes their decision is            
 correct and credible.  Together, conservation issues can be                   
 addressed in a manner that reduces effects to industries and                  
 dependent communities and avoid the costly efforts to recover                 
 listed species.                                                               
                                                                               
 MR. JANIK explained the USFS is pursuing a three step approach that           
 emphasizes prevention rather than correction.  The three steps are:           
 1) Rescheduling of the 1994 and 1995 timber sales to preserve                 
 options for addressing scientific recommendations and wildlife                
 concerns that have emerged; 2) preparing an amendment to the                  
 existing Tongass Plan with interim measures to guide project level            
 activities until the Tongass Plan revision is completed; and 3)               
 completing the Tongass Plan revision to directly address the                  
 resource concerns that have been raised and to address the                    
 socioeconomic implications.                                                   
                                                                               
 MR. JANIK stated with respect to the first part of the strategy,              
 the USFS deferred offering part of the timber sale volume that had            
 been prepared.  The deferrals will help maintain planning options             
 for consideration in the TLMP revision.  He said the habitat                  
 approach adopted in the Plan amendment or the Plan revision may not           
 allow all of these sale areas to be offered in the future.  He                
 noted that in June 1994, the USFS projected a 281 million board               
 feet timber program for fiscal year 1994.  By the end of the fiscal           
 year, USFS actually delivered 307 million board feet of new offers            
 and, with re-offers, put 337 million board feet on the market.                
 USFS anticipates the fiscal year 1995 timber program to be at the             
 320 million board foot level to supply timber to the KPC long term            
 contract and to the independent timber sale operators.                        
                                                                               
 MR. JANIK said the USFS exercised considerable flexibility                    
 preparing the fiscal year 1994 and fiscal year 1995 timber offering           
 projections by carefully and thoughtfully identifying where HCAs              
 and timber sale adjustments were permissible, so as to preserve               
 planning options while delivering as much timber volume as                    
 possible.  Examples of timber sales where such changes were                   
 incorporated include the Saginaw and Bohemia sales on the Stikine             
 Area, the Shelter Cover sale in the Ketchikan area and the                    
 Northwest Baranof, Neka-Humpback, and the Hanus sales on the                  
 Chatham area.                                                                 
                                                                               
 MR. JANIK stated the USFS will continue to exercise flexibility               
 where possible.  He said USFS's field people, of all disciplines,             
 have worked side by side in meeting these challenges.  They have              
 spent many long days and weekends trying to be responsive to both             
 the USFS land stewardship and land use obligations.  He expressed             
 appreciation for their efforts and personal sacrifices to get that            
 job done.  He noted the most recent example is the re-evaluation of           
 the Luck Lake units on Prince of Wales Island.                                
                                                                               
 MR. JANIK said the USFS also recognizes that policies such as                 
 approval of the export of cedar and other tree species must be                
 reviewed in the context of the domestic timber supply.  He noted              
 that the USFS is currently conducting such a review.  He stated the           
 Plan amendment process, part two of the strategy, is underway.  A             
 draft environmental assessment was circulated for public comment on           
 September 30, 1994.  The USFS received comments from over 2,500               
 individuals, groups, and agencies.  He noted that the USFS is still           
 evaluating those comments.  Many of the comments are opposed to the           
 USFS proposal.  However, comments from the USFWS and the state of             
 Alaska are generally supportive of the USFS's proposal, but the               
 USFWS urges consideration of additional habitat management measures           
 for both the wolf and goshawk.                                                
                                                                               
 MR. JANIK added that the state of Alaska also emphasizes the                  
 importance of these issues to the timber industry of Southeast                
 Alaska.  He said the USFS remains convinced that some form of                 
 interim direction is needed to maintain the management options,               
 minimize the risk to the timber industry, and prevent more serious            
 impacts in the future.                                                        
                                                                               
 TAPE 95-19, SIDE B                                                            
 Number 000                                                                    
                                                                               
 MR. JANIK stated the Plan revision, the third part of the strategy,           
 is also underway.  He mentioned that the USFS plans to finish the             
 revision as soon as possible, with a target date of June 1996.  He            
 said the USFS is in agreement with the many respondents to the                
 environmental assessment that the Tongass plan revision effort is             
 the appropriate vehicle to address these complex resource and                 
 socioeconomic issues.  He told committee members the USFS has                 
 restructured the planning process to involve the USFS Pacific                 
 Northwest Research Station as a full partner in the revision.  The            
 USFS has also incorporated personnel from the USFWS, the National             
 Marine Fisheries Service, and the Environmental Protection Agency             
 in the full range of planning activities.                                     
                                                                               
 MR. JANIK said the intent is to ensure that the USFS's decisions,             
 with respect to the wildlife and fish issues, benefit from a                  
 broader interpretation of available scientific information.  The              
 viewpoints of the federal agencies that have statutory and                    
 regulatory responsibilities with respect to wildlife, fish, and the           
 environment are considered as part of the scientific information.             
 Involvement by the state is also expected, essential, and welcome.            
 He added that informational open houses will soon commence and be             
 conducted throughout Southeast Alaska.                                        
                                                                               
 MR. JANIK said although the relationship between the wildlife                 
 issues and timber production on the Tongass have received the most            
 attention, other issues are also being assessed in the revision.              
 These issues include use of alternative timber harvest and                    
 silvicultural systems to accomplish forest management objectives              
 and provide additional flexibility in issue resolution.  He stated            
 in the Tongass for too long, there has always been a decision faced           
 as to either cutting trees or not cutting trees in terms of trying            
 to meet environmental obligations.  He explained the USFS has                 
 commenced a study and will be examining some alternative means of             
 harvesting trees, whereby they might be modifying forest structure            
 but not eliminating it over a course of a number of acres through             
 the form of a clearcut.  He noted the USFS is not going to get away           
 from clearcutting but does want to have other options available for           
 harvesting trees that might relieve some of the tension of that cut           
 or no cut two way option.  He noted that other examples are                   
 protection and sustainability of anadromous fish habitats,                    
 protection of the karst/cave resources on the forest, and wild and            
 scenic river considerations.                                                  
                                                                               
 MR. JANIK stated he understands Sitka's and Wrangell's financial              
 difficulties resulting from the closure of the Alaska Pulp                    
 Corporation mills.  He said the USFS is going to try and help as              
 best they can in two ways.  First, the USFS will continue to try to           
 get as much timber out on the market as possible.  Second, the USFS           
 is trying its best to bring forward through Forest Service sources            
 community assistance funding.  He noted the USFS well exceeded a              
 $150,000 investment in 1994 in that regard and hopes that figure              
 will be significantly higher in 1995, perhaps $1 million or more.             
 He stressed the USFS does care and is very concerned about the                
 situation.                                                                    
                                                                               
 MR. JANIK stressed the USFS cannot do this job alone.  The USFS               
 intends to actively engage the other federal and state agencies,              
 tribal governments, and interested publics.  He said how the                  
 Tongass is managed should be determined through a collaborative               
 process, and the USFS is committed to that kind of interaction.  In           
 addition to the open house information and listening sessions the             
 USFS will conduct throughout Southeast Alaska, they welcome other             
 interactive forums that might be suggested or arranged.  Such                 
 sessions must be open to all interests so that the USFS meets the             
 requirements of the Federal Advisory Committee Act.  He stated from           
 such sessions could emerge a better mutual understanding of                   
 people's expectations regarding timber supply, the demand for                 
 timber, wildlife conservation, and the feasibility of meeting those           
 expectations.                                                                 
                                                                               
 MR. JANIK mentioned that he had been told that during the                     
 deliberations associated with the TTRA legislation, the Southeast             
 Conference played an instrumental role in bringing people together            
 to interact, which helped lead to the resolutions achieved in that            
 effort.  He suggested perhaps a similar forum could be used to                
 assist the USFS with the revision.  He said the USFS is very                  
 encouraged by the cooperative spirit demonstrated by the federal              
 and state agencies and by the partnership approach being emphasized           
 by Governor Knowles in how government entities interact with each             
 other and with the public they serve.  The USFS is eager to                   
 participate in that kind of partnership.                                      
                                                                               
 MR. JANIK stated during the meeting of December 8, 1994, that                 
 Representative Williams arranged in Ketchikan, he personally agreed           
 to meeting quarterly with representative interests and members of             
 the public in Southeast Alaska.  He stressed the Forest Supervisors           
 of the Tongass and he reaffirmed their commitment to participate in           
 such regular sessions along with key members of their Regional                
 Office and Forests.                                                           
                                                                               
 MR. JANIK recalled the letter of invitation for the hearing said              
 the Resources Committee hoped the hearing would lead to a better              
 understanding of how the state, the federal government, affected              
 communities, and the timber industry could work together to solve             
 problems facing timber-dependent communities in the region.  He               
 stressed the USFS is committed to such a collaborative approach.              
 He suggested four ways the state, the legislature and/or state                
 agencies can help the USFS.                                                   
                                                                               
 MR. JANIK said the first suggestion is establishing and helping the           
 USFS with forums for public involvement, especially going through             
 the TLMP revision process.  Next, help the USFS review, in a broad            
 sense, all of the federal and state permitting system processes the           
 USFS is required to comply with as timber projects are moved                  
 through the various gates of approval.  He said there has been                
 discussion about forming a policy group, consisting of federal and            
 state policy makers who will discuss some of the major issues which           
 are particular challenges, as well as continuing and expanding                
 state involvement in many of the studies needed to further                    
 interpret some of the science where there are voids.  An example              
 was mentioned earlier and that is because of limited funds, etc.,             
 many of the goshawk surveys are only being conducted in areas where           
 there is a need to clear timber.  Ideally, the sampling for goshawk           
 nests should be Tongass-wide, in a statistically valid sampling               
 process.  He mentioned that the USFWS has indicated they would help           
 pay for that process.                                                         
                                                                               
 CO-CHAIRMAN WILLIAMS thanked Mr. Janik for his presentation and his           
 efforts to answer some of the questions in his letter of                      
 invitation.                                                                   
                                                                               
 REPRESENTATIVE JOE GREEN acknowledged that he is coming from ground           
 zero and stated all he knows about the problem is what he has read            
 in the paper.  He recalled that Mr. Janik had referred to a 4,500             
 million board feet of timber available per decade, then had                   
 mentioned the 320 million board feet available in 1995, and then              
 related to the fact that the USFS is going to try and get as much             
 timber available as possible but because that is going to be less             
 than is necessary, Mr. Janik understands the financial difficulties           
 in Sitka and Wrangell.  He noted that Mr. Janik had said the                  
 federal government planned to try and come up with some funding to            
 help the conditions.  He asked if the USFS is only going to make              
 two-thirds of timber available of what is necessary, would it not             
 be more prudent to increase the amount of timber available and                
 forget handing out dollars.                                                   
                                                                               
 MR. JANIK stated he did not mean to suggest in any way that the               
 rural assistance program was a substitute for timber.  The USFS               
 fully recognizes that delivering timber to the market is the most             
 crucial thing which needs to be done in terms of the USFS's ability           
 to help the communities dependent on timber.  He stressed he was              
 only trying to point out that the USFS does care about the changes            
 going on with Sitka and Wrangell and will do its best with regard             
 to the rural assistance monies available.  He hoped those monies,             
 along with other monies coming from other sources, will help make             
 a difference in terms of current challenges.                                  
                                                                               
 MR. JANIK said in regard to the figures Representative Green quoted           
 from his prepared statement--the 4,500 million board feet per                 
 decade is the Allowable Sale Quantity from the forest plan and is             
 the maximum amount identified.  He stated the USFS would like to              
 try and achieve that level but has found they cannot achieve it               
 because of other restrictions being dealt with.  He pointed out the           
 320 million board feet for fiscal year 1995 is the best the USFS              
 can do as projected currently.  He said the USFS continues to look            
 for other opportunities as they did in 1994 to determine if                   
 additional units can be released.                                             
                                                                               
 MR. JANIK mentioned with the environmental assessment  being                  
 finalized, and with some of the new technical information which has           
 emerged since last September, the USFS may find some room for more            
 flexibility but that remains to be seen.  He stressed he does not             
 want to mislead anyone.  He reiterated the USFS is going to try its           
 best to get as much timber out in the market as possible without              
 running some of the risks mentioned earlier.                                  
                                                                               
 REPRESENTATIVE JOHN DAVIES clarified the 320 million board feet for           
 1995 results from a judgment call within the USFS as to what is               
 required to avert listings and is not a legal requirement.                    
                                                                               
 MR. JANIK responded the 320 million board feet is the USFS's                  
 interpretation of its legal requirements regarding the                        
 environmental laws they are compelled to follow and the USFS sees             
 some risks if the USFS does not respond to the information in the             
 fashion they have, then they would be vulnerable to that.  He                 
 stated the 320 million board feet does relate to the USFS's ability           
 to produce that level in complying with other regulations they are            
 required to follow.  He added the debate is that is a judgment call           
 on what the law does require the USFS to do.                                  
                                                                               
 REPRESENTATIVE DAVIES noted KPC's average annual 225 million board            
 feet (to meet the contract) and the SBA 80 million board feet                 
 totals 305 million board feet and if another 60 million board feet            
 was added for Wrangell, the total would be around 365 million board           
 feet.  He wondered if 365 million board feet is completely out of             
 the question.                                                                 
                                                                               
 MR. JANIK replied 365 million board feet for the fiscal year is not           
 achievable.  He said the 320 million board feet is the best the               
 USFS can do unless some additional units can be found.  He pointed            
 out it is important to note there is not agreement between the USFS           
 and KPC as to what the contract obligation is in terms of volume.             
 He noted that the USFS had a recent contractor's decision on the              
 obligation of the USFS delivery on the contract which is under                
 discussion currently.  He stated the part of the 320 million board            
 feet which is identified for KPC for fiscal year 1995 is 220                  
 million board feet and the other 100 million board feet is                    
 identified for offerings for the independent program.                         
                                                                               
 MR. AMBROSE asked Mr. Janik to explain to the committee that the              
 307 million board feet actually delivered by the USFS is not trees            
 cut.                                                                          
                                                                               
 MR. JANIK said the terms he used in his presentation basically                
 meant that the USFS offered up for sale 307 million board feet of             
 timber of new offerings.  In addition to that, there was another 30           
 million board feet of reoffers.  Therefore, the total offering to             
 the timber market put up for sale was 337 million board feet for              
 fiscal year 1994.  He thought Mr. Ambrose's point was much of that            
 volume was not immediately available for harvesting, depending on             
 the time it was released.                                                     
                                                                               
 MR. AMBROSE stated there has also been an anadromous fish habitat             
 assessment being prepared.  He said it is his understanding the               
 assessment has been through the Office of Management & Budget and             
 is now back in Agriculture.  He wondered if there is anything in              
 that report which is going to require additional protections.                 
                                                                               
 MR. JANIK responded he may sound evasive when answering the                   
 question even though he does not mean to because the Appropriations           
 Committee of Congress has asked the USFS to prepare that report.              
 He said that came about as a result of Senator Stevens' amendment             
 for the fiscal year 1994 which prohibited implementation of the               
 PACFISH strategy being considered in the Lower 48.  He added what             
 came from that amendment, through conferencing, was an instruction            
 to the USFS to conduct a study to see if additional protective                
 measures were needed on the Tongass for anadromous fish and                   
 watershed integrity.  He told committee members that report was               
 completed and is moving through the approval process to delivery to           
 the committee.  He pointed out it would be very awkward to give the           
 details of that report until the committee has a chance to receive            
 it.                                                                           
                                                                               
 MR. JANIK stated there is nothing in the report that indicates any            
 kind of immediate measures to be taken of an emergency status.  He            
 said there are some things in the report the USFS will be examining           
 in the TLMP revision through the normal course of that planning               
 process which will involve full public disclosure and interaction.            
                                                                               
 REPRESENTATIVE SCOTT OGAN noted that he offered a bill in the                 
 house, HB 83, which would require state agencies to scrutinize                
 federal mandates and either negotiate with the federal government             
 to implement changes in that mandate or possibly sue the federal              
 government for changes.  He asked Mr. Janik if he had the power to            
 eliminate or modify any of the federal environmental laws to help             
 implement the USFS's multiple use goals, what would those be and              
 how would he change them.                                                     
                                                                               
 MR. JANIK replied he would not offer any suggestions on what should           
 be eliminated, as many of those environmental laws and regulations            
 were developed in good faith and with sound reasoning.  He would              
 suggest that through the various kinds of forums and interactions,            
 the USFS can do a better job analyzing the science that is an                 
 interpretation of its obligations and bring a broader base to bear            
 on that of all responsible agencies and interests as well as then             
 deliberating and trying to find some resolutions to some of the               
 issues.                                                                       
                                                                               
 SPEAKER PHILLIPS recalled that Mr. Janik had commented on the                 
 contract which existed with KPC.  She asked if it was extremely               
 clear that the USFS does have a 50 year contract with KPC to                  
 provide timber.                                                               
                                                                               
 MR. JANIK replied yes.                                                        
                                                                               
 SPEAKER PHILLIPS recalled that Mr. Janik had said, "The Forest                
 Service is bound by many laws which require that management of all            
 forest resources be accomplished in a sustainable manner".  She               
 asked if Mr. Janik considers the USFS contract with KPC to be part            
 of those laws which bind the USFS on their responsibility on the              
 forest.                                                                       
                                                                               
 MR. JANIK responded yes and added that a contract is a binding                
 instrument.                                                                   
                                                                               
 SPEAKER PHILLIPS asked if the USFS feels it is fulfilling the                 
 content of that contract on an annual basis.                                  
                                                                               
 MR. JANIK said the USFS strongly believes it is meeting its                   
 obligations under the KPC contract.                                           
                                                                               
 SPEAKER PHILLIPS recalled Mr. Janik talking about the USFS's desire           
 to give grants to communities.  She stressed the communities do not           
 need grants, they need logs.  She noted that Mr. Janik had clearly            
 left out any written testimony that the USFS wanted to provide                
 extra timber, should be providing extra timber, needs to be                   
 providing extra timber.  She stated the only comment Mr. Janik made           
 was the USFS may be able to give grants to these communities in the           
 amount of $118,000.  She stressed that amount of money does not               
 sustain a community.                                                          
                                                                               
 MR. JANIK asked Speaker Phillips to consider the number of times he           
 referenced the USFS's strong intent to deliver as much volume of              
 timber to the market as possible.  He stated he is fully aware that           
 the USFS's ability to bring money forward is no substitute for                
 timber on the market.                                                         
                                                                               
 CO-CHAIRMAN WILLIAMS asked Mr. Reinhart if KPC would be willing to            
 continue to operate on the long term contract if the extension was            
 beyond the year 2004.                                                         
                                                                               
 MR. REINHART stated KPC has a commitment to Ketchikan to go through           
 the year 2004 and if a workable agreement can be reached for an               
 extension, KPC would like to stay in the community and continue to            
 operate their facilities.  He said KPC believes in the community              
 and Southeast Alaska.                                                         
                                                                               
 CO-CHAIRMAN WILLIAMS asked Mr. Reinhart to comment on Mr. Janik's             
 comments about making timber available.  He said this is a problem            
 which the community has heard a lot about from KPC and the USFS.              
                                                                               
 MR. REINHART said it is part of the shell game going on.  KPC has             
 many numbers and every time they start to discuss the numbers and             
 begin to narrow the gap, the USFS comes up with a new way to                  
 present the numbers to keep people confused.  He noted he had                 
 outlined the contract numbers which KPC believes that contract                
 calls for, but the USFS continues to make the majority of the                 
 volume available in September.  He stated even though USFS says               
 they will give KPC 220 million board feet, if it comes late in the            
 year, that is not what is going to go through KPC's mill.  Last               
 year, the USFS gave KPC 176 million board feet and KPC was only               
 able to get 110 million board feet to the mill which does not keep            
 their people employed, their sawmills running, their pulp mill                
 running and the loggers in the woods logging.                                 
                                                                               
 REPRESENTATIVE DAVIES said he appreciates the problem in regard to            
 getting the timber offering late in the year the first time.  He              
 asked if that is a continuing problem.  He wondered if the offering           
 is always in September, would not the previous September go into              
 the next year, etc.                                                           
                                                                               
 MR. REINHART said some of those delays do not delay KPC for a year            
 but create delays of two years.  Therefore, it becomes a compound             
 problem.  He stressed the USFS has not met their volume.  One year            
 the USFS gave KPC just under 50 million board feet and the next               
 year they gave 167 million board feet.  He stated KPC has such a              
 small pipeline, they have no flexibility left and when those                  
 numbers are going up and down, KPC will always be behind.                     
                                                                               
 MR. AMBROSE observed that folks such as Mr. Seley--small                      
 businessmen that are independents looking for SBA sales--seem to be           
 pitted against the long term contract, acknowledging the fact that            
 a lot of the infrastructure provided helps the small businessmen              
 out.  He said there are those who contend that if the long term               
 contract goes away, there will be lots of timber jobs based on                
 operations of Mr. Seley's size.  He recalled that Mr. Seley had               
 said that someone from the USFS had told him he would have a hard             
 time finding a market for his product.  He wondered if Mr. Seley is           
 out there by himself, is there a market there the USFS does not               
 think is there now.                                                           
                                                                               
 MR. SELEY responded he is not sure who gave that statement and why.           
 He stated there is not a problem for finding markets for his                  
 products.  He said in regard to the KPC operation, he feels it is             
 crucial that long term sale volume be provided because KPC is a               
 buyer of chips, they plan to assist in the remanufacture of rough             
 baby squares from his plant, they are one of the local buyers of              
 pulp wood, etc.  He stated KPC is the key part of the industry.  He           
 stressed there is not an argument between the majority of the                 
 independent sector and the long term contract.                                
                                                                               
 MR. AMBROSE wondered if he was correct that when the volume for Mr.           
 Seley's part of the industry was going down, someone said there is            
 not a market for his product.                                                 
                                                                               
 MR. REINHART stated perhaps he is talking about appraisal problems            
 --some sales did not sell.  He said KPC has sales which sometimes             
 the USFS appraises as deficit sales and independent operators like            
 Mr. Seley are not able to get those on the board because there is             
 not a profit associated with them.  He noted it depends on how the            
 sales are put together.                                                       
                                                                               
 MR. AYRES asked Mr. Seley what prevents the state from having in-             
 state processing requirements and is that something he would                  
 support.                                                                      
                                                                               
 MR. SELEY said absolutely.  He felt the only thing which stops more           
 value-added in-state processing facilities is the commitment and              
 the USFS's ability to keep a commitment for a viable supply of                
 timber.                                                                       
                                                                               
 MR. AYRES stated if there is a certain amount of timber available             
 and there are going to be losers, why isn't it the logs drifting              
 down the channel.  He wondered why there is not a requirement for             
 those logs to be processed.  He stressed for every tree cut, there            
 should be jobs in Alaska.                                                     
                                                                               
 MR. SELEY agreed.  He recalled Mr. Age earlier stating his desire             
 to manufacture cedar at his plant and if he manufactures cedar, he            
 displaces what he is now cutting in spruce and hemlock for KPC.  He           
 felt industry will again take grips with that problem and develop             
 the manufacturing capability for cedar.                                       
                                                                               
 MR. AYRES felt that is something the state and the legislature                
 could help with.  He mentioned that someone slipped him a note                
 saying the Supreme Court has said Congress has not authorized the             
 state to require in-state processing so if the federal government             
 does not authorize it, it cannot happen.                                      
                                                                               
 CO-CHAIRMAN WILLIAMS said many of these things can happen today if            
 there is a volume of timber available.  The current problem is the            
 amount of timber needed is not made available by the USFS.  He                
 stated KPC can consume 220 million board feet of timber and Mr.               
 Seley's mill can consume 70 million board feet of timber.  He                 
 stressed to get the value-added, there is a need for a volume of              
 timber.                                                                       
                                                                               
 SPEAKER PHILLIPS stated her question is for Mr. Janik and Mr.                 
 Reinhart.  She asked what the process is when they are allocated a            
 certain amount of board feet per year and they are unable to                  
 process that all in one year.  She wondered if they can carry over            
 to the next year that which they were not able to process.                    
                                                                               
 MR. REINHART said in days gone by, KPC and others had 2-3 years               
 worth of operating volume within the pipeline and could adjust                
 their operations depending on their volume needs, wildlife                    
 constraints, etc.  He stated today KPC has 6-9 months worth of                
 operating volume.  He added KPC can carry its volume over and they            
 previously had the surplus volume to do that.                                 
                                                                               
 SPEAKER PHILLIPS gave an example.  She said KPC was allocated 220             
 million board feet and because the offer came in so late in the               
 year, they were only able to process 150 million board feet.  She             
 asked if KPC can take the additional 70 million board feet and                
 stockpile it for the next year.                                               
                                                                               
 MR. REINHART stated yes--it moves into the next year and KPC tries            
 to develop it and work it into their timber program.                          
                                                                               
 FRED WALK, DIRECTOR FOR TIMBER MANAGEMENT, USFS, said when the USFS           
 releases timber under the long term contract, they expect there be            
 an appropriate amount of time for the road construction work and              
 the harvesting to take place, and that time frame would be from 3-5           
 years before the timber the USFS offered would be all harvested,              
 the contractual work completed, and the operation completed.                  
                                                                               
 CO-CHAIRMAN GREEN recalled that Mr. Janik had said the 320 million            
 board feet was USFS's legal interpretation.  He asked if that                 
 interpretation was made before the information about the goshawk              
 was available--maybe the goshawk does not really live in the older            
 forest and the information on the martens--which would have                   
 influenced their decision.                                                    
                                                                               
 MR. JANIK said the USFS has tried to be as responsible as possible            
 in looking at what its legal obligations are and balancing that out           
 with delivering as much timber to the market as possible.  He                 
 stated the USFS will continue to examine those recommendations as             
 it gets smarter about all the information, and wants to do that               
 with a broader group of people than those who have been involved to           
 date.  He noted if the USFS does find additional flexibility                  
 through that kind of interpretation, it will be pursued                       
 aggressively.  He stressed the USFS is wanting to provide and do              
 its part for a sustainable timber industry in Southeast Alaska.  He           
 added the USFS is trying its best and is trying to prevent further            
 adversity which could emerge if it does not take action now.                  
                                                                               
 MR. JANIK noted what he said about the finalization of the                    
 environmental assessment will be the next inning on that subject              
 because the USFS does have additional technical information.                  
                                                                               
 MR. AYRES asked what keeps the state from requiring in-state                  
 processing.                                                                   
                                                                               
 MR. JANIK felt that subject should be examined.  He said there may            
 be some federal implications but noted it is an area that should be           
 looked at.                                                                    
                                                                               
 MR. REINHART stated there are two parts to the export component.              
 He said on federal lands for everything other than cedar, there are           
 domestic manufacturing requirements.  He noted that KPC does not              
 export spruce and hemlock but runs it through their facilities.               
 KPC has requirements set through regulations the USFS has.  He                
 commented in regard to the question about cedar--KPC has talked to            
 Governor Sheffield, in his work at Wrangell, about KPC's interest             
 in sawing some of that cedar.  He noted there are some things which           
 need to be done to ensure a timely progression, so the industry is            
 not disrupted and the timber pipeline is not further disrupted.               
                                                                               
 MR. REINHART said the second part is the land which the committee             
 and Governor Knowles controls--the state forests.  He stated that             
 effort will have to be between the state legislature and the                  
 federal government because there are no requirements for domestic             
 manufacturing.                                                                
                                                                               
 RALPH LEWIS, PRESIDENT & GENERAL MANAGER, KPC, stated he would like           
 to address the cedar issue which has always been a KPC concern in             
 terms of manufacture.  He said the only thing keeping KPC from                
 doing that is getting the red cedar into the market.  Times have              
 been changing and the restrictions and requirements on red cedar is           
 disappearing in the Lower 48.  Therefore, people are beginning to             
 show interest in KPC's red cedar.  He noted that previously, red              
 cedar was on the very highest and furthest north was the lowest               
 quality, so the only value was in the export of the logs.                     
                                                                               
 MR. LEWIS stated the red cedar higher value gave positive stumpage            
 rates.  He stressed exporting that cedar has bailed out timber                
 sales.  He said with the price going up, those sales are                      
 profitable.  He noted there is a misconception that added-value               
 brings more money to the stump and he stressed that is not                    
 necessarily true.  If KPC processed red and yellow cedar, it would            
 be less valuable to the USFS, not more.  It would put more jobs in            
 Alaska but would reduce the value.                                            
                                                                               
 MR. LEWIS said if that is hard to believe, one needs to look at the           
 hemlock and spruce which KPC cuts and processes in Alaska, where              
 the private lands can export it.  Those logs have $350-700 a                  
 thousand more value than processing them here in Alaska.  He stated           
 when people start talking about processing the wood, the return to            
 the seller of the product is going to be reduced (the USFS).  If              
 that is going to be done, there will be below cost timber sales or            
 small stumpage value sales.  He stated the problem with it is the             
 Lower 48 trying to stop the timber sales.  He stressed there is a             
 balancing act going on.                                                       
                                                                               
 TAPE 95-20, SIDE A                                                            
 Number 000                                                                    
                                                                               
 REPRESENTATIVE DAVIES said one of the things learned today is that            
 the numbers mean different things to different people.  He recalled           
 that Mr. Janik had said 100 million board feet would be allocated             
 to the SBA program.  He asked Mr. Seley if that 100 million board             
 feet means at least 80 million board feet.                                    
                                                                               
 MR. SELEY stated there is a difference between the SBA program and            
 the independent sale program.  He recalled that Mr. Janik had                 
 referenced the independent sale program but did not recall him                
 referencing the SBA program, which is a commitment between the SBA            
 and the USFS.  He said the independent sale program involves a                
 volume of wood which gets thrown out and every time there is a                
 shortfall on the SBA sale volume, the USFS says it could have been            
 picked up through the independent program and if the USFS falls               
 short on the KPC contract, they say it could have been picked up              
 through the independent sale program.                                         
                                                                               
 MR. SELEY said SBA operators have to have the 80 million board feet           
 of SBA designated timber made available.  Last fall, the sale of              
 approximately 20 million board feet was sold in the independent               
 sale program, purchased by a non-SBA firm with no manufacturing               
 capability in Southeast Alaska.                                               
                                                                               
 REPRESENTATIVE DAVIES asked Mr. Lindekugel to comment on the                  
 numbers being discussed and what those numbers mean from his                  
 perspective.                                                                  
                                                                               
 MR. LINDEKUGEL responded supply issues are very difficult and what            
 needs to be considered is that a small fraction of the forest is              
 being talked about which supplies this volume to support a certain            
 percentage of the jobs in the Southeast economy.  He stressed that            
 timber also supports other diverse aspects of the Southeast                   
 economy.  He said his organization is willing to work with people             
 in Southeast to determine solutions and recently worked on                    
 conceiving, received fundraising for and planned a workshop in                
 Sitka on forest enterprises which will happen in early March.  This           
 workshop will focus on different options, given the fact that there           
 is a smaller timber volume available and there is a need to                   
 maximize the job output from that volume.                                     
                                                                               
 MR. LINDEKUGEL stated in addition, his organization has repeatedly            
 gone to the table and gave committee members an example.  He said             
 his organization is very interested in working toward solving the             
 problems.  He noted Wrangell was hit hard by the Alaska Pulp Mill             
 closure.  He pointed out that 91 million board feet of timber came            
 up on the block in September.  Alaska Pulp Corporation (APC)                  
 elected not to bid on any of that timber and instead shut down its            
 mill indefinitely.  He said purchasers paid up to 50 times the                
 dollar amount that APC was getting under its former long term                 
 contract.  He stressed the Wrangell facilities can be used as a               
 demonstration project for adding manufacturing capabilities which             
 would produce more jobs.  He noted there are many options to                  
 explore.                                                                      
                                                                               
 MR. LINDEKUGEL told committee members that SEACC members live                 
 throughout the panhandle and depend upon the forest resources in              
 many different ways and they want to be at the table, working with            
 people to solve the problems that change brings.  He stated change            
 either has to be managed or it will control.  A person can stay a             
 step ahead of it, looking into the future and maintaining the                 
 options available or they can be cut out before they are explored.            
                                                                               
 CO-CHAIRMAN WILLIAMS clarified that Mr. Lindekugel was saying there           
 was enough time for APC to bid on the 90 million board feet of                
 timber made available in September in order to keep the mill                  
 working throughout the winter.                                                
                                                                               
 MR. LINDEKUGEL stated he does not know what kind of flexibility the           
 APC had in terms of available timber supply.  He said the APC                 
 received over 60 million board feet in close out activities on the            
 long term contract after the contract was closed, which is about              
 the volume APC cuts on a yearly basis.  He said APC chose not to              
 play the game.  He stressed APC was willing to get the timber when            
 they were paying $1.07 per thousand board feet in cash but was                
 unwilling to go on the competitive market and bid for that timber.            
 Therefore, that timber increased in value due to competitive                  
 forces.                                                                       
                                                                               
 CO-CHAIRMAN WILLIAMS clarified that Mr. Lindekugel was saying that            
 the 90 million board feet of timber made available in September was           
 very good timber, was not a deficit sale, and the sale areas were             
 available for winter type logging.                                            
                                                                               
 MR. LINDEKUGEL responded he did not know if the areas were                    
 available for winter type logging.                                            
                                                                               
 CO-CHAIRMAN WILLIAMS asked Mr. Lindekugel if he knew what type of             
 timber was made available--deficit sale, good timber, etc.                    
                                                                               
 MR. LINDEKUGEL stated that APC claimed it was a deficit sale.                 
 Purchasers competed in a bidding process and raised the price of              
 that timber 50 times over what the USFS appraised it.  He stressed            
 that fact suggests it was not a deficit sale.  He said people are             
 not going to bid on timber if they cannot sell it and manufacture             
 it.                                                                           
                                                                               
 CO-CHAIRMAN WILLIAMS clarified there is 90 million board feet of              
 timber available for the sawmill now.  He said if the USFS is going           
 to turn down a bid 50 times more than what they appraised it at,              
 there is something wrong with the system, unless they have not cut            
 it already.  He stated if the 90 million board feet of timber is              
 available at 50 times more than the cost, that volume should be out           
 and readily available for the sawmill.                                        
                                                                               
 MR. SELEY stated the 90 million board feet was timber that was                
 originally earmarked for APC under their long term contract.  He              
 said he cannot speak on their behalf but he felt their closure was            
 a result of years of not receiving volume on a timely basis to keep           
 their operation running.  He stressed that 90 million board feet of           
 timber was like asking them to take a 200 mile trip with 100 miles            
 worth of gas in the tank hoping they would find a pump down the               
 road.  He noted it is too difficult to manage an operation with an            
 unsteady supply of timber coming in spurts.                                   
                                                                               
 MR. SELEY stressed if the industry gets the supply, it will make              
 the commitment.  He said he does not care how many million board              
 feet his mill does or does not run--he works on dollars.  He stated           
 he has to have enough revenue to cover costs and perhaps a margin.            
                                                                               
 CO-CHAIRMAN WILLIAMS thanked everyone for their participation.  He            
 said the committee was given a lot of good information and he hoped           
 they could put it to use.  He closed by referring back to a few               
 opening remarks.  He said Speaker Phillips spoke of the                       
 relationship between production, the economy, and civilization.  He           
 stated everyone heard today of the many, many people willing to               
 risk their own futures to go into the forest products business in             
 Southeast Alaska.  He recalled that people spoke of trust and                 
 credibility.  He stressed from his experience, trust is not                   
 possible among strangers.  He noted that everyone present has                 
 gotten to know each other much better and added that trust may grow           
 from the session because knowledge certainly has.  He thanked                 
 everyone for their testimony.                                                 
                                                                               
 CO-CHAIRMAN WILLIAMS pledged to continue to talk to fellow                    
 legislators, the Administration, the Congressional delegation, Mr.            
 Janik and all interested parties who have acceptable solutions to             
 the concerns raised.                                                          
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 There being no further business to come before the House Resources            
 Committee, Co-Chairman Williams adjourned the meeting at 12:40 p.m.           
                                                                               
                                                                               

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