Legislature(1995 - 1996)
04/02/1996 04:35 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE RESOURCES STANDING COMMITTEE April 2, 1996 4:35 p.m. MEMBERS PRESENT Representative William K. "Bill" Williams, Co-Chairman Representative Joe Green, Co-Chairman Representative Scott Ogan, Vice Chairman Representative John Davies Representative Pete Kott Representative Don Long Representative Irene Nicholia MEMBERS ABSENT Representative Alan Austerman Representative Ramona Barnes COMMITTEE CALENDAR *HOUSE JOINT RESOLUTION 64 Relating to extension of the United States Forest Service timber sale contract with the Ketchikan Pulp Company. - HEARD AND HELD (* First public hearing) PREVIOUS ACTION BILL: HJR 64 SHORT TITLE: EXTENSION OF KETCHIKAN PULP CO. CONTRACT SPONSOR(S): RESOURCES JRN-DATE JRN-PG ACTION 03/25/96 3310 (H) READ THE FIRST TIME - REFERRAL(S) 03/25/96 3310 (H) RESOURCES 04/02/96 (H) RES AT 4:00 PM CAPITOL 124 WITNESS REGISTER CHERYL SUTTON, Legislative Assistant to Representative Bill Williams House of Representatives Alaska State Legislature Capitol, Room 128 Juneau, AK 99801 Telephone: (907) 465-3715 POSITION STATEMENT: Explained changes in the CS for HJR 64. RALPH LEWIS, President Ketchikan Pulp Company P. O. Box 6600 Ketchikan, AK 99901 Telephone: (907) 225-2151 POSITION STATEMENT: Explained Ketchikan Pulp Company position on HJR 64. DICK COOSE, Chairperson Timber Issues Committee Greater Ketchikan Chamber of Commerce P. O. Box 5957 Ketchikan, AK 99901 Telephone: 225-3184 POSITION STATEMENT: Presented comments on behalf of Ketchikan Borough Mayor, Jim Carlton; and testified in support of CS HJR 64. STEVE KALLICK Alaska Rainforest Campaign 1016 West 6th Avenue Anchorage, AK 99501 Telephone: (907) 274-7246 POSITION STATEMENT: Testified that HJR 64 is not in the best interest of the state. DIANE MAYER, Director Office of Governmental Coordination Office of Management & Budget P. O. Box 110030 Juneau, AK 99811-0030 Telephone: (907) 465-3562 POSITION STATEMENT: Presented Governor's statement on HJR 64. WILLIAM MORAN, President First Bank P. O. Box 7920 Ketchikan, AK 99901 Telephone: (907) 228-4202 POSITION STATEMENT: Testified in support of HJR 64. JOHN ANTONEN, Executive Director Southeast Regional Resource Center 210 Ferry Way, Suite 200 Juneau, Alaska 99801 Telephone: (907) 586-6806 POSITION STATEMENT: Testified in support of HJR 64. WILLIAM BROCK, Analyst and Project Manager McDowell Group 416 Harris Street Juneau, Alaska 99801 Telephone: (907) 586-6126 POSITION STATEMENT: Testified in support of HJR 64. JOHN SISK, Former Director Southeast Alaska Conservation Council Address Unknown Telephone: Unknown POSITION STATEMENT: Testified in opposition to CS HJR 64. WAYNE WEIHING, President Tongass Conservation Society and Board Member Southeast Alaska Conservation Council P.O. Box 3377 Ketchikan, Alaska 99901 Telephone: (907) 2255827 POSITION STATEMENT: Testified in opposition to CS HJR 64. KELLY NOLLEN, Attorney Sierra Club Legal Defense Fund 325 4th Street Juneau, Alaska 99801 Telephone: (907) 586-2751 POSITION STATEMENT: Testified in opposition to HJR 64. KATHY LIETZ, Bookkeeper Black Bear Cedar Products Box 19112 Thorne Bay, Alaska 99919 Telephone: Not Available POSITION STATEMENT: Testified in support of HJR 64. BRIAN S. BROWN, Chief Logging Engineer Silver Bay Logging Company Cube Cove, Number 2 Juneau, Alaska 99850-0360 Telephone: (907) 586-4133 POSITION STATEMENT: Submitted written testimony to be included in committee file. JACK PHELPS, Executive Director Alaska Forest Association, Inc. 111 Stedman, Suite 200 Ketchikan, Alaska 99901-6599 Telephone: (907) 225-6114 POSITION STATEMENT: Testified in support of HJR 64. TINA LINDGREN, Executive Director Alaska Visitors Association 3201 C Street, Number 403 Anchorage, Alaska 99503 Telephone: (907) 561-5733 POSITION STATEMENT: Testified on HJR 64. SOL ATKINSON, Council Member Metlakatla Indian Community Metlakatla, Alaska Telephone: (907) 886-1175 POSITION STATEMENT: Testified in support of HJR 64. GARY PAXTON, City Administrator City & Borough of Sitka 100 Lincoln Street Sitka, Alaska 99835 Telephone: (907) 747-3294 POSITION STATEMENT: Testified on HJR 64. DOUG ROBERTS, Mayor City of Wrangell 205 Brueger Wrangell, Alaska 99929 Telephone: (907) 874-3952 POSITION STATEMENT: Testified in support of HJR 64. KATE TESAR, Lobbyist Alaska Services Group P.O. Box 22754 Juneau, Alaska 99802 Telephone: (907) 463-5657 POSITION STATEMENT: Read statement on behalf of the Mayor of Ketchikan, Alaire Stanton. ERNESTA BALLARD, Environmental Consultant Ketchikan Pulp Company P.O. Box 6600 Ketchikan, Alaska 99901 Telephone: (907) 225-2151 POSITION STATEMENT: Testified on CS HJR 64. ACTION NARRATIVE TAPE 96-46, SIDE A Number 001 CO-CHAIRMAN WILLIAM K. "BILL" WILLIAMS called the House Resources Committee meeting to order at 4:35 p.m. Members present at the call to order were Representatives Green, Williams, Ogan, Davies, Kott, Long and Nicholia. Representatives Austerman and Barnes were absent. HJR 64 - EXTENSION OF KETCHIKAN PULP CO. CONTRACT CO-CHAIRMAN WILLIAMS announced that it was not his intent to move the resolution out of committee today; committee members would hear from invited speakers only. Public testimony would be heard tomorrow, April 3, and following that, he would pass the bill out of committee. Co-Chairman Williams brought forth the proposed committee substitute for HJR 64. Number 118 CO-CHAIRMAN WILLIAMS stated he had introduced the resolution at the request of community leaders in Ketchikan. He stated, "They were concerned about timber available in the pipeline to continue on in Ketchikan Pulp and Southeast Alaska. They were very concerned about seeing mills like Sitka, Wrangell and Ketchikan I believe, was closed last year for nine months. Seley Mill was closed. Seaborne Mill was closed. I think they are talking about closing now. Ketchikan Pulp is working to do the environmental concerns that were brought before us. They are concerned also about whether or not we have enough timber to continue on with this, at least the community members are, and I am sure that the board of directors at Ketchikan Pulp Company are also concerned about whether they should continue on with this project." Number 240 CO-CHAIRMAN JOE GREEN moved to adopt the proposed committee substitute for HJR 64, Version 9-LS1812\C, dated 4/2/96 as the working draft. Hearing no objection, it was so ordered. CO-CHAIRMAN WILLIAMS announced the House of Representatives was going back into session at 5:00 p.m. He indicated that he would like Vice Chairman Scott Ogan to remain with the committee to continue to take testimony and get everyone on record. Number 334 CO-CHAIRMAN WILLIAM requested the sponsor statement for HJR 64 be incorporated into the record: "The Majorities in the Alaska Legislature have called upon the Governor to work with the Legislature and the Alaska Congressional Delegation to resolve Tongass issues. Our goals very simply are, at a minimum, to maintain the existing industry and to require the Forest Service to provide sufficient volume to allow the industry to grow back to the level contemplated in the 1990 Tongass Timber Reform Act (TTRA) compromise. "This resolution to extend the Ketchikan Pulp Company (KPC) contract is critical to maintaining the existing industry. In order to meet various environmental and related requirements, KPC will have to make major capital expenditures. No company can justify to investors the level of capital expenditure which KPC requires without showing its investors that it has access to the raw materials it needs to process to pay back the investment. "In this case, investors quite reasonably need confidence that there will be sufficient timber made available. Given the Forest Service's continuing failure to provide adequate volume to the industry, only a contractual commitment will provide the necessary investor assurance of sufficient timber. Thus, it is clear that an extension of KPC's long term contract is necessary for financing purposes. "In addition, KPC's contract economics need to be restored from the unfortunate unilateral changes in the TTRA. Alaska Pulp Corporation (APC) cited these changes as a significant factor in its decision to close. The need to restore the contract economics is as vital as the extension. "It is particularly important here to understand that the federal government plays two roles. It is the monopoly holder of the timber supply needed to maintain KPC and the timber industry in Southeast. It also sets the requirement for many of the permits without which these plants, including the KPC pulp mill, cannot operate. "Because of these competing roles, the federal government has a special obligation in this case to provide a sufficient guaranteed timber supply to KPC by contract to justify the expenditure of millions of dollars which federal legislation is requiring KPC to invest to keep operating. If there were other sources of supply, maybe the situation would be different, but there are not. When the supplier also sets the regulatory standards, as the federal government does here, it has a special obligation to the public to coordinate its policies. It can do that here by extending and modifying the contract. "Louisiana Pacific has made it clear that unless a contract extension and modification process begins taking shape this year, it will face extensive uncertainty inconsistent with making a significant portion of the required capital expenditures. "We, as Alaskans, really need to think about what it would mean if we had no pulp mill in Southeast Alaska. Since the 1920s, the Forest Service has recognized the need for pulp mills as the cornerstone of a timber industry in Southeast Alaska. The sawmills cannot buy timber sales unless they have a means of disposing of the pulp logs and the high product chips from sawmilling operations. The pulp mill converts low value material into high value material. Indeed, it is the most significant example of ongoing value added processing in the timber industry in Alaska. While the sawmills could arguably chip up pulp logs and send those chips along with by-product chips from their sawmill operation to the Lower 48, it would be more expensive and involve more risk. Higher Alaska logging costs and transportation costs would make Alaskan chips more expensive and thus, less competitive in Lower 48 markets. It is riskier because of the uncertainty of being able to sell into the Lower 48 market. In other words, if the last pulp mills goes out of business, the sawmills will be under much greater financial pressure. "The impact on the economy in Southeast Alaska of losing the timber industry will be devastating. On a Southeast areawide basis, we will lose the stumpage receipts program which has poured millions of dollars into our school and road system throughout Southeast Alaska for many, many years. "In addition, there will be a cataclysmic impact on the City and Borough of Ketchikan with the loss of its largest employer. This will affect countless others throughout the region who are suppliers and contractors to KPC. "In addition, it must be remembered that the pulp mill is a major contributor to forest health and good conservation by serving as a processor of over-mature timber and chips which are a by-product of sawmilling operations. "We have a robust, healthy National Forest which has 8.3 million forested acres which will never be harvested. Of the 1.7 million acres in the timber base, only 400,000 acres have been harvested since the turn of the century. Thus, the Forest Service should make 420 million board feet per year available as promised by the TTRA and as proposed in the February 1993 Tongass Land Management Plan (TLMP) Record of Decision (ROD). As ex-Regional Foresters Sandor and Barton testified last year at Wrangell at Senator Murkowski's hearing, this is a sustainable, allowable sale quantity consistent with sound fish and wildlife protection. Granting this contract extension would not jeopardize the other users of the Tongass and there would be sufficient timber for small businesses and independent operators. "For the foregoing reasons, the legislature, the Governor and the congressional delegation need to act together to get this contract extended. The purpose of House Joint Resolution 64 is to show support of the Alaska Legislature for this proposition." CO-CHAIRMAN WILLIAMS asked Cheryl Sutton to come forward and explain the changes in the committee substitute. Number 410 CHERYL SUTTON, Legislative Assistant to Representative Williams, outlined changes in the committee substitute. Page 1, line 16, adds the language: "due, in part, to the failure of the United States Forest Service to make available the approximately 420,000,000 board feet per year needed to meet the jobs protection promises made by those who sought passage of the TTRA,". Number 547 MS. SUTTON stated on page 2, line 5, Add: "WHEREAS, another of the reasons for the closure of the Sitka pulp mill was the adverse economic impacts of unilateral changes to its long-term contract made by the TTRA, those unilateral changes also adversely impact the economics of the Ketchikan Pulp Company (KPC) contract; and". Page 2, line 9, add: "year-round" after the word create. Page 2, line 13, after the words pulp mill, delete: "could cause" add: "could lead to". Page 2, line 17, add: "of the" following the word `failure'. Page 2, line 18, after the word Service, add: "to meet its volume requirements under KPC's contract and the TTRA," Page 2, line 18, delete: "policy and," add: "as a result of the adverse economic impacts to its long-term contract caused by the unilateral TTRA changes, and as". Page 2, line 25, after the word expenditures, add: "without an adequate supply of timber, and without modifying those portions of the unilateral TTRA contract changes that have adversely impacted the contracts economics;". Page 2, line 29, after amortization;, add: "and". Page 2, line 30, add: "WHEREAS the legislature finds that the 420,000,000 board feet promised by the TTRA must be made available in order to provide sufficient timber to maintain the KPC contract, to provide for the contracts to small business, and to reopen the Wrangell facility and a by-product facility in Sitka;". Page 3, line 5, after the words 15 years, add: "and modify those portions of the contract which the TTRA unilaterally impacted,". Page 3, line 6, after the word "extension," add: "and modification are", delete the word "is". Page 3, line 11, add: "FURTHER RESOLVED that the Alaska State Legislature also respectfully urges the Alaska Congressional Delegation, the Governor, and the United State Forest Service to take action this year to assure that a minimum of 420,000,000 board feet per year is made available as part of any revision of the Tongass Land-Use Management Plan." Number 609 MS. SUTTON referred to several letters in the committee packet and said that some of the folks testifying today would be reading, in part, through some of these statements. Number 690 RALPH LEWIS, President, Ketchikan Pulp Company, thanked Chairman Williams and the committee for hearing HJR 64. He introduced KPC staff, Ernesta Ballard who is the former Region X administrator for the Environmental Protection Agency (EPA) in Seattle, and was hired to help KPC go forward with all items including the environmental challenges ahead. He also introduced Kent Nicholson who is KPC's timber specialist. Mr. Lewis indicated that Ms. Ballard and Mr. Nicholson were available for technical questions. MR. LEWIS continued, "As you know by the letter, KPC is seeking, through Congress, an extension to the contract. We are looking, certainly, for some local support. The mayors in the towns have come forward because they see that with eight years left, and where KPC is with the expenditure cycle, and they are just as concerned and as worried as we are." MR. LEWIS recollected that the first timber bill in the late 1940s, established 50-year contracts which brought stability and long term, year-round jobs to Southeast because everything was seasonal at that time. This stability helped to balance the economy by providing hospitals and those types of facilities that year-round jobs bring. MR. LEWIS continued, "What came about was a 50-year sale that was bid on by Puget Sound Pulp and Paper on the open bidding process, who sat down with the Forest Service and negotiated a contract. Both parties sat down and negotiated this 50-year contract which we were operating under." MR. LEWIS said in the late 1970s, when ANILCA passed, a lot of wilderness was set aside and lands were designated into different groups. Everybody that came to the table agreed at that time, that about 450 million would be sustainable and should be met by the Forest Service to sustain the industry knowing that even with that some of the industry was going to fall by the wayside. And, in fact, did. In the early 1970s, we had probably some of the highest volume and then going into the 1980s, it slowed down. There were also some market depressions that knocked some of the people out. Number 889 MR. LEWIS continued that the Tongass Timber Reform Act (TTRA) came about in 1991. Historically, through the efforts of Representative Miller of California and Senator Worth, the House passed a bill to cancel the contracts which put all of us at a disadvantage in trying to negotiate, trying to salvage what we had and trying to make this thing work. Out of that came the TTRA, which again, I think everybody that came to that table agreed that with the TTRA, the industry could continue and go on, and stay at that size. The TTRA has not worked. All a person has to do is just look around. There is no Sitka, there is no Wrangell and we are fighting for our lives which shows the bill did not work. That is one of the reasons we have to go back to Congress, there really isn't any place for us to go because it was Congress who that passed the TTRA. So, we have to go back through that process to try to get a fix. Basically, what we are asking for is support from the state, to be able to go back there and show that the state continues to want us around and wants the business to continue and wants the timber industry. MR. LEWIS said, "That's what it takes today - it takes that commitment, by everybody. If you stay on the middle of the fence, you basically join those that don't want the timber industry. There are a lot of them out there that say they do, but the size of the industry that they want isn't going to give health care, and it isn't going to give pensions, and it isn't going to give the things that year-round employment and the size of the operations that we have, give." Number 994 MR. LEWIS explained that, "There have been a lot of environmental issues raised, and to understand the environmental process that has gone on, it started really, in the 1970s. There's been a lot of changes and modifications to the regulations. The United States has been on a very aggressive direction and a change mode. All of us that are in the middle of trying to make the changes and trying to go forward, it's very difficult. It is not that you don't try, but at times it becomes difficult. I know in the 1970s, almost all the industries waited until the regulations were passed, until you knew what you had to meet. Then you would sit down with the EPA and make a consent decree, sit down and figure out what you had to do, they'd give you `X' amount of time and then you would go forward. And in a lot of cases, the science was not there. A lot of the regulations and those things that you were going to meet, the science really wasn't there. You were having to generate -- make the science. We used to bring in CH2M Hill, and still do, to help us try to figure out what we can do to be able to meet those." CO-CHAIRMAN WILLIAMS asked Mr. Lewis to describe the environmental equipment being installed at the mill. Number 1080 MR. LEWIS recounted, "I took over about two years ago and also, came in because I am a 30-year employee. I have seen the good times and the bad times. I thought I knew what to do and the right direction, and how to go forward, and how to go forward as a leader and not wait until you see the consent decrees. I talked with Harry Merlo, former CEO of Louisiana Pacific, about Elementary Chlorine Free (ECF), and he agreed to do that. So, we started ahead of the program, going to ECF and doing oxygen deliquidization. We were planning to be on board with that in May of this year. Now, it will be September or October, when we take our October shut down, we will tie it in together. It won't be finished by May." MR. LEWIS continued, "Also, under the consent decree, there have been questions on that. The consent decree amounted to just about $20 million and most of that was containment. In other words, all of our tanks and so forth didn't have containment around them. So, we are having to go out and lift all the tanks up, put a seal of concrete underneath it, and then put walls around those in case one of them would split or break or there might be an earthquake or something like that. It hadn't happened before." Number 1153 MR. LEWIS proceeded, "One of the things that makes it difficult is we are on solid rock. We are on rock that is not (indisc.) and you have to go back underneath it and put pads underneath it and go all the way through it. We don't have any draining fields." Number 1170 CO-CHAIRMAN WILLIAMS suggested that Mr. Lewis address some of the environmental problems that are occurring, the lawsuit and whether Ketchikan Pulp Company has made any changes. Number 1187 MR. LEWIS responded, "What we got into trouble for was ... I guess the judge said it the best, when he said, `You guys seem to have a cavalier attitude' meaning that what Ketchikan Pulp Company was doing was ... what we pleaded guilty to on a felony -- we have a secondary treatment plant that contains our solids. A lot of times, we pull the solids out and we burn those. But you have to clean the tank about every two years. We took the tank down, drained it out and put it back through the system and, in doing so, went back out to measure the outfall, but in the permit you are not allowed to re-enter what they call any solids that have already been gathered. You can't turn around and re-enter that back to the water. We were wrong. We did that on a shut down. That was the felony." Number 1232 MR. LEWIS further stated, "The misdemeanors that we pleaded guilty to -- we put in a mixing chamber in 1993 which cost about $6.5 million, to take the water and adjust the pH so the Ph was brought up to the right value. In doing that, with our high tides -- we were already built on rock down at the tide level -- what we found after we were operating was that when the high tide would come in and we would also have kind of an overflow situation that couldn't get through the pipes and it would come back up through, just like down on your streets, which would be a sewer pipe. It came through the holes and in some of the cases, it would go down and go over the side. It was never more than what the material was that was going into the water to begin with. It was already going through that. But, you don't do that. We should have stopped -- had a different kind of attitude -- stopped and figured out how to fix that, how to stop that and do that and we hadn't done that. So, we got into trouble for that. A lot of it was in the approach of doing things. That approach has been changed, there isn't anything that we don't do that if we can find out what went wrong because mistakes happen. The plant is running 24 hours a day, seven days a week, it's a machine and sometimes it needs fixing." Number 1316 MR. LEWIS stated, "It is a process, the whole environmental side and the changes to be made, is a process. Any one firm measured at any one point in time, will find itself not in good standings. But, it's the process. Are you trying to head to the right direction and to make the changes. I certainly believe that KPC is doing that. I am giving it every effort and the people working for me are. You have to get to all the employees, you have to get down to every single employee. It doesn't just start with me; they all have to come on board. A lot of times, it isn't just the management that makes the mistake, it's all of us together in the facility. So, when you start that process, we all have to change." Number 1363 CO-CHAIRMAN GREEN asked whether Mr. Lewis felt there was any bias established because of these perceived or, in some cases, actual violations, that goes from the EPA to the Forest Service. Number 1383 MR. LEWIS said, "Two years ago when I came on board, the first thing I did was got with the EPA and everybody else, and told them what my plan was and where we were going. We have a very good rapport with them now. They understand, they know what we're doing and they're supporting us. We are doing the best that we can. I can go through and list the changes and the things that are in place that were not in place two years ago. It is substantial. It is amazing that we have been able to accomplish what we have, and a part of that is Ernesta Ballard who came aboard to help get those things in place." Number 1417 MR. LEWIS continued, "There is no excuse, there isn't any. You come to Ketchikan ... and for those us who like to be in Alaska and like to be isolated and that is why we are there. Sometimes, you become too isolated and we became too isolated, there is no question about it." Number 1440 REPRESENTATIVE IRENE NICHOLIA wondered about Ketchikan Pulp Company's relationship with its workers and also wanted to know if KPC honors its union contracts. MR. LEWIS replied, "We have three unions at KPC: I.U.O.E, out of Alaska; we have I.B.E.W., the electricians and we deal with Mr. Brooks out of Anchorage. We have contracts with both of those unions. We entered into three-year contracts with both unions. We have a third union which is A.W.P.P.W. which is represented by Portland Union. We have been unable to get a contract with the third union, A.W.P.P.W. since 1984." REPRESENTATIVE NICHOLIA asked Mr. Lewis whether KPC ever hires non- union contractors. Number 1501 MR. LEWIS responded, "We hire union and non-union. We try to hire Alaskans and there are some Alaskans that are union and some that aren't. We just found it difficult to say, `I'm sorry, you're an Alaskan, but you're a non-union, I can't hire you.' So, what we've done is let our contracts out, we encouraged the contractors that we do -- again, the contractors that we deal with within the mill are for specialized type work. We deal with the power house, we encourage them to hire Alaskans. They hire a lot of boilermakers out of Kenai, Anchorage, and areas like that, but they also hire down South because of the type of work that we have and the short duration they can't always get all Alaskans. But we encourage and we try to get them all to hire local first. I can give you a list of how many are local, how many are Alaskan and how many are outside. We do that with all of our agreements." Number 1649 REPRESENTATIVE NICHOLIA inquired how many contractors are from the Lower 48. MR. LEWIS explained, "We have a group in here that is called TIC, they're doing part of the Environmentally Chlorine Free project; GE - they've done KPC's boiler work for years. Off and on, if we have specialized roof repair or some specialized red brick repair. We usually go out for bid and usually the contractors that we deal with, not all of them, are contractors that specialize in doing the job, and then hire people to help them with those trades to be able to do that job. Usually it's done on the bidding and we will put it out for bid. A lot of work that is done is by local contractors ... there are a couple of electricians in town that we do a lot of work with. We do a lot of work with the barge, the ship repair, Ty-Matt, Inc. We have a 115 maintenance crew at KPC that we try to have do most of the work. But being in Ketchikan, it's difficult, but where you have a one month job and then out you go -- then you don't again -- we really do not have the work force to handle that. Ty-Matt, for the first time has been able to put a group together of about 30-35, but they work at the shipyards, they work for us; it kind of works together so when the ship comes in, they can work there and sometimes we can put our work off. We have tried to work together with those guys to be able to have a steady work force for what is not a year-round kind of a job." Number 1666 REPRESENTATIVE NICHOLIA emphasized that her questions pertained to her belief in local jobs for Alaskans. Number 1682 MR. LEWIS responded that, "Basically, if we can get $200 million off our long term sale, there are about 1,500 people that touch the log. My guess is that 90 percent of those are in fact people that live in Alaska. Ten percent of that total workforce might work here in the summer and leave in the winter. But I would say that 90 percent of them are solid in the work force. It's not like the timber industry; there's only like 250 or 300 that would be in the woods. It used to be, when the wood system first started because there was no infrastructure, no roads on Prince of Wales, there was no Coffman Cove, no Thorne Bay, there weren't any of these towns, so when it first started, no question, a lot of them came up here in bunk houses, they lived in the bunk houses and they left. Well, now there are towns and cities. Now these people live in those towns and cities and the whole thing has changed. That's part of the whole structure that's taken place down there and that has changed. And part of that has been with continuous timber harvesting and a continued program. It has changed." Number 1742 REPRESENTATIVE DON LONG asked what the possibility was of getting an endorsement from the Environmental Protection Agency for HJR 64. MR. LEWIS said, "I can ask them, I don't know if they do that. I know that when I first sat down with them and we were working with the things, they said that the timber side of it is nothing that we do anything about. It's a political -- in our case it is -- it's politics. When every time you want to do something, you have to go back in the halls of Congress to make the change, it's politics." Number 1781 CO-CHAIRMAN WILLIAMS asked Mr. Lewis to explain how the Tongass Timber Reform Act of 1990 affected Ketchikan Pulp Company and how the Forest Service is providing KPC with timber. Number 1794 MR. LEWIS answered that, "Basically, the timber supply ... the commitment to our contract has not been made. Under TTRA, the Forest Service changed the delivery system and the pricing system. They changed a lot of things that are not working out. It was changed unilaterally, but we had a bilateral contract. The minute that was changed, we also have a suit with them. And part of this we hope is a patch back through Congress that stops the damage that's occurring on that suit. Basically, it has been the wood supply and we've been down because of that. We were down 90 days for a short of wood supply. KSM announced just now, about a six to eight week shut down on its sawing operation. Annette is going down about eight weeks on its sawing operation. I put in chippers at both of those facilities last year and the first part of this year -- one thing to try to be able to maintain some of the work force over there. What you have when the saw logs are gone, all of a sudden the guys have no work. If we can go ahead and chip some of those logs over there, that can maintain some of the stability on some of those jobs and certainly on the key people that you need because a lot of those jobs are key personnel that take a long time to train. So, you've got to have some system there that you can keep those people employed or you just can't start back up the next day. They have to go elsewhere to find work. If they have to do that very often, they do not count your operation as being very secure." Number 1899 MR. LEWIS continued, "APC, when it went down, we got about 130 days from them or we would have been down another 130 days which would have been 240 days of down time. That's a lot at a pulp mill; that is a lot of lost revenue. Usually, a pulp mill will run while it loses money because it loses less than it would be if it shut down. That is why pulp mills were selected as the kind of a facility to build infrastructure around because it runs 24 hours a day, seven days a week and about 345 days a year. Those are jobs that are just continuing and go on forever and even when you are losing in low markets, you are in fact still running. So, the jobs and the revenue are still going there. Sawmills, because of the low capital that is put into there, don't cost as much. Even to a smaller operator it's a lot of money and I don't ever want to lighten that. They can shut down at a lot less cost and a lot less revenue loss. That's why pulp mills were selected, plus to utilize the 40 percent of the forest that would just lie and rot." Number 1924 CO-CHAIRMAN WILLIAMS related that he sees a lot of timber being sold by companies like Sealaska and Klukwan and that he had read in the paper where KPC is buying timber from Canada. He asked if that helped KPC? Number 1938 MR. LEWIS answered, "The private lands, they have the right to export, there's a higher value in export than there is domestic. This is life, that's economic life. That's the way it is. They will pay a lot more for saw logs than what we can process them through and sell them. The pulp logs - we should be the best in the market place to be able to buy them, either APC or ourselves. Over the years, between APC and ourselves, we were able to buy most of the pulp logs that were generated. Some of them did go south and some of them were sold at certain times in the market place. We were able to buy Concore's last year; Sealaska's we didn't. Sealaska's got away from us. But we try to negotiate with them and buy it, but it's an open market and they have the ability of doing both. They try to do business with us and we try to business with them. There are times when economics might not allow us to be as competitive. They have always worked with us, they have always tried to meet us. The Canadian logs -- basically, the Skeena Mill went down, we were almost out of logs, we would have probably been down this spring. The Skeena Mill went on strike. Bang, there was a surplus of logs and we were able to go over there and buy some logs and keep our operations running. Since about that same time, the whole market collapsed, so now there's some logs floating around." Number 2007 CO-CHAIRMAN WILLIAMS remarked there have been comments like KPC has repeatedly threatened to shut down the mill if they do not get their way,; unless they get special treatment from the federal government KPC will discontinue its operation; or it's a scare tactic that KPC is using. He asked Mr. Lewis if Ketchikan Pulp Company will close if it doesn't get this extension. Number 2025 MR. LEWIS replied, "You don't want to threaten and you don't want to say anything. I guess, what has happened is ... part of what we are trying to do and part of this extension is to get a recommitment that the government wants a timber industry up here and the federal government is willing to supply that timber. There's been a real hesitancy on that part and I think we can all see that because Seley is not running today and Klawock is struggling, the last of the mills are fighting to survive. Most of them don't have timber. So, there isn't any real commitment. That's the real scare. The real scare is when you're putting the money forward, the resource won't be there and won't be put up for sale. Louisiana Pacific has a new CEO and he's looking at the situation saying `what are you doing, that kind of money put in there for the eight years won't have a pay back' and it won't." Number 2073 MR. LEWIS related, "We went through Alaska Industrial Development & Export Authority (AIDEA) trying to look at some money, and I think we could have got a loan with AIDEA but only guaranteed by Louisiana Pacific which would mean only the investment of it. We couldn't carry -- with an eight year contract, we could not carry the payment back ourselves. We couldn't make that payment ourselves, it would have to be extended. I understand the threats. You can't be in a small town and you can't run into trouble, and be up against it. Most people don't realize it, but one of our original parents, FMC that bought American Viscose, sold their viscose business in 1975. Eighty percent of our product went to them. They wanted out and they didn't care about taking KPC and continuing it. They were going to get out and sell, they were going to sell their viscose. The person that bought them did not want the other. KPC had a supply, so they weren't interested in the supply. Louisiana Pacific stepped forward and came forward and agreed to do the environmental expenditures and basically, bought FMC out - negotiated a price and became the sole owner. A lot of people go back to those days and say they were all threats and everything else. That was real, that was really going on. It wasn't made for threats, it wasn't made for anything else. Everybody was new in the environmental arena. All of a sudden there were requirements and the EPA came out and said, `You guys are going to spend $60 million.' We hired CH2M Hill and people to come in and they said it would only take 28. So, here we were at a loggerhead and they were saying that you are going to spend $60 and you are going to have to and we said, `we don't have to, we are only going to spend $28.' And in the law is what we call a 507 hearing which means we can ask for economic analysis of the situation before that is done. So, we went through that process, and out of that process came an agreement with them, and after the realization that you guys can go ahead with your $28 million program and it would work. It did work and met all those requirements that were necessary. Science was being developed at that time, nobody was at fault. It was just being developed." Number 2158 CO-CHAIRMAN WILLIAMS announced that Mr. Lewis' time was up and that he would take teleconference testimony at this time. Number 2222 DICK COOSE, Chairperson, Greater Ketchikan Chamber of Commerce Timber Issues Committee related that he had the following comment to make on behalf of Ketchikan Borough Mayor, Jim Carlton. "The Ketchikan Borough Assembly passed a resolution supporting HJR 64: RESOLUTION NO. 1267 "Section 1. The Borough Assembly, in conjunction with the Alaska State Legislature, respectfully urges the Alaska delegation in Congress and Governor Knowles to take all steps necessary, this year, to extend the Ketchikan Pulp Company long-term contract for an additional 15 years because such an extension is critical to the environmental, social and economic well-being of the Tongass National Forest timber workers, their families, and the timber dependent communities in Southeast Alaska and because such an extension is in the public interest of the State of Alaska. "Section 2. The Borough Clerk is instructed to send a copy of this resolution to the Honorable Bill Clinton, President of the United States; the Honorable Daniel R. Glickman, Secretary of the U.S. Department of Agriculture; the Honorable Bruce Babbitt, Secretary of the U.S. Department of the Interior; the Honorable Newt Gingrich, Speaker of the U.S. House of Representatives; the Honorable Strom Thurmond, President Pro Tempore of the U.S. Senate; and to the Honorable Ted Stevens and the Honorable Frank Murkowski, U.S. Senators, and the Honorable Don Young, U.S. Representative, members of the Alaska delegation to Congress. "Section 3. This resolution is effective upon adoption." Number 2275 STEVE KALLICK, Alaska Rainforest Campaign, stated that his prepared remarks were based on the previous version of HJR 64. He said, "I understand that yesterday, the resolution that was passed by the Senate Judiciary Committee from what I can tell, is very similar to the one that you have before you now. I just want to say at the outset, my organization is a coalition of national and Alaskan conservation groups and we are concerned very much with the management of the Tongass National Forest. But unlike an increasing number of environmental groups, we are not against all logging, we are not against clear cutting, we are not opposed to the harvest of old growth timber on national forest land and we are supporting valid multiple use of our public land, including the Tongass. Most of all, we are really looking for locally based solutions to our resource management challenges." Number 2309 MR. KALLICK stated he was really disappointed to see this resolution has now expanded to attack directly the Tongass Timber Reform Act. Yesterday, he felt there had been a fascinating discussion in the Senate and found himself, amazingly, in agreement with former Tongass National Forest Regional Forester, John Sandor, for the first time in many years. He found many things that he agreed with the borough mayor in Ketchikan on and he was depressed to see that the discussion about the future of Ketchikan and the future of our wood products industry and the role of government, which he thought was fairly productive and which had a lot of areas of agreement, has now exploded into a direct attack on the Tongass Timber Reform Act. Number 2342 MR. KALLICK further stated, "If that is what the timber industry wants, then the timber industry cannot complain about the instability in the region, and the instability in Tongass management because that will lead to a dramatic increase in the instability of the whole situation. I do not think that is in anyone's interest and I don't think it will help us plan for a future where we can have a timber industry and a tourism industry and subsistence and commercial fishing and sport fishing, and all of the other industries that depend on the Tongass. I think what we have got here is an attempt by one side to gain temporary advantage. If you let that happen, you are our political leaders here, you're responsible for that. If you back one faction or the other, if you continue to try to solve Tongass problems by passing legislation like this resolution, then you are going to be part of the problem. This is not going to help create stability in the Tongass; all it'll do is cause further fighting about the forest services's management of the forest. I just do not think that is in the best interest of anyone. I think all Alaskans need to get together and all of our leadership needs to demand of us that we work these things out together." Number 2385 MR. KALLICK emphasized, "There are so many inaccuracies in this resolution, I do not have time in five minutes to go through them all. Let me tell you that the Tongass Timber Reform Act never promised that 420 million board feet would be made available. That's simply not true. In fact, that is exactly what the problem was with the laws that changed beforehand. There was a mandated timber harvest level that was not mandated (indisc.) for other industries." Number 2405 MR. KALLICK further stated, "Talking about changing these timber contracts, Mr. Lewis has a tremendous grasp of history, but he seems to have forgotten that when the House decided to cancel the 50-year contracts in 1989, the compromise the Senate came up with was that the contracts be modified and kept. But, the modifications were the compromise. If you take away those critical modifications, then you've completely undone that deal. You're reopening that deal. I think it is very likely that Congress will revisit the issue of whether the contracts should be cancelled. I just don't see that anybody gains from reopening the issues that were agreed to ... you know, the timber industry, or I should say, Louisiana Pacific because they are apparently the ones who are going to be the beneficiaries of all of this... CO-CHAIRMAN WILLIAMS asked Mr. Kallick to conclude his remarks. MR. KALLICK continued, "If this is what we have in store for us, then I am really sorry for it because this is not going to help Alaskans, this is not going to help the timber industry. All this is going to do is make this a national political football, and I don't think that any of us who lives in Alaska and care about the Tongass will benefit....(CHANGE TAPE) TAPE 96-46, SIDE B Number 001 MR. KALLICK further stated ... "I believe that of all the Tongass issues that need to be resolved or put on the table together that that issue would belong on the table. That's an extraordinary statement. We can't consider these things in the kind of resolution that you now have before you. So, I think that it's really unfortunate. I am saying that we all need to talk about it and reason together. We are getting lost in what has become a temporary splice for political advantage here." Number 024 CO-CHAIRMAN WILLIAMS asked Mr. Kallick if he had helped craft the Sierra Club Legal Defense Fund fundraising letter? MR. KALLICK responded, absolutely not. CO-CHAIRMAN WILLIAMS asked if he was aware of it or if he had seen it. MR. KALLICK responded that he had seen the letter and was just as surprised as the committee. He had nothing to do with the crafting of the letter and said he did not agree with the tone of the letter and felt that the letter was not helpful in this debate. Number 060 CO-CHAIRMAN WILLIAMS asked if Mr. Kallick felt that letter was way off base and should not have been written? MR. KALLICK responded, "Yeah, I think that the tone of that letter was way off base." Number 069 REPRESENTATIVE JOHN DAVIES inquired whether Mr. Kallick had any written comments to provide to the committee. MR. KALLICK said that he wanted to make sure that the new committee substitute for HJR 64 was the same one that was written by Jim Clark and handed out in the Senate the previous day. He added that he hadn't seen the House committee substitute. Number 086 CO-CHAIRMAN WILLIAMS remarked that Mr. Kallick was welcome to submit written testimony. MR. KALLICK interjected that his feeling was that no one in Alaska had anything to do with the writing of the Sierra Club letter. Number 115 DIANE MAYER, Director, Division of Governmental Coordination, Office of the Governor, read the Governor's position on HJR 64: "The Knowles Administration recognizes the important role Ketchikan Pulp Company (KPC) plays in the timber industry, including employment in Ketchikan and Southeast Alaska. The responsibility and statutory authority to extend the KPC contract lies with the U.S. Department of Agriculture and Congress. "Our Administration is promoting sustainable, responsible economic development of Alaska's natural resources. In Alaska we can do it right. As KPC develops its business plan to present to the U.S. Department of Agriculture for a contract extension, Alaskans will be interested in KPC's commitment to fully address: 1) long term jobs for Alaskans; 2) the use of Alaska businesses, both in harvesting and value-added processing; 3) provision of a solid tax base for Ketchikan and other Southeast communities; 4) responsible environmental management; 5) participation in and support of the Tongass Land Management Planning process that ensures sustainable uses of our forest; and 6) consideration of other forest users, including those dependent on timber production, tourism, commercial and sport fishing, seafood processing, mining, subsistence and personal use. "We hope the legislature will address these important matters in its deliberations. "We look forward to the Department of Agriculture providing Alaskans the opportunity to review proposals regarding the contract extension. We stand ready to work with Alaskans and Ketchikan Pulp Company to achieve these goals." Number 224 CO-CHAIRMAN WILLIAMS asked Ms. Mayer if she agreed that Ketchikan Pulp was doing the six issues mentioned in the position paper. Number 246 MS. MAYER thought that KPC was working on these points. C0-CHAIRMAN WILLIAMS asked if Ms. Mayer would agreed that KPC has been here for 40 years and plans to be here for another 15. He said, "KPC uses the use of Alaska businesses, harvesting and value added processing, their pulp mill, they saw logs. When I first got into the timber industry, the pulp was 30 percent of the forest. Now it's down to ... I am guessing, 15 or 20 percent now where we are using more of the pulp type timber. So, we are utilizing it for value-added processing. We have heard the argument was `you are just using the good saw logs for pulp'. So, we got a sawmill and added more jobs in that area. I think that was the cry we were hearing from special interest groups. I don't think that responsible environmental management -- I think we can attest to that or maybe you have heard something different. Can you expand on that and why we have to question this portion of it." Number 305 MS. MAYER replied, "What the letter is doing is raising points for deliberation that I think have been discussed somewhat in these hearings." C0-CHAIRMAN WILLIAMS asked, "Does this letter say that the Governor supports the resolution." MS. MAYER answered, "This letter lays out some terms for deliberation and focuses mostly on the call for Alaskans to be able to review some specifics of contract extension and to be able to be heard on the issue, and the Administration is looking forward to that discussion." CO-CHAIRMAN WILLIAMS said, "So, you're not saying that he does support it right now - yes or no? Does he support the timber industry and does he support the extension of 15 years?" MS. MAYER stated, "These terms here, lay out the terms for deliberation and what the Administration is looking forward to is the discussion of the proposal. At that time, I think we will come to the conclusions about where we go next." Number 358 CO-CHAIRMAN WILLIAMS said he was confused about the statement `We hope the legislature will address these important matters in its deliberations.' He remarked, "I think we heard from Ketchikan Pulp Company on how they felt and what they've done in all of these issues here. I haven't heard any large outcry from the Environmental Protection Agency, I haven't heard our state forester saying that they have problems with the logging practices that are going on. I think they are supposed to be watching that, aren't they? I am kind of confused by the Governor's letter saying that we should be looking at it when I think, everything I've heard so far, is that we are looking at it and see something -- you're not saying that the Governor is supporting this very strongly. He will support it `if' and these `ifs' are already answered." Number 404 MS. MAYER responded that the terms of the letter talk about ... "certainly, the Governor has talked about jobs for Alaska and using Alaskan businesses both in harvesting and value-added processing. It goes on - consideration of the land management planning process and discussion among other users. I think that we have, certainly, in this and in various forms, launched some of these discussions. I don't think they have come to closure yet. The questions you are asking are in regard to the resolution. I think what the letter is calling for here, is for the opportunity to actually review proposals for the extension and having Alaskans discuss those specific proposals for the extension." Number 439 REPRESENTATIVE SCOTT OGAN felt the Governor's letter didn't seem to be overwhelming support from the Administration for the resolution. He referred to point one of the Governor's letter, "long term jobs for Alaskans" and said that Ketchikan Pulp Company had produced that over the years. He asked Ms. Mayer if she disagreed. MS. MAYER emphasized the letter clearly states the Knowles Administration recognizes the important role that KPC plays in the timber industry. Number 475 REPRESENTATIVE OGAN referred to point number two, the `use of businesses, both in harvesting and value-added processing' and asked if there were suggestions the Administration might make that KPC needs to improve on or is their track record okay. MS. MAYER said she didn't have all the details on employment, but she did know that the Governor is very interested in increasing the number of Alaskans in jobs. With respect to the harvesting, as Mr. Lewis discussed earlier, there is a long history of workers from out of state and that has definitely shifted. There's room for discussion of these points and that's all this letter is alluding to. She didn't have all the back up here from the Department of Labor to get into that. Number 509 REPRESENTATIVE OGAN felt that the Governor's letter implies that these conditions aren't being met, so that's why he was asking for a case-by-case basis as to what the Administration bases its assertions on and suggestions for possible areas that Ketchikan Pulp needs to improve on to meet the Administration's goals. Number 540 MS. MAYER did not believe there were assertions about Ketchikan Pulp Company directly in this. She said, "I think it is simply just putting the decision of contract extension in the broader context of what's going on. Support and participation of the land management planning process is clearly something that's broader than just KPC's role in that process. I think it's just putting the contract extension in the context of some of the important issues that I think Alaskans want to have addressed and want to then look at contract extension in the context of these terms." REPRESENTATIVE OGAN reiterated that he was looking for the areas that could be flushed out, if any, that the Administration has problems with in supporting the resolution. He asked Ms. Mayer to articulate if there were any of those areas. MS. MAYER responded, "The list is there. I think the summary statement, the opportunity to review proposals -- providing Alaskans the opportunity to review proposals regarding contract extension. Put it in the context of (indisc.), put it in the context of consideration of other forest users and it names others dependent on production - other industries that use the forest. It's simply a statement about looking at it in the context of these other issues." Number 607 CO-CHAIRMAN WILLIAMS pointed out that most of Ms. Mayer's comments came out in the Environmental Impact Statement (EIS). Presently, the committee was looking for support from the Governor's Office for this resolution. He hypothesized, "Let's say for this discussion, that we don't get this resolution for whatever reason. I know the Governor made some promises to Wrangell, and maybe Wrangell will be on line and Sitka also, and they can talk to the promises the Governor made to them. Let's say for this discussion that we don't get the long-term extension, the 15-year extension. Does the Governor have a plan for protecting the displaced workers if KPC does shut down? Does he have a plan for Ketchikan? Is he thinking out that far?" Number 661 MS. MAYER replied, "I think the focus of this letter is really to focus on the dialogue needed to ensure stability in the industry and I think, that is the emphasis that the Administration is taking right now. The focus of this letter is putting the debate in the context that can assure the stability of the industry and that is the tact that the Administration has been working on." Number 711 CO-CHAIRMAN WILLIAMS stressed that he would like to hear from the Administration, a very strong "yes" to this resolution. He said, "We know what the timber industry is under today and the problems we are having. We have Sitka closing down, Wrangell closing down, Ketchikan sawmills closing down, Annette Island sawmills partially closing down, and Ketchikan Pulp Company is having a difficult time with the volume of timber that's available. Southeast Alaska is going to be affected by this timber industry. If it wasn't for the timber industry in Southeast Alaska, we would be hurt and for the Governor not to come out very strong in support of this timber industry like he said he would when he was running for the election ... getting that timber committee together run by Governor Sheffield. I am just very concerned and I would hope that the Governor comes back with a strong `yes' to us sometime in the very near future." Number 771 REPRESENTATIVE DAVIES said some of the difficulty he is having is that he would like to be able to say, "Yes, I support a 15-year extension." He certainly thinks it is important that we come to some agreement on how to provide for that continued timber supply for Ketchikan Pulp Company. Also, he thinks that most people would agree that we would like to keep a strong presence of the timber industry in Ketchikan. But he thought the issue is, "when you are asking for specific endorsement of this particular resolution; in other words, the talk given by a member of your caucus recently, called `the devil is in the details' and the problem is when you're talking about a 15-year extension, we do not know what the details of that are." Also, he was somewhat concerned by the change in tone between the original resolution and the committee substitute and he really hadn't had a chance to fully digest those yet, but he was struck with the same thing. He had complimented some people earlier on the restraint in the original House version and hoped they could get back to that and keep the tone even in this discussion and that maybe the problem that we are having in getting to say, `yeah, I really like that' is that we don't really know what it is that we're being asked to like. Number 853 CO-CHAIRMAN WILLIAMS understood Representative Davies' concerns saying that he is concerned about comments in the letter like, `the other forest users' and this is what we get beat up on, all the time. Chairman Williams referred to a map and said, "The Tongass, we have 17 million acres of land and we have about 8.7 million acres of timber land available to us to log." MS. MAYER interjected she thought it was 1.7 million acres. CO-CHAIRMAN WILLIAMS continued, "All of these other user groups are in there, tourism, commercial and sport fishing, seafood processing, mining, subsistence and personal use. After all these other areas have taken and looked at, and taken away from logging, we won't ever be able to log 1.7 million and even part of that is tied up in (indisc.) issue that we talked about in 1995 when the Governor gave up our stand on that issue. So, we might be down to 1.2 or 1.3 million acres of land that we can plan on. We have a large volume of fish and you know better than I, how much fish we have left to sell yet. So, the fish habitat apparently isn't hurt. The deer on Prince of Wales - the subsistence people can take six deer a year there. Back in 1964, we could only take two deer. It's there and I would hope that when the Governor comes up with a letter such as this that is not really supportive -- and I can understand `the devil in the detail'. `The devil in the detail' up there in ANWR is something else, also. And he is out there waving the Alaskan flag and more power to him, but I would like to see him also doing this for the timber industry. I think we need it, Diane, and if there's anything that you need to take back to the Governor is that he needs to understand what we are giving up here. There's no more room for compromise. We are on the edge of shutting down Southeast Alaska and I would hope that the Governor understands that." Number 1001 MS. MAYER assured Representative Williams that the Administration has spent an enormous amount of time on timber issues. She had worked on several and had been continually impressed by the commitment. Number 1052 DICK COOSE, Chairperson, Greater Ketchikan Chamber of Commerce, Timber Issues Committee, read his testimony into the record: "The Ketchikan Chamber of Commerce has approximately 400 businesses and individual members representing over 4,000 jobs. Our members represent the three primary industries that sustain our community: timber, fishing and tourism. We sponsor community events and support active committees through which we address issues which are important to economic development. "There is no single issue of greater importance to our members than a strong economy. There is no greater threat to our economy than the reduction of the timber industry to our community and to Southeast Alaska. Each year we poll our members to determine where to focus our efforts. Our number one issue continues to relate to maintaining a strong timber industry. "The Greater Ketchikan Chamber of Commerce supports a 15-year extension of the Ketchikan Pulp Company long term timber sale contract. Ketchikan Pulp Company (KPC) has initiated a $200 million investment program to upgrade facilities to remain competitive in the world pulp market and to meet new and ever changing environmental requirements. For any business to commit to an investment of this size, they must be reasonably assured that a raw material supply will be available, the long term timber sale contract is this assurance. "I know you have or will receive many facts and figures concerning the economic impact of the KPC operation on the City and Borough of Ketchikan, but let me state just a few: * KPC assessed value equals 8.62 percent of the Ketchikan Borough assessed value for 1995 or $78.9 million. * KPC property taxes to Ketchikan Borough for 1995 was $675,000. * KPC payroll with benefits for 1995 was $53.6 million. * KPC total employees in March 1995 was 670. "You know that for each employee of a major industry like KPC there are three additional jobs in the service and supply sectors and that the income for these indirect jobs is four times the payroll. This is an additional 2,010 jobs and $214.4 million of income benefit to our community. "Should Ketchikan Pulp Company cease operations in Ketchikan, which other businesses will have to close, which and how many teachers, store clerks, doctors, service persons, lawyers, and others will have to look for work elsewhere. I believe each of you know and understand what happens to a community when a third of the jobs disappear. "We believe that Ketchikan Pulp Company has been and will continue to be a responsible business, neighbor, and citizen in this community. "We believe you realize that harvesting enough timber from National Forest lands to sustain the timber industry in Southeast Alaska is not an environmental, conservation or scientific issue. It is an issue of personal philosophy and politics. "We have initiated a petition to Governor Knowles requesting his support of the KPC contract extension. Over 1,600 signatures have been collected in three and one half days of effort in Ketchikan. "The Ketchikan Chamber of Commerce supports and urge your approval of House Joint Resolution No. 64." Number 1274 WILLIAM MORAN, President, First Bank, testified, "First Bank is the only commercial bank in Alaska with headquarters in Southeast Alaska and all our commercial activities are combined in this area of the state. We currently have eight branch offices located in Sitka, Ketchikan, Prince of Wales, Wrangell, Petersburg and Juneau. The bank has been in business since 1924 and as a result, we have a previous history of economic development in Southeast Alaska and a good understanding of what it takes to do business here." MR. MORAN made three comments in support of HJR 64 supporting the 15-year extension of the long term timber contract. He stated, "First of all, it is currently fashionable to talk about free markets when we talk about natural resource development in Alaska. We generally need to recognize that the federal government exercises what amounts to a monopoly of control over the raw materials. In the case of Ketchikan pulp mill, there are not five or six significant sources of wood fiber competing to supply raw materials at free market prices. There is only one primary source, and then some minor secondary sources of raw material. The primary source is the federal government, the Tongass National Forest. As a result, any entity contemplating a significant long-term investment in resource development needs a long term contractual assurance that the necessary raw materials will be available on reasonable terms. There would not be a pipeline to Prudhoe Bay without a long-term source of oil. There presently wouldn't be a pulp mill in Ketchikan if there had never been a long-term contract. It is probably reasonable to assume that there won't be future long-term significant investments without long-term commitments for sources of supply." MR. MORAN continued, "Second, while there's not a free market for natural resource based raw materials in Southeast Alaska, there's certainly a free international market for investment capital. No responsible investors are going to commit $200 million to any project anywhere unless they are reasonably confident of an acceptable risk adjusted rate of return. That corresponds with the pulp mill's plans but at the local level, when we try to build new hotels, hospitals or fund new schools, if there isn't a strong underlying local economy then there isn't the access to the funds that we need. Along with that, if we look around at the Pacific Northwest, state and communities are making long-term commitments raising from property tax relief, favorable long-term leases of public assets, tax refinancing of infrastructure in order to attract the same type of long-term job training capital investment that Louisiana Pacific is willing to commit to a small town in Southeast Alaska. If we do not support their efforts by doing those things that we can reasonably do to make Southeast Alaska a profitable place to do business, then the investment capital and the jobs that go with them, will find a more attractive home somewhere else." Number 1458 MR. MORAN further stated, "Finally, I guess it is easy to read the handwriting on the wall. If Louisiana Pacific stops investing in the mill, the 2,000 for exploration of their current contract, really becomes meaningless. In a couple of years, the mill will shut down and when it does, it probably won't open up again. No one will build another one; at least, probably not in my lifetime. The bureaucracy and the government related support facilities will continue to go on and on, but the people who are employed directly or indirectly in the forest products industries, will become what is conveniently known as redundant. If you live around Ketchikan, Alaska, or Sitka, Alaska, or Wrangell, Alaska, in fact, Wrangell is a good case, if you have a chance, you should walk down the Main Street of Wrangell. There isn't an alternative source of employment that there would be if 500 jobs disappeared in Seattle or a larger metropolitan area." Number 1556 MR. MORAN commented, "Anyway, anyone who currently lives and works and invests in Southeast Alaska that's been through the turbulent times that we've had here over the years realizes that the minute they see there's no long-term commitment to a vital forest products industry, they'll start acting in their - I guess you'd call it their own life self-interest. Their individual decisions taken in the aggregate will certainly result in unpleasant, unfortunate and unnecessary long-term decline in the regional economy and I guess the only growth industry would be for consultants holding seminars, proposing unrealistic plans and develop a new value-added forest products industry. That seems to be the latest fad in Sitka and Wrangell, anyhow." MR. MORAN concluded, "I'd like to make one last observation. In 1954, we started harvesting the first trees for the pulp mill. About 25 years later, we started pumping the first oil through the pipeline. In 2004, we'll be in the process of pumping the last few drops of oil out of Prudhoe Bay, but in Southeast Alaska if we do the things we need to do now, in 2004 we can be making plans to start harvesting second growth timber and hopefully, we can be talking about another extension of the long-term contract, an additional long-term investment in the state. The Tongass National Forest, I guess people have a tendency to look at it as just something that's to be used up, thrown away and I think those of us who live down here, look at it as a renewable resource and something that will be here for generations to come (indisc.)." CO-CHAIRMAN WILLIAMS asked if there were any questions of Mr. Moran. Hearing none, he asked John Antonen to present his testimony. Number 1652 JOHN ANTONEN, Executive Director, Southeast Regional Resource Center, testified that the Southeast Regional Resource Center is governed by school districts of Southeast Alaska and serves every district in Alaska with educational services. He stated, "You have in your packet a survey of timber impacted schools and communities in Southeast Alaska. This survey was conducted by the Southeast Regional Resource Center on behalf of the districts listed on page 1. It discusses the impact of timber reduction on schools, communities and families and the significant problems that arise for schools, communities, children and families in Southeast Alaska because of reductions at Wrangell, Sitka and other rural communities. The survey also was prepared for our Congressional Delegation suggesting that the federal Forest Service, Department of Agriculture, had some responsibility for those problems and ought to have some fiscal responsibility to mitigate those problems much like that commitment that was made to Oregon, Washington and northern California when their timber industry had significant problems." MR. ANTONEN continued, "I guess I come before you to say that strong local economy - timber products economy - is important to children and families and bad things happen when it goes away. I also say to you that as the state of Alaska perhaps reduces its overall income or revenue to school districts, there's got to be a strong economy out there, a strong industry so that it can support the funding for schools, for communities, for families and children." He welcomed any questions committee members had regarding the survey which was completed approximately two years ago by a consortium of Southeast school districts. He believed those school districts in that consortium are in support of a strong industry; a strong timber products industry in Ketchikan. CO-CHAIRMAN WILLIAMS asked if there were any questions of Mr. Antonen. Hearing none, he called on William Brock to testify. Number 1849 WILLIAM BROCK, Analyst and Project Manager, McDowell Group, testified that he has worked for the McDowell Group since the fall of 1982. His background is in economics, public policy and management. He said, "Since 1973, the McDoweLl Group has conducted over 800 research and consulting projects for private and public sector clients. I have authored and co-authored reports on the economic impacts of tourism, seafood, forest products, transportation and government in Southeast Alaska, in addition to conducting economic profiles of Juneau, Sitka, Ketchikan and other Southeast communities. The purpose of my testimony today is first, to outline research the McDowell Group has conducted on the Southeast Alaskan economy as a result of declining timber harvest on the Tongass. And second, to address in general terms what could result from further decrease in the Tongass timber harvest." Number 1927 MR. BROCK continued, "Let's begin with the economic impacts of declining Tongass timber harvest between 1990 and 1994. Between 1990 and 1994, the U.S. Forest Service data indicated a 40 percent decrease in Tongass timber industry employment. This equates to a loss of over 1700 industry related jobs throughout the Southeast Alaska region. There's no way to track the exact location of these economic impacts; the data just isn't available. However, what we have tried to do is take a look at Southeast Alaska economy in different segments to see how they also fared during this 1990 to 1994 period. What we did is we divided the Southeast Alaska economy into three separate micro-economies: That of Juneau which is primarily dependent upon government; other urban economies which is comprised of Sitka, Ketchikan, Wrangell, Petersburg and Haines, these communities are primarily dependent upon resources - natural resources as well as government with a growing dependence on tourism; and finally, the rural economy of Southeast, which is primarily dependent upon resource and government. Between 1990 and 1994, Juneau's economy fared comparatively well. We noted there was about a 7 percent total employment increase, growing at about 2 percent annually. About 1,000 jobs were added to Juneau's economy, most of these were in the service sector and the retail sector. In the other urban economy, things didn't fare quite as well in the 1990 to 1994 period. Collectively, the other urban economy noted a 4 percent decline in employment. That was for a net loss of 640 jobs. There was a 10 percent decline in real payroll which equated to about a net loss of $40 million. Also, during this period, Alaska Pulp Corporation's (APC) mill in Sitka closed. These resulted in a job loss of 400 individuals and $19 million in payroll. At the time of the closure, APC was Sitka's largest employer in the community. While many components of Sitka economy are healthy and strong today, estimates based upon the Alaska Department of Labor (ADOL) indicate annual average employment in Sitka actually declined by about 375 jobs between 1993 and 1994. In addition, based on ADOL data, payroll declined as well, falling from $115 million in 1993 to about $100 million in 1994." Number 2080 MR. BROCK said, "Wrangell was the community probably hardest hit by the declining Tongass harvest. In November 1994, APC was forced to close the Wrangell sawmill, costing the community about 225 jobs. This equates to about a full 20 percent of the local work force. As with APC in Sitka, the sawmill in Wrangell was the community's largest employer and was a heavy contributor to local taxes. In fact, according to the city of Wrangell, it made up about 20 percent of local revenues to the municipalities. Rural Southeast also had a little bit of trouble between 1990 and 1994. There was a 4 percent decline in employment, 15 percent decline in payroll which came out to about a $20 million loss in payroll overall during that period. A 4 percent decline in personal income between 1990 and 1993 - 1993 was the most recent available data for personal data - and during this time period, there was about a 16 percent increase in transfer payments. What that is, is Aid to Families with Dependent Children (AFDC) payments, welfare payments, unemployment, and those type of income sources, there was a noted increase." Number 2176 MR. BROCK asked, "What are some of the likely impacts from the continued declines in Tongass timber harvest? According to the U.S. Forest Service, there's still about 2,500 direct and support sector jobs in the industry. These jobs would be at risk if further declines in the Tongass timber harvest occurred. In addition, Ketchikan Pulp Company is at risk. The closure of KPC would result in probably the loss of up to 700 forest product related jobs in the community. That's about $40 million to $45 million in annual payroll. This represents about one-fifth of Ketchikan's economic base. In total, if KPC were to close, the region could lose as much as 1,000 industry related jobs and approximately 700 jobs in the support sector. As with Wrangell, KPC also contributes heavily to the city coffers or the borough coffers; the estimate is they contribute annually about 50 percent. Let me rephrase that - my notes here have the Ketchikan Pulp Corporation accounts for about half the total assessed property valuation in Ketchikan. So, they are contributing heavily as far as municipal revenues as well." Number 2274 MR. BROCK concluded, "In addition, continued declines in the Tongass timber harvest could threaten sawmill operations in Ketchikan, Klawock and Metlakatla as well as logging companies throughout the region. In conclusion, further declines in the Tongass timber harvest could likely result in significant additional job losses within Southeast. While this occurs, Southeast would become increasingly more dependent on seasonal and low paying jobs. As a result, Southeast Alaska could lose significant ground in its efforts to build stable, year-round economies in the region." CO-CHAIRMAN WILLIAMS thanked Mr. Brock for his testimony. He asked John Sisk to present his testimony. Number 2379 JOHN SISK, Former Director, Southeast Alaska Conservation Council, thanked the committee for the opportunity to testify and distributed written statements that had been prepared for the previous day. He informed the committee of his background which included a degree in environmental biology, a masters degree in forestry and he had worked in many different industries ranging from lumber to tourism in addition to running a small business. MR. SISK stated that he endorsed the positions of the Southeast Alaska Conservation Council and the Alaska Environmental Lobby, who are both strongly opposed.... TAPE 96-47, SIDE A Number 001 MR. SISK continued..."prepared by initial presentation with the idea that mostly address the KPC topic and not opposed to KPC's operations. I think the resolution is premature because I think we need to get through the Tongass Plan, at least the next step of it. We need to look at the landless Natives issue and see what that means about timber supply and we need to take a hard look at where we think our timber industry should be in the twenty-first century and make sure we're tracking towards that. That's not to say that Ketchikan Pulp is not an important part of the economy. It's not to say that they might not be the player. It's just to say that we need to take a hard look at some of these things before endorsing a resolution like this." Mr. Sisk brought with him a piece of wood he had found in his garage and said this is what this value-added issue is all about. He said, "This is a piece of wood that is made out of little short pieces of vertical grain high value wood they cut out of low grade logs - logs that as a whole are low grade, but have pieces of good wood in them - finger jointed and laminated together and it ends up being a high value-added, labor intensive thing and you can further manufacture, retail and pre-retail products. This is the kind of thing I really think that we need to be thinking about. This is happening right now in British Columbia and the Northwest with logs that we're pulping here. There's reasons why we've ended up here but when we look to the future, we need to make sure we don't end up with our pulp being the tail wagging the dog while the rest of the world leaves us in the dust." Number 170 MR. SISK stated he thought the committee substitute puts a huge cloud over the original resolution that KPC and concerned representatives and senators brought forth. There were several things he addressed. First, it completely misrepresents the Tongass Timber Reform Act. Second, it ropes so much into it that instead of being a simple resolution about Ketchikan Pulp's contract, it becomes a resolution about Alaska Pulp Company, about the Tongass Timber Reform Act, and about the overall timber supply. If he were KPC, he would be a little nervous about that because it quite frankly makes a really "nice fat target" for those individuals who would like to shoot at it. He thought there were environmental groups around that would do just that. Additionally, he thought a number of people would basically panic when they realize that the original resolution had been transformed into something quite different. He wondered what effect the scenario in the committee substitute would have on the landless Natives effort. The reason he mentioned that was because the Forest Service in 1991 stated that "420" was close to the maximum they could get out of the Tongass and this resolution talks about going back to the industry we had a few years ago. In that scenario, he didn't see where landless Native claims would come from on the Tongass, unless they were to come from national conservation areas. He wasn't sure that was the way landless Natives want to deal with the issue. MR. SISK stated, "Looking at the Tongass Timber Reform Act - there is nothing in the Tongass Timber Reform Act that has the number 420 in it. That number is a Forest Service number they came up with after the Reform Act and before it in their Tongass Planning process as one alternative. Section 101 of the Reform Act says, `Let the markets decide the timber supply based on taking care of the stewardship requirements of law.' That's been upheld." MR. SISK recommended that committee members take a hard look at the accuracy of the committee substitute. He thought something that could be talked about and some progress made in discussing had been replaced with something that is a huge target and a huge albatross that would probably keep things polarized and will serve other interests. Number 448 WAYNE WEIHING, President, Tongass Conservation Society and Board Member, Southeast Alaska Conservation Council, testified that he is a 28-year Alaska resident and former 21-year employee of Ketchikan Pulp Company. He stated, "I'd like to speak in opposition to the 15-year contract extension that's being proposed. At this current time, Ketchikan Pulp Company is promoting economic fear and insecurity in Ketchikan. It's a very real thing and it's very sad. They're also promoting it in our state of Alaska. I'd like to give you a couple of examples here and a little bit of history. In 1973 -- this is a news clipping from the Ketchikan Daily News and it goes as follows -- `In 1973, the following first attempts to implement basic environment impact statement requirements, C. L. Cloudy of Alaska Loggers Association, warned that the requirements would cause complete pulp mill shutdown and shutdown of the remaining sawmills in Southeast Alaska.' That's Ketchikan News, April 19, 1993. Another, on May 4, 1976, Ketchikan Daily News reported, Ketchikan Pulp Company will close by July 1, 1977, but as the paper explained the next day, the announcement wasn't news; it was part of a publicity stunt. The paper then criticized the pulp mill for issuing false alarms one week before EPA pollution hearings and shortly before employee negotiations were due to start. One editorial concluded that Ketchikan Pulp Company's crying wolf and playing with the fate of thousands of people. God help it. Ketchikan Daily News, May 5, 1976. In 1984, Martin Pihl claimed that if the Forest Service didn't reduce the price of timber and allowed larger clearcuts, we're all going to pack up and leave. That's from the Juneau Empire, March 29, 1984. In 1992, the EPA proposed much tighter pollution controls for Ketchikan Pulp Company's mill. KPC's then President Martin Pihl, claimed that the new pollution controls would seriously threaten the survival of the mill or any pulp mill anywhere. That's Ketchikan Daily News, April 17, 1992. On June 26, 1995, Ketchikan Daily News announced that KPC says it would close its Ward Cove sawmill for an indefinite period starting Friday because it's running out of timber sold by the United State Forest Service. The same day it announced the closure of the sawmill, the Ketchikan Daily News contained an ad paid by KPC, which offered to sell approximately 3,000 board feet of red cedar and 2,000 board feet of yellow cedar during the third quarter of 1995." CO-CHAIRMAN WILLIAMS asked Mr. Weihing to repeat his remarks about the red cedar and the yellow cedar. MR. WEIHING reiterated that the same day the mill announced the closure of the sawmill, the Ketchikan Daily News contained an ad paid for by KPC which offered to sell approximately 3,000 board feet of red cedar and 2,000 board feet of yellow cedar. CO-CHAIRMAN WILLIAMS inquired if Ketchikan Pulp Company had done that. MR. WEIHING responded affirmatively. He said it was a "for sale" ad in the Ketchikan Daily News. CO-CHAIRMAN WILLIAMS inquired if the Ketchikan Pulp Company could utilize that in the pulp mill, itself. MR. WEIHING said, "I guess what I'm saying is that the cedar they offered for sale could have been utilized in the sawmill." REPRESENTATIVE OGAN observed that a total of 5,000 board feet of timber could be utilized in a heartbeat. He remarked that was not a significant amount and he didn't understand the relevance. MR. WEIHING said he was reading from an article in the Ketchikan Daily News to give the committee an example of some of the inconsistencies. MR. WEIHING continued with his testimony, "And one of the reasons why that sawmill went down, and I think we looked at it when Senator Murkowski was here, while pulp prices were exploding, the average market price for selling timber dropped 30 percent. When Senator Murkowski was in Ketchikan, the Ketchikan sawmill said they had to shut down. What they were shutting down for is they were still running the chipper because saw logs were worth more in the form of chips for pulp. That's the only thing that determined that. There wasn't a shortage. They had saw logs running through their chipping." Number 777 CO-CHAIRMAN WILLIAMS said, "I could agree with that but a few years back, prior to the time that Ketchikan Pulp put in the Ketchikan sawmill, we were hearing the other side of the story that all they're doing is doing exactly what you're saying. So what did the pulp mill do? They put the sawmill in to utilize these saw logs. So, I don't understand where you're coming from. I mean, here the pulp mill has done that - they're utilizing it now - and then we're getting cut off by the amount of volume." He asked Mr. Weihing if he supported the extension? MR. WEIHING responded that he did not. He thought it was too open- ended. In his closing remarks, Mr. Weihing commented that Ketchikan Pulp Company has a history of corporate greed. If they would have put their profits back into pollution controls, they wouldn't be in the fix they are now. If they had negotiated with the workers in 1984 when they terminated the labor agreement which took the workers from $20 an hour to $12 an hour, they'd get a lot more support from the people, including the workers that actually work there. If Ketchikan Pulp had done these things with their profits instead of taking their profits to Portland and then crying poverty. He said, "It's a scare tactic; it was blackmail in 1976 and it's blackmail in 1996." Number 913 KELLY NOLLEN, Attorney, Sierra Club Legal Defense Fund, testified the Sierra Club Legal Defense Fund is a nonprofit law firm that represents citizens and enforcing laws designed to protect the public health and the environment. She said, "Our clients, especially those who live in Ketchikan near KPC's mill, are increasingly concerned about the huge amount of pollution illegally generated by KPC and I appreciate the opportunity to express their concerns. We are adamantly opposed to the resolution before this committee today. Over the past 20 years, KPC has proven itself unable to comply with pollution control laws. The mill has an extraordinary history of violating laws meant to protect public health, jeopardizing the safety of Ketchikan residents and mill workers. The resolution being considered would reward the shameful performance. The KPC argues that an extension of its long-term timber contract is necessary to allow it to finance new pollution controls at the mill. Such a rationale is not persuasive. The KPC has enjoyed the subsidies and economic benefits of a long-term contract for 40 years and it has still failed to operate in compliance with the law. Based on KPC's past performance, there is no guarantee that 15 more years of subsidies will result in an end to KPC's illegal pollution. In fact, history shows us the opposite will likely be true. In addition, no other pulp mill in the country has the benefit of a long-term contract like KPC's but all must operate in compliance with environmental laws. Ketchikan Pulp Company's mill has been unable to comply with the law even with a large competitive advantage over other mills nationwide. Instead, KPC has continually emphasized profits over compliance with pollution control requirements. Finally, KPC is not a small company with limited resources. KPC's parent company, Louisiana Pacific, is one of the largest forest products companies in the world and earned nearly $350 million in profits in 1994. Taxpayers should not be asked to foot the bill for such a company to come into compliance with environmental laws. KPC's poor environmental record is also a breach of its existing long-term timber contract. The contract requires KPC to maintain adequate measures for disposal of its pulp mill effluents into operating compliance with all applicable laws. In December 1995, the Forest Service notified KPC that its violations of the Clean Water Act constituted a breach of these provisions of its existing contract. Under this circumstance, it is especially inappropriate for the legislature to support a contract extension and a corresponding continuation of KPC's disregard for environmental requirements." MS. NOLLEN gave a brief overview of KPC's past history. She said their violations are not newly arisen in response to new environmental controls; they have continued through the `70s, `80s and `90s. Whatever the state of the environmental law has been, they've been unable to comply. She urged the committee not to reward them for their past poor performance as a corporate citizen and to send a strong message that compliance with environmental laws is not contingent on continuing taxpayer subsidies in the form of an extension of their long-term timber contract. CO-CHAIRMAN WILLIAMS asked Ms. Nollen if she was familiar with a letter. MS. NOLLEN responded she had seen the letter for the first time just a few minutes earlier. CO-CHAIRMAN WILLIAMS referred to a statement in the letter with regard to convincing the government to cancel these outrageous contracts and asked Ms. Nollen if she still felt that way. MS. NOLLEN responded she had nothing to do with the drafting of that letter. She said she worked for that organization, but she had just seen the letter. Her understanding of her office's position is that they support a sustainable timber industry in Southeast, but one that provides as many jobs as possible for each board foot cut and one that is conducted in compliance with all applicable laws. CO-CHAIRMAN WILLIAMS noted for the record that Representative David Finkelstein was in attendance. Number 1229 REPRESENTATIVE OGAN asked if it was a fair assertion that there had been a tremendous amount of change in environmental laws in the last couple of decades. MS. NOLLEN said she thought the laws have always been evolving, but as stated earlier, she thinks that KPC has not complied with the laws, whatever the provisions were over the past 20 years. Number 1278 REPRESENTATIVE OGAN asked if it was possible that maybe some of the laws were evolving a little faster than a reasonable ability to keep up with the laws and regulations? MS. NOLLEN stated she thought that any company should have to comply with the laws, whatever they are at any point in time and that most pulp mills do not ask for special long-term timber contracts in order to finance their ability to do so. REPRESENTATIVE OGAN asked if it was not true that it takes a tremendous amount of capital investment in time to come into compliance with the environmental laws as they change and sometimes it doesn't always exactly coincide with when the law is passed. He asked if Ms. Nollen was asserting that KPC has never made any attempts to comply? MS. NOLLEN thought they had made attempts, but obviously over the past 20 years, none of those attempts have been sufficient. There is no guarantee that any additional time period would result in them coming into compliance. She noted that KPC has operated under a long-term contract for the past 40 years and has a poor record. There is no guarantee that an additional 15-year extension would result in compliance. REPRESENTATIVE OGAN said he was having a difficult time following Ms. Nollen's logic. He said they, as legislators, pass laws and if someone is out of compliance, there are certain regulatory adjudicators that enforce the compliance. He asked if that system was broken? MS. NOLLEN thought it had been broken in this case. She noted that KPC has paid huge fines - they paid $6 million last year, they plead guilty to criminal violations and there are continuing problems. Number 1348 KATHY LIETZ, Bookkeeper, Black Bear Cedar Products, testified via teleconference that Blear Bear Cedar Products is an independent cedar mill located near Thorne Bay who employs 10 people with an annual payroll of a quarter million dollars. She said unfortunately, due to circumstances beyond their control, they have not run at capacity since 1992. She provided background information for committee members saying, "The owners of Black Bear Cedar came to Thorne Bay in 1986 to examine the availability of cull red cedar logs. At that time, what little cull cedar actually came into (indisc.) was being either buried or burned due to lack of (indisc.). That was the beginning of a long and fortuitous business relationship between Black Bear Cedar and Ketchikan Pulp Company. To be quite frank with you, KPC is our mainstay. We purchase at least 90 percent of our log supplies from them. They're close in proximity to our mill and the price is one we can live with. When we buy logs elsewhere, the logistics are more involved and expensive. Ketchikan Pulp has always been a good neighbor to Black Bear. We have brought in rounds of logs from elsewhere and they have dewatered and loaded them onto our trucks. When our mill burned to the ground in 1992 putting 10 people out of work, they hired some of our crew. They have helped us in so many small and insignificant ways, it would be impossible to name them all. We are not the only ones benefitting from the generosity and kindness of KPC. The other three (indisc.) mills at Thorne Bay are treated the same. Our (indisc.) community are the benefactors of a substantial amount of philanthropy bestowed by KPC." MS. LIETZ remarked, "The basic impact of KPC not getting an extension of the long-term contract is simple. KPC would quite likely cease operation in Southeast Alaska. If they were to leave, Black Bear and several others would follow. For you see, we are not in the logging business, but in the manufacturing business. It is not our job to make a log but to make something out of it. I assure you that there is not a single mill in this forest (indisc.) financial resources to locate, purchase and log enough timber to sustain their operation. We depend on larger companies like KPC, to do that for us. Honestly, our (indisc.) is intertwined with that of Ketchikan Pulp Company. An extension for them is an extension for us. Furthermore, you will hear from people who will tell you that Southeast Alaska will be just fine after KPC is gone. Those people are only kidding themselves. There's absolutely no question in my mind as to what will happen to Black Bear and our community. We will simply cease to exist. Many businesses and communities have come and gone in this state over the last century and we will join them. KPC is the largest employer in Thorne Bay. In all, there are hundreds of jobs that can be linked either directly or indirectly to KPC. Each and every person here is somehow touched by timber. Some may say that eliminating KPC will open up the industry to the little guy. Let me attest to you, the game would not change; only the players. Instead of KPC, we would have Boise Cascade, Weyerhauser, International Paper Champion or some other big business. It is anyone's guess as to whether they would be as generous to us as KPC has been. Thorne Bay was founded by KPC - our city hall, fire hall and most of the homes were erected by KPC and its employees. Any time the city of Thorne Bay is in need, who do they ask for help? KPC. I can safely guarantee that without KPC the communities of Thorne Bay, Coffman Bay and (indisc.) would become virtual ghost towns. I am certain that a few people would remain, but not nearly as many as there are today. I keep hearing that we need to diversify. Value-added and tourism are key words these days, yet to diversify first you must have infrastructure. Very few communities in Southeast have the infrastructure necessary to exist without the timber industry. And let's face it, we all know that if the mill closes, the Forest Service (indisc.) their volume from the timber base. That timber should still be a factor in order to encourage new timber businesses to come in. So far we've lost Sitka, Wrangell and (indisc.). Nearly one-half of the timber demand has been removed from the supply. If we are to move forward, we must have direction. The Forest Service needs to be directed to maintain a stable timber supply to keep us going. If KPC were to leave, that volume would be (indisc.) as well. Without the binding legal powers of a timber contract authorized by the government of the United States, there is absolutely nothing to encourage the Forest Service to provide ample timber to keep this industry alive. It is honestly that simply." MS. LEITZ concluded that Black Bear Cedar supports the 15-year contract extension for Ketchikan Pulp Company. Not only is it good business for them, it is in the best interest of all Alaska. Number 1616 REPRESENTATIVE KOTT asked how many employees Black Bear Cedar currently has and the length of their relationship with KPC. MS. LEITZ said Black Bear Cedar currently has eight employees. They are currently in a layoff status due to a lack of logs and added it would be a two or three week layoff depending on their timber supply. Black Bear Cedar has had contracts off and on with KPC continually since 1987. REPRESENTATIVE KOTT asked how many employees Black Bear Cedar has when they are at full capacity? MS. LEITZ responded that at full capacity, they employ 10 people. Number 1690 CO-CHAIRMAN WILLIAMS thanked Ms. Leitz for her testimony and asked Brian Brown of Silver Bay Logging to present his comments. BRIAN S. BROWN, Chief Logging Engineer, Silver Bay Logging Company, left because of time constraints but submitted a written copy of his testimony to committee members to be included in the committee file. Number 1731 JACK PHELPS, Executive Director, Alaska Forest Association, Inc., remarked he wished the committee had been able to hear Brian Brown's testimony because he represents one of the logging companies, Silver Bay Logging, that contracts with KPC. Silver Bay Logging is the main helicopter logging company in Southeast Alaska. Their ability to do helicopter logging which is very important in terms of the environment and in terms of minimal impact on the forest is exceptionally important. He said, "Were it not for the presence of KPC, the kinds of investments that it takes to log with helicopters simply would not exist and that's a very important issue with respect to logging in the Tongass National Forest." Number 1782 MR. PHELPS read the following statement: "The resolution before you today concerning the requested extension of Ketchikan Pulp Company's long-term contract, deals with the type of issue on which the Alaska Forest Association would normally not take a position. The matter of contracts is considered the business of each individual company, although I am certain many of our member companies, such as Silver Bay Logging, would enthusiastically endorse the continuation of the long-term contract. "My purpose today, speaking for the Alaska Forest Association, is to point out to you the more technical issue of KPC's crucial role as a key component in Southeast Alaska's timber industry. We're talking about an industry that has lost, due to governmental policies and environmental extremism, 42 percent of its work force since 1990. That's nearly half. Just a few short years ago, Alaska had two pulp mills to process the huge volume of utility logs available in the Tongass National Forest. Today there is only one such mill, Ketchikan Pulp Company's dissolving pulp mill at Ward Cove. "The importance of that pulp to Southeast Alaska's economy and to the forest industry in the state cannot be overemphasized. The need for a stable, year-round employment base in Southeast Alaska was recognized back in the 1920s and it led to the establishment of the long-term contracts in the 1950s. Today, KPC is Southeast Alaska's largest industrial employer, and the largest member company in our association. Its presence in the market helps support the smaller mills in the region by building and maintaining infrastructure, by purchasing power and other utilities, and by creating downstream employment in the wood products and service industries throughout the region, such as you just heard about from Kathy Lietz. "The company provides local, value-added employment based on the use of a local, renewable natural resource. It employs some 450 people in the pulp mill, 250 people in related sawmills, and another 300 people in the woods. That's value-added. That's taking Alaska's natural resources and creating long-term good jobs; jobs that support families in Southeast Alaska. Those 1,000 jobs are important not only for the families who directly depend on them, but for the entire economy of the region. The Alaska legislature, the Governor, and the Alaska congressional delegation should make a priority of protecting those jobs. Equivocation on that issue is unbelievable to those of us working in this industry and trying to maintain a living in Southeast Alaska. "The presence of the pulp mill in Ketchikan is important for another reason. In sustaining any timber industry in any forest, and the Tongass is no exception, it is always easy to sell the high end logs. There's always a market for the high end logs. Finding a market for the low-end timber and for the waste wood and by- products of sawmill operations is a different matter. With a pulp mill in Southeast Alaska, we have the opportunity to utilize those products here, to provide a market for those products here in Alaska and to create jobs from those products here in Alaska. Everyone, from our schools - you heard from John Antonen earlier, to the local grocer benefit from that larger infrastructure. "In summary, Mr. Chairman, the Tongass National Forest is more than capable of sustaining the last remaining pulp mill in Alaska. Furthermore, the forest industry as a whole needs that mill to operate at capacity. In fact, in a really healthy forest industry here on the Tongass, we could easily maintain two, three or even more such mills. The entire region would benefit under that scenario. Please continue to do what you can to help strengthen and support Alaska's timber industry, including the Ketchikan Pulp Company's operations in the Tongass National Forest." MR. PHELPS thanked the committee for the opportunity to testify on this important matter and offered to answer any questions. Number 1981 TINA LINDGREN, Executive Director, Alaska Visitors Association (AVA), testified that the Alaska Visitors Association is a statewide organization with over 600 members. She stated she was not suggesting to committee members whether this specific contract of the pulp company should be extended, but wanted to make the point that the tourism industry and the timber industry are not mutually exclusive and in fact can work together. The Alaska Visitors Association has long recognized that Alaska's economy is supported by a multitude of industries from petroleum products to mining, fishing, timber, as well as tourism and they have consistently supported a viable timber industry in Alaska. The AVA appreciates the fact that Alaska needs to diversify the economy, especially healthy basic industries because so many supporting jobs rely on those basic industries. The AVA also endorses the multiple use of forests. They believe that timber harvesting and tourism can co-exist within the country's largest national forest with proper management. There may be potential conflict with certain areas; however, the AVA has consistently worked with the Forest Service to try to identify where those areas might be to help resolve those conflicts. Number 2056 MS. LINDGREN stated the AVA does share some common concerns that were raised in the resolution. The need for businesses to be able to plan ahead in order to justify capital investments. This is certainly a problem for businesses, especially those small businesses in tourism as well as KPC - she could certainly understand the need to be able to plan for the future. Access to public lands is another area of common concern. There is tremendous pressure to further restrict access to public lands for commercial purposes of all kinds. Her third point was that both tourism and the forest products industry in Alaska are renewable, sustainable, regulated and compatible with the environment if they are conducted in a responsible manner. MS. LINDGREN said in conclusion that AVA would like to continue to work with the timber industry, the legislature, the Administration and the Forest Service to help alleviate uncertainly for businesses whose livelihood depend on the forest and to minimize conflicts wherever they may be. She thanked Co-Chairman Williams for the opportunity to testify. Number 2100 CO-CHAIRMAN WILLIAMS asked if there were any questions for Ms. Lindgren. He called on Sol Atkinson of Metlakatla to testify. Number 2109 SOL ATKINSON, Council Member, Metlakatla Indian Community, testified on behalf of the Metlakatla Indian Community that they do support the resolution relating to the extension of the United Forest Service timber sale contract for the Ketchikan Pulp Company. He said it is time for the state legislature and the Governor's Office to recognize that something must be done for the timber dependent communities in Southeast Alaska that seem to be ignored in the rush to save the environment. Metlakatla is for sound environmental policies, but they are for jobs, people and families as well. They applaud this effort to move the Congress to do something to bring some stability to our economy. With a population of approximately 2,000 people, Metlakatla is a timber dependent community, with an unemployment rate at the present time of over 50 percent. This is due to the unstable timber supply at the present time. A stable timber supply from the Tongass National Forest is essential to their welfare. In the last few years, in an effort to improve their economic situation, Metlakatla successfully established a small business administration timber sale purpose program and started a small sawmill to provide jobs and revenues. They have operated their mill profitably for three years and it provides between 20 and 40 jobs. They also depend on the (indisc.) of their mill to the Ketchikan Pulp Company for an additional 100+ jobs plus the revenues. Therefore, Metlakatla has become timber dependent, but their new economic program is now threatened by a lack of timber. That is why Metlakatla supports HJR 64. MR. ATKINSON stated one thing is certain for now - the small independent operators cannot count on any supply and without that fundamental variable in the marketing equation, they must support extraordinary measures that are essential to their survival. The extension of the long-term contract for KPC is one of those measures. He said the rest of us who would like to be able to compete for timber, if it were available, simply cannot risk losing the last strong economic forest in their industry. In their view, if the long-term contract for KPC is not extended, they are looking at the last years of the timber industry in Southeast Alaska and they cannot be happy about that. MR. ATKINSON said that people in Metlakatla believe that Southeast Alaska can sustain the timber supply without permanent harm to the environment. Also, they believe the timber industry holds the most potential for long-term economic stability. Mr. Atkinson stated that by this testimony, Metlakatla is declaring its commitment to stand with all right thinking people in Southeast Alaska to find a solution to our economic problems. Part of that solution must be proper utilization of our forests for the good of all, which includes a stable timber supply. They encourage any effort to move toward that goal. He said that HJR 64 is a step in the right direction. He thanked Co-Chairman Williams for the opportunity to testify. Number 2368 GARY PAXTON, City Administrator, City & Borough of Sitka, testified as the City Administrator, not necessary on behalf of the Assembly, although he was confident his comments would reflect their position as well. The first point he wanted to make is if we had a timber supply, we would have a timber industry in Sitka and in Wrangell. He said, "Through money provided by Senator Ted Stevens, the Forest Service had conducted an analysis for a timber industry in Sitka and there were multiple opportunities to have a timber industry ranging from a sawmill with (indisc.) inflator to laminated (indisc.) lumber if the supply was available." Like Metlakatla, Sitka's heritage and character are fully intertwined with the timber industry. They are a blue collar town; they are a town of independent working individuals who want to work for a living and support their families. The impact of the mill closure two and one-half years ago has significantly shrunk their middle class population. His second point is the fundamental importance of a timber industry to the socio-economic health of the communities. His point is that timber jobs are needed to maintain their blue collar tradition. MR. PAXTON said his second point was that he was a second generation Alaskan and in his view it has specific negative impact on our Native community. He said this year Sitka was a million dollars short of funding their school district for the third year in a row. If Sitka had gotten the property tax that would have been derived from the mill plus the sales tax of a $20 million payroll, that wouldn't have been an issue. MR. PAXTON said his third point was that community was being pitted against community with the current limited supply. His last point was that both the litigation action in the appeal process.... TAPE 96-47, SIDE B Number 001 MR. PAXTON continued ..."same numbers, the Tongass is certainly able to sustain well over 350 million board feet (indisc.) or 120 million board feet that we used to have." The final point he made is that (indisc.) process of litigation on all offerings is damaging. The second point he made on this final issue is that he had grave concerns about the current (indisc.) analysis and the proposal that will come out of that. He did not believe the numbers will be anywhere near sufficient to provide the timber industry from Sitka to Wrangell down to Prince of Wales and of course to include KPC. Number 042 CO-CHAIRMAN WILLIAMS asked if the committee had any questions of Mr. Paxton. Hearing none, he asked the mayor of Wrangell to present his testimony. Number 063 DOUG ROBERTS, Mayor, City of Wrangell, testified that he is a lifelong resident of Wrangell and was born in Ketchikan. He wanted to advise the committee of some of the more positive times in Wrangell so everyone would understand what Wrangell was all about a few years ago. He said, "As a child growing up in Wrangell, we made an annual tour of our two mills that we used to operate in town - two larger mills and as you'd walk through the tour of the mill, you'd always recognize familiar faces that ran the mill. They were called residents of our community. As we toured the mill, there was always something that stuck in my head - something that we were always proud of and that was the idea that the Wrangell sawmills produced more lumber than anywhere else in the state of Alaska. Wrangell was the lumber capital of Alaska. Nobody produced more lumber than our community. Our longshoremen had the distinction of being the most productive crews on the West Coast, including down South, in terms of loading lumber onto ships. I can remember the ships parked out in front of town, in both the in town dock and the 6-mile mill had a port facility that was handling ships. All materials being cut at our mills. Something that we were very proud of." Number 131 MR. ROBERTS continued, "Now all I can tell you about is the devastation of a proud community that once had probably the heritage of being one of the state's largest exporters of lumber materials. Now Wrangell's unemployment rate is up around 30 percent; all our mills are shut down and you continually hear that our mills didn't evolve through time and change economically to changing lumber situations in the market or through the environmental process. That's not true. Our mills did evolve. They did change; they did move along with the process. They had torn down both mills and had just recently built a new more modern efficient mill that was a lot more environmentally capable of handling some of the problems of the changes. It didn't matter - the mill is still shut down. We don't have the distinction of being the timber capital of anything now." MR. ROBERTS distributed a hand out on the economic situation in Wrangell. He said, "One of the things that kind of catches me though recently that's most noticeable to me in the mixture of industries is the dramatic change in the manufacturing and government sectors of the economic base. In 1994, manufacturing jobs comprised 29 percent of the available jobs. Today, it has dropped to 11.4 percent. Likewise, government jobs comprised 47.4 percent of the economic base compared to 32 percent two years ago. So this trend has been pretty quick to come upon us and we're no longer a timber town; we're a government town. I'm going to submit this for your record. This is supplied both -- state information - - and the state doesn't even bother to track our unemployment situation in Wrangell and that's stated in there -- I think as of 1994 they quit tracking our unemployment situation. We just had one of our oldest restaurants in town close, we lost 20 more employment jobs and opportunities in the community. One of the things that we have implemented -- the only thing that we have to offer anybody that is out of work as a result of the closures of our mills and the displaced timber workers, longshoremen, and the list just keeps going on down -- I can name a variety of road building contractors that are out of business - they're all out of work -- is we have a career transition center that's basically training good sound people that were ship sawyers and longshoremen into being something that they weren't intended on being. They were sawyers, they were longshoremen - that's what they want to be but now we're re-training them to be barbers and computer technicians. That's all we have to offer these people at this time. We don't have any other solutions; we have no other jobs." MR. ROBERTS continued, "I'm proud to be the mayor in my community and it irritates me beyond words when someone comes up to me and says, `Well, you've been given a sentence.' That's not the case; I knew the situation when I was elected mayor and I'm proud to be in that position right now. I see it as an opportunity to allow my community to grow past the situation we are in. We'll never allow ourselves again to be reliant on one industry but I'm here to say that I do support the Ketchikan Pulp Corporation. The council has not had time to consider the resolution but I can speak on behalf of small business and large business that we can't afford to lose anymore jobs and Ketchikan Pulp Corporation has a presence in our community. They do considerable work and we can't afford to lose a single job. I wish them all the luck in the world. We're not giving up on the timber industry, don't get me wrong. We have hopes that things are going to turn around and change, but on the other hand we have more serious work ahead of ourselves." MR. ROBERTS referred to the social impacts and said, "I hear from the environmental community and the Sierra Club Legal Defense Fund that they're concerned about the social, economic, safety and health of communities but I've got a real social problem in my community right now and there's no legal defense fund for their protection or help. We're going to be okay and we're going to survive as a community. We've had quite a bit of help from the state and yourself, Mr. Chairman. You've been a proponent of the industry for a long time. One other point I'm going to make is that it's a timber supply issue that we have. We have a small mill that employs about 20 people and I mentioned yesterday at another hearing I was at that this mill needs about 25,000 board foot a day to operate. And that's the way we live our lives in Wrangell now - one day at a time. That's how we exist. That's not -- we don't need -- we're just hoping we get a little shot of timber to keep them going and we're failing miserably. We've got a couple of municipal tracts available to us right now that we're looking at trying to find a way of getting timber to that particular operator and the state has also got some Department of Natural Resources land that could possibly allow him to operate for three months. But it's a pathetic situation. We're living one day at a time and so is he. We get the feeling that we're not allowed to be a community anymore; that we're almost asked to leave the state and we're not going to leave." He invited questions from committee members. Number 397 CO-CHAIRMAN GREEN asked, "These 1994-95 unemployment figures - are they just figures so that if somebody came from a fairly reasonable job, say associated with the timber industry and then had to take a job that is lesser, he wouldn't be unemployed and so therefore, he wouldn't show up on these figures? What I'm suggesting is even worse than these figures show because of down grading of jobs." MR. ROBERTS said that was a safe assumption and added it's hard to track their unemployment. Their best estimate is that it's over 30 percent, but their unemployment is compared together with Petersburg who is more of a fishery oriented community and who seem to have a more stable employment, whereas Wrangell's isn't. He noted it would be nice if Wrangell could have their own employment data. Number 440 CO-CHAIRMAN WILLIAMS asked what the effect has been of the Governor's program to restore jobs in Wrangell. MR. ROBERTS replied the Governor put together a task force that has a great deal of potential. He thought the Governor should follow through and allow the task force to meet with the sectors of this industry in order to sort some things out. Mr. Roberts noted there had been some dialogue between the Governor and industry people. CO-CHAIRMAN WILLIAMS asked if there were anymore questions of Mr. Roberts. Hearing none, he asked Kate Tesar to testify. Number 493 KATE TESAR, Lobbyist, Alaska Services Group, read the following statement into the record on behalf of Alaire Stanton, Mayor, City of Ketchikan: "The basic facts in support of this resolution are contained within the resolution itself, which I wholeheartedly support. My husband and I moved to Ketchikan 42 years ago because of his employment as a chemical engineer with Ketchikan Pulp Company. We raised our family in Ketchikan, supported by one stable, well-paying job. We bought property and built a house. My husband was promoted. The kids graduated from Ketchikan High School, went away to college and earned their college money by working at Ketchikan Pulp Company during the summers. "Our family story and many others like it, would not have been possible in Ketchikan without the long-term contract between KPC and the U.S. Forest Service. The early capital investment by Puget Sound Pulp & Timber Company and FMC would not have been made unless they had the security promised within those contracts. Year-round jobs and the stability which is necessary for families and communities to survive is as necessary today as it was when the strategy was first developed in the 1950s. And long-term stability is as important now for KPC as it ever was. If KPC is going to upgrade its facilities to ensure that it is a better neighbor and to remain competitive in a world pulp market, then it needs to know that a stable timber supply will be available into the future. "The community of Ketchikan has been involved in intensive economic development studies and discussion during the last three years. The `2004' information was developed with wide representation from the community. This statistical and consensus information is readily available from the city, borough or the University of Alaska Southeast. Our conclusions were, and are, that the loss of a fully operating pulp mill at Ward Cove and its interrelated sawmills and wood operations in southern Southeast Alaska, would cause severe economic impacts and would probably cause devastating social consequences as well. We are already seeing evidence of these impacts within the community due to the fact that there are fewer jobs now, and there is considerably less money circulating than there was just four or five years ago. "Finally, Mr. Chairman, I believe we should send copies of the adopted resolution to all members of the United States Congress, not just the leadership and our own delegation. Many members of Congress and people in the other 49 states may not be aware that there is little other timber available here except for that in the national forest. I would also stress that Ketchikan Pulp is a value-added product. The KPC and its related enterprises not only utilize the whole log, but also the trash and scraps that otherwise would just rot or burn. This is a very efficient use of a renewable resource. "Thank you very much for allowing me to represent the citizens of Ketchikan in voicing our support of this resolution which sets out how essential the operation of Ketchikan Pulp Company is to the continuing economic and social well-being of our families and communities." Number 630 REPRESENTATIVE DAVIES asked Ms. Tesar if the reference to the resolution in the first sentence of her statement was to the original resolution or the committee substitute. MS. TESAR responded it was to the original resolution. CO-CHAIRMAN WILLIAMS asked Ernesta Ballard from KPC to comment. Number 650 ERNESTA BALLARD, Environmental Consultant, Ketchikan Pulp Company, said there were a number of issues raised earlier about KPC's environmental record. She directed the committee's attention to the third tab in the blue book that had been distributed. She said this document was constructed in the fall anticipating some of the questions that had been raised about KPC's environmental track record and it documents KPC's entire environmental history; what the regulations required at the time and what installations were made. She made a few comments to put KPC's environmental track record in context. MS. BALLARD stated, "Prior to KPC's design and construction, the pulping process of choice in the world was a calcium bisulfite process. This is more technical than you may wish to know, but it's important for the record because the calcium bisulfite process does not allow the recovery of spent liquor and therefore it's discharged with the effluent. KPC was designed - it was the first pulp mill designed in North America and the first pulp mill built with the magnesium bisulfite pulping process. This was an intentional effort to reduce - and it reduced by as much as 50 percent - the pollutant load in the effluent because the magnesium bisulfite process allows the complete recovery of cooking liquors and they can either be recaptured and reused or burned for fuel. This was the spirit with which the founders of KPC went forward into the pre-regulatory era. The first 15 years of KPC's operation were before the passage of the contemporary environmental laws that we operate under today. So, from 1956 until 1971 with the passage of the Clean Water Act, the discharges were unregulated but were regulated voluntarily by the operators because of their intentional design to use a recovery process. I won't take anymore of your time this evening to recount what is itemized for you in complete detail in this book, but I would be happy to answer questions that you might have at a later date about the specific regulatory history. KPC's history of environmental control and environmental compliance is comparable to industry in the Pacific Northwest with which I was extremely familiar during my tenure as EPA Regional Administrator." Number 780 CO-CHAIRMAN GREEN asked when KPC made the switch over to using magnesium bisulfite? MS. BALLARD responded that KPC was designed to use magnesium bisulfite at its inception; it never used calcium bisulfite. She pointed out that a calcium bisulfite mill will discharge about 300,000 pounds of BOD which is the biological oxygen demand entity which can cause (indisc.) in a water body; 300,000 pounds, by contrast, KPC during its 15 years of unregulated discharge, before the passage of the Clean Water Act, discharged about half that much. Number 819 CO-CHAIRMAN WILLIAMS asked if there were any other questions for Ms. Ballard. Hearing none, he announced that he planned to take two hours of public testimony the following day. ADJOURNMENT CO-CHAIRMAN WILLIAMS thanked everyone for their participation and adjourned the meeting of the House Resources Committee at 7:15 p.m.