Legislature(1995 - 1996)
02/18/1995 09:05 AM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE RESOURCES STANDING COMMITTEE
February 18, 1995
9:05 a.m.
Ketchikan, Alaska
MEMBERS PRESENT
Representative Joe Green, Co-Chairman
Representative Bill Williams, Co-Chairman
Representative Scott Ogan, Vice Chairman
Representative John Davies
MEMBERS ABSENT
Representative Alan Austerman
Representative Ramona Barnes
Representative Pete Kott
Representative Eileen MacLean
Representative Irene Nicholia
OTHER LEGISLATORS PRESENT
Speaker Gail Phillips
Senator Mike Miller
COMMITTEE CALENDAR
Presentation on Timber/Forestry Issues
WITNESS REGISTER
JOE AMBROSE, Aide
Senator Robin Taylor
State Capitol, Room 30
Juneau, AK 99801
Phone: 465-3873
POSITION STATEMENT: Made comments and asked questions
JIM AYRES, Chief of Staff
Office of the Governor
P.O. Box 110001
Juneau, AK 99811-001
Phone: 465-3500
POSITION STATEMENT: Made comments and asked questions
CLIFF SKILLINGS, General Manager
Alaska Lumbermen's Association
81 Phillips Lane
Ketchikan, AK 99901
Phone: 225-0947
POSITION STATEMENT: Made comments and answered questions
STEVE SELEY, JR., Owner & President
Seaborne Lumber Co.
P.O. Box 6157
Ketchikan, AK 99901
Phone: 225-2181
POSITION STATEMENT: Made comments and answered questions
FRANK AGE, Owner & President
Pacific Rim Cedar
P.O. Box 1498
Wrangell, AK 99924
Phone: 874-2772
POSITION STATEMENT: Made comments and answered questions
KIRK DAHLSTROM, Partner & Manager
Viking Lumber
P.O. Box 670
Craig, AK 99921
Phone: 755-8880
POSITION STATEMENT: Made comments and answered questions
TROY REINHART, Employee Relations & Public Affairs Manager
Ketchikan Pulp Company
P.O. Box 6600
Ketchikan, AK 99901
Phone: 225-2151
POSITION STATEMENT: Made comments and answered questions
ROBERT LINDEKUGEL, Conservation Director
Southeast Alaska Conservation Council
419 Sixth Street, Ste. 328
Juneau, AK 99801
Phone: 586-6942
POSITION STATEMENT: Made comments and answered questions
DAVID SALLEE
P.O. Box 1219
Ward Cove, AK 99928
Phone: 247-9557
POSITION STATEMENT: Made comments
JACK LEE, Past Chairman
Tongass Sportfishing Association, Chapter 573
of Trout Unlimited
P.O. Box 1081
Ward Cove, AK 99928
Phone: 247-8156
POSITION STATEMENT: Made comments
DALE PIHLMAN, Representative
Alaska Wilderness Recreation & Tourism Association
P.O. Box 7814
Ketchikan, AK 99901
Phone: 225-3498
POSITION STATEMENT: Made comments
BRUCE WALLACE
P.O. Box 8572
Ketchikan, AK 99901
Phone: 225-6547
POSITION STATEMENT: Made comments
BILL THOMAS
P.O. Box 5196
Ketchikan, AK 99901
Phone: 225-4833
POSITION STATEMENT: Made comments
K.A. SWIGER, Executive Director
Stand Up!
P.O. Box 23645
Ketchikan, AK 99901
Phone: 225-8627
POSITION STATEMENT: Made comments
KATHI LIETZ, President
Alaska Timber Trackers
Thorne Bay, AK 99919
Phone: 828-3986
POSITION STATEMENT: Made comments
ALAIRE STANTON, Mayor
City of Ketchikan
334 Front
Ketchikan, AK 99901
Phone: 225-3111
POSITION STATEMENT: Made comments
DENNIS WATSON, Mayor
City of Craig
Craig, AK 99921
Phone: 826-3438
POSITION STATEMENT: Made comments
DUANE GASAWAY, City Administrator
City of Wrangell
4th Avenue
Wrangell, AK 99929
Phone: 874-2642
POSITION STATEMENT: Made comments
ERNESTA BALLARD, President
Ketchikan Chamber of Commerce
705 Main Street
Ketchikan, AK 99901
Phone: 247-0846
POSITION STATEMENT: Made comments
PHIL JANIK, Regional Forester
Region 10, U.S. Forest Service
709 W. 9th
Juneau, AK 99801
Phone: 586-8806
POSITION STATEMENT: Made comments and answered questions
FRED WALK, Director
Timber Management
U.S. Forest Service
709 W. 9th
Juneau, AK 99801
Phone: 586-8806
POSITION STATEMENT: Made comments and answered questions
RALPH LEWIS, President & General Manager
Ketchikan Pulp Company
P.O. Box 6600
Ketchikan, AK 99901
Phone: 225-2151
POSITION STATEMENT: Made comments and answered questions
ACTION NARRATIVE
TAPE 95-18, SIDE A
Number 000
The House Resources Committee was called to order by Co-Chairman
Williams at 9:05 a.m. Members present at the call to order were
Representatives Green, Williams, Ogan and Davies. Members absent
were Representatives Austerman, Barnes, Kott, MacLean and Nicholia.
CO-CHAIRMAN BILL WILLIAMS welcomed everyone and made introductions.
He thanked those present for taking the time on a Saturday morning
to come together and help try to find solutions to the problems
facing Southeast communities. He said the focus of the meeting is
the forest products industry, particularly on the timber supply
problem which has already resulted in the loss of many jobs. He
stressed everyone needs to recognize there are many different
interests and user groups in the Tongass National Forest. However,
everyone also knows that the timber industry makes up a large part
of the economy in Southeast Alaska.
CO-CHAIRMAN WILLIAMS stated various panelists have been invited to
help the committee learn about the problems, and hopefully to hear
how solutions can be found. He said the committee wants to hear
ideas from the different points of view represented on these
panels. He pointed out that by listening and asking some
questions, all who came to listen may be better able to find
solutions to the problems facing the timber-dependent communities
in Southeast Alaska.
CO-CHAIRMAN WILLIAMS stated five different panels will be
presenting testimony. They are the Independent Operators,
coordinated by Cliff Skillings; the Long Term Timber Contractor,
led by Ketchikan Pulp Company (KPC) President Ralph Lewis; the
Grass Roots Community Panel, including representatives from the
Southeast Alaska Conservation Council (SEACC) and Stand UP!; the
Community Leadership Panel, including representatives from Craig,
Wrangell, and Ketchikan along with the Ketchikan Chamber of
Commerce; and the Regional Forester, Phil Janik and his staff.
CO-CHAIRMAN WILLIAMS announced the meeting would begin with a slide
presentation put together by the United States Forest Service
(USFS). He stated the presentation provides a good history of land
use in the Tongass National Forest. (May be listened to on tape
95-18, Side A, House Resources Committee Meeting, February 18,
1995, available in House Records.)
SPEAKER GAIL PHILLIPS thanked everyone for attending and thanked
Co-Chairman Williams for putting the meeting together in Ketchikan.
She noted when Co-Chairman Williams asked if a meeting could be
held in Ketchikan, she said yes on one condition--she be allowed to
attend also. She stated it is important for people in Southeast
Alaska to recognize and realize that the House of Representatives
is committed to working towards economic security for the people in
Southeast.
SPEAKER PHILLIPS stated everyone has seen what has happened to the
forests of Southeast Alaska over the years. She said with the
economic crisis being experienced in this region, and with the
mills that are closed down, anyone who states that 320 million
board feet is enough to utilize is not looking at the economic
reality of the area and what it means to the state. She stressed
she will be there for whatever support is needed.
SPEAKER PHILLIPS said the House of Representatives is taking a few
small steps to correct the measure. She pointed out that Co-
Chairman Williams introduced new legislation HB 121, a small forest
bill called the salvage timber bill. She noted she lives on the
Kenai Peninsula and the forests there are devastated with the
spruce bark beetle infestation. This bill will allow moving up the
schedule of timber sales on those devastated forests. She stated
HB 121 is just a small step, yet the human outcry from people who
think the forests are better off unattended and unproduced is
amazing to her.
SPEAKER PHILLIPS stated she read an article indicating that
Washington State is in the process of revamping their entire forest
practices act. She noted the flak taken over one little bill for
dead trees is unbelievable. She stressed if Alaskans do not stand
together strong to fight for their responsibility to develop the
state's resources, the economic viability of the state will be
lost. She said anyone coming into her office and signing the guest
book will face a sign which reads, "Without production there is no
economy and without economy, civilizations fail." She stressed she
will not allow the civilization in Alaska to fail.
JOE AMBROSE, AIDE, SENATOR ROBIN TAYLOR, stated Senator Taylor
sends his regrets he cannot be present due to a death in the
family. He said a lot of what is going on in Southeast is a matter
of credibility and trust. He pointed out when the Knowles
Administration's change in position on the habitat conservation
areas (HCAs) became public, the Governor's Chief of Staff asked Lew
Williams at the Ketchikan Daily News whether he thought the Knowles
Administration could trust the USFS. Mr. Ambrose felt there is a
pattern developing.
MR. AMBROSE said the U.S. Fish & Wildlife Service (USFWS) announced
on Thursday they had no scientific basis for establishing HCAs for
the wolf. They also revealed there had been an agreement since
December between the USFWS, the USFS, and the Alaska Department of
Fish and Game (ADF&G) which ultimately would achieve the areas
anyway. He noted the Clinton budget shows an introduction for
timber harvest based on the establishment of HCAs, which are the
areas everyone had been told no plan had been made. He commented
the credibility factor is there.
MR. AMBROSE stated when the President established his forest plan
in the Pacific Northwest, it took 85 percent of the land base out
of harvest. Congressional withdrawals removed 38 percent of what
was available in the Tongass, other actions took that up to 63
percent, and if the 21 percent proposed for HCAs is added, the
total is 84 percent which is within 1 percentage point of what the
President has proposed for the Pacific Northwest. He did not
believe that is a coincidence. Rather, he felt it was a concerted
effort and what remains will not sustain the economy of the area.
MR. AMBROSE said Mr. Janik told the Governor the USFS would make
available 320 million board feet in the coming year, which everyone
knows is not adequate to open the mill in Wrangell. He noted that
amount is what will be made available and does not mean it will not
be challenged and the timber supply will be further reduced by
those challenges. He stressed the area is in a crisis and folks
need to know, at least from Senator Taylor's standpoint, the
agencies being dealt with are being less than candid. He stated
Senator Taylor's office has asked on numerous occasions if the USFS
or the agencies looking for the Goshawk had looked at established
wilderness areas. From the top, they are assured they are. If one
goes down a couple of notches and talks to someone who is actually
doing the work, they say no--they do not have the budget for that.
Rather, they are looking at areas where timber surveys are being
conducted to prepare for harvest.
SENATOR MIKE MILLER stated it was good to be back in Ketchikan as
he spent a lot of time there during the campaign. He said during
that time, he got a handle on some of the issues facing Southeast
Alaska and Ketchikan specifically, especially the timber issues.
He noted many people in the Interior would like to start a timber
industry with the forest lands there. He pointed out the dynamics
there are a little different--they are dealing with state lands
versus federal lands, the trees in Southeast are much larger than
in the Interior, etc. He felt many of the things learned in
Southeast can be applied to Interior Alaska.
SENATOR MILLER stressed a strong statewide economy is needed in
order to make everything work. Not only is a strong timber economy
needed but also needed is a strong mining economy, fishing economy,
and tourism economy because they all work together to make a strong
economy for Alaska so Alaskans can have a good living. He said he
was born in Alaska and intends to stay in Alaska but he wants to
make sure there are jobs so his children, should they choose to
stay in Alaska, can also stay in the state and make a living.
SENATOR MILLER stated there is a need to develop the timber economy
in the state and he will do whatever he can in his position in the
state Senate to do that. He thanked Co-Chairman Williams for the
invitation and enabling him to continue to stay involved in the
issues.
JIM AYRES, CHIEF OF STAFF, GOVERNOR TONY KNOWLES, stated he was
happy to be back in Ketchikan. He said he appreciated the previous
speaker's talk about a strong sustainable economy, which is what
the Governor talked about during the campaign, as did Senator
Miller. He pointed out the essence of the issue is how to build a
strong and sustainable economy. The Governor is committed to jobs
and families. He hoped it would be possible to figure out how to
get to a meaningful process which includes the communities,
meaningful information, and concerned people to determine a way to
have a sustainable fishing, timber, and tourism industry.
CLIFF SKILLINGS, GENERAL MANAGER, ALASKA LUMBERMEN'S ASSOCIATION,
thanked Co-Chairman Williams and Co-Chairman Green, and guests for
giving him the opportunity to express concerns of the Small
Business Administration (SBA) timber industry and its respectful
federal timber sale program. He said he could not help but notice
the fine wood products used to support picket signs that morning.
He stated he was pleased to know that form of sign support will not
melt in the rain.
MR. SKILLINGS explained the Alaska Lumbermen's Association is an
organization of SBA timber operators and Southeast Alaska
businesses and individuals who wish to see a productive and viable
SBA federal timber sale program on the Tongass. He asked committee
members that while they listen to testimony, to remember just two
aspects about the timber industry and respectful timber sale
program. First, the 80 million board foot demand that will be
heard is a real demand by the SBA timber industry. Eighty million
board feet is an attainable target volume to subside the industry,
agreed upon by both the SBA and USFS two decades ago; it is a
volume that is processable by the regional SBA sawmills; and it
represents an integral part of the entire Southeast Alaska timber
industry as a whole.
MR. SKILLINGS said the second aspect is HCA legislation, a
regulatory action which has a devastating trickle down effect upon
the SBA timber operators on the Tongass. HCAs deplete the timber
harvest base from both the long term contract holder and the SBA
independent timber operators. He stressed HCAs are causing a
significant impact to the timber industry by deferring and
canceling timber sales in both sale programs. In so removing
certain sales from both programs, the SBA timber industry is
affected the hardest when the USFS must remove prepared timber
sales from the sale program and release them to the long term
contract holder to meet contractual obligations. He stated this is
simply not fair, especially when the sales removed are in the
Ketchikan and Prince of Wales vicinity and any replacement volume
is located in the Northern Chatham region.
STEVE SELEY, JR., OWNER & PRESIDENT, SEABORNE LUMBER, thanked
Chairmen Williams and Green and the committee for holding this
public forum and allowing him to testify on behalf of the SBA
timber operators on the Tongass. He stated he has spent 40 years
of his life in Southeast Alaska--primarily the Prince of Wales
Island and Ketchikan communities. He grew up on Prince of Wales
Island in a timber harvesting family and in 1978, established Seley
Incorporated. This company grew from a four man "jippo" operation
to a multi-faceted timber business involving road construction, hi-
lead logging, marine transportation, whole log chipping and sawmill
operations.
MR. SELEY stated in 1993, with the promise of a guaranteed timber
supply from the federal government SBA timber sale program, he
began the construction of the sawmill facility now operated as
Seaborne Lumber Company. He said the SBA timber sale program was
designed in 1973 to ensure that regional small business timber
operators would have a supply of timber to meet the demand of their
processing facilities, eliminating larger corporate intervention.
This concept was formalized in an agreement entered into on March
18, 1977, between SBA representative Art Mason and then regional
forester John Sandor and was called the "Agreement Between
Department of Agriculture and the Small Business Administration For
The Development and Operation of a Small Business Program In The
Sale Of National Forest Timber Related Products". He pointed out
this marked the beginning of the SBA version of a long term timber
sale contract. The agreement stated that "the USFS and SBA have
agreed to a set-aside program of approximately 80 million board
feet of saw timber (average annual target volume) for the Tongass."
MR. SELEY said in 1986, this agreement was amended to cause the
USFS to follow closer the target volume of 80 million board feet,
especially since the entire industry had just witnessed depressed
timber volumes in the previous 1984 and 1985 timber sale years. It
was again amended in 1993 due to two SBA mill shutdowns--Mitkof
Lumber in Haines and Klawock Timber in Klawock--at which point the
USFS stated they felt demand was significantly lower than the
target volume of 80 million board feet. He stated the new
amendment called for cyclical six month meetings between the USFS
and SBA representatives to identify mill capacity and meet SBA
demand. He noted that to his knowledge, these meetings have never
involved regional SBA timber operators and the 80 million board
feet demand still has not been met.
MR. SELEY told committee members that with these agreements and
legislative wording placed in the Tongass Timber Reform Act of 1990
to help support SBA timber operators, he proceeded to build a new
sawmill facility to process timber harvested from the Tongass
National Forest. He stated Seaborne Lumber now employs 31 loggers
and 54 mill workers. The sister company, Seaborne Marine Service,
employs an additional 20 men and women. He said his sawmill
processes raw timber into cants, flitches, squares and produces
chips from residual slabs and low quality logs.
MR. SELEY stressed his primary concern lies with the current supply
of SBA timber and the fact that the fiscal year 1995 timber sale
schedule falls short of meeting the USFS commitment to the Small
Business Administration and those who depend on that supply of
timber. He said Seaborne Lumber has an annual saw log demand of 26
million board feet. In addition, Seaborne Lumber has the capacity
to chip an additional 11.5 million board feet for a total need of
37.5 million board feet of timber.
MR. SELEY stated Seaborne Lumber's operations have been severely
affected over the course of 1994 due to a log supply shortage
brought on as a result of extreme pressure from environmental
groups striving to curtail the harvest of timber on the Tongass.
The USFS's lack of desire, inability or lack of funding necessary
to combat this pressure has resulted in a shortfall in meeting the
SBA industry demand for logs. He said HCAs have posed the biggest
threat to the SBA timber supply due to their impacts on the entire
industry. Harvest areas have been deferred even though they have
passed all National Environmental Policy Act (NEPA) gates, have
been funded for the entire preparation period of 2-4 years, and are
ready for immediate advertisement. He noted that HCAs have further
posed a problem for the timber industry because when harvest areas
are deferred or withheld from the long term contract holder, the
USFS will remove timber sales from the SBA and independent timber
sale pipeline to meet the long term sale contractual obligation and
not replace the volume. He pointed out that today, the SBA
pipeline is nearly empty.
MR. SELEY gave an example of his company's need for timber. On
December 1, 1994, they cut the last log in their yard and curtailed
sawing operations. The Bushy Island Salvage Sale was bid on
December 28, 1995. Seaborne Lumber was the successful bidder from
six companies competing for the sale containing approximately 400
million board feet. The sale was awarded one week after the bid.
Two days later, they had cutters on the island. Three days after
that a camp had been mobilized and equipment was at the site. He
said 31 days from the date of the bid opening, the entire volume
had been harvested and all equipment and logs were removed from the
sale area and delivered to Ketchikan. Unfortunately, the timber
from the sale will provide only 3.7 days of cutting at his mill.
MR. SELEY told committee members that Seaborne Lumber invested $1.4
million in 1994 to upgrade its facility, allowing them to expand
their product line with higher valued lumber. These improvements
include the latest technology in computerized set works to insure
accurate sizing, a new carriage and drive system capable of
operating three times faster than the equipment it replaced,
helping reduce manufacture costs at that machine center, an edger
with both shifting and gang saws that provide for efficient
breakdown of cants to a multitude of semi-finished products, and a
new trim station with the capability to accurately even end trim
all lumber that is produced. In addition to the sawmill equipment,
Seaborne Lumber designed and built a drum chipping system that will
take a defective log end of any diameter up to six feet in length
and cut it to chips acceptable for sale to Ketchikan Pulp Company,
helping meet their fiber needs. He stressed that each additional
machinery center not only adds to their flexibility and
profitability, they also add jobs to the community.
MR. SELEY stated the SBA timber industry is not restricted to
certain sales as the USFS may think. The USFS has stated that the
SBA industry does not have the capability to process the volume
needed to meet the 50 percent SBA primary processing clause placed
on all SBA timber sales. He said currently, Seaborne and Viking
Lumber have chipping capabilities along with cutting facilities to
insure that the 50 percent primary processing clause can be met by
SBA owned companies. The USFS has stated the SBA operators cannot
locate adequate funding to cover the cost of performance bonds,
pre-roading, and harvest costs for larger sales. He pointed out
that regional financial institutions such as the National Bank of
Alaska and First Bank stand ready to assist SBA timber operators
with their financial needs. Mr. Seley stated finally, the USFS has
stated the smaller operators will have a harder time finding or
creating markets for their products. He said the majority, if not
all, regional SBA mills have contracts with one or several
purchasers for the products they produce.
MR. SELEY stressed there is a viable and thriving SBA timber
industry in Southeast Alaska. He said the timber industry adds to
community socioeconomic levels and provides employment for many
Southeast Alaska residents. He stated the level of timber the USFS
plans to offer the SBA timber operators over the next two years
falls short of meeting the SBA processing capacity. The volumes
for both years, as currently planned, will fail to meet the 80
million board feet promised which is so desperately sought.
MR. SELEY said the three mills represented, if operated at full
production levels, have the capacity to cut all 80 million board
feet. However, there are 36 other smaller SBA classified
processing facilities in Southeast Alaska who also seek to share in
the federal SBA timber sale program. He stressed it is imperative
the USFS adhere to an 80 million board feet yearly target volume so
as to maintain the viability of the mills sector of the industry.
He stated the mills have demonstrated the ability to survive and at
the same time pay the highest average stumpage prices and
continually upgrade and improve manufacture capabilities to meet
the market demand for a variety of products. Coupled with this 80
million board feet demand should come timeliness of SBA timber sale
offerings, sales areas located geographically equal to the total
volumes sold off the Tongass and timber sales that are economically
viable. He stressed without these demands met, the SBA timber
industry and supporting operators will be eliminated.
FRANK AGE, OWNER & PRESIDENT, PACIFIC RIM CEDAR, stated Pacific Rim
Cedar owns and operates a sawmill facility in Wrangell. He said he
came to Alaska in 1991 after his Oregon mill was forced to shut
down following an extensive timber reduction due to the spotted owl
legislation. He started Age Cedar Products in Wrangell with a
small mill processing cedar shakes and shingles. He started with
five employees and operated profitably until the high delivery cost
of his logs created an uneconomical situation for his mill. In
1993, after reviewing market trends and congressional oversight to
provide for an economical supply of timber to regional SBA timber
operators, he created Pacific Rim Cedar with the purpose of
manufacturing logs from the Tongass into marketable wood products.
He explained his employment base has grown since 1991 from 5
employees to 14 employees encompassing milling, log transportation
and sort yard operations. He noted currently Pacific Rim Cedar is
the only operating sawmill in the township of Wrangell.
MR. AGE told committee members over the course of 1994, Pacific Rim
Cedar has made numerous upgrades in an attempt to produce a better
product for a lower manufactured cost. These upgrades to facility
and heavy equipment have cost in excess of $450,000. With these
improvements, Pacific Rim Cedar was able to increase productivity
approximately 15 percent. He stated the Pacific Rim Cedars milling
operation relies heavily on the USFS obligation to provide an
economically viable timber supply of 80 million board feet for
regional SBA timber operations use. Pacific Rim Cedar has a saw
log volume capacity of 10-12 million board feet per year annually.
He said they are currently cutting spruce and hemlock but would
prefer to be processing Western Red and Alaska Yellow Cedar should
there be a shift in the USFS policy surrounding cedar export
provisions.
MR. AGE stated this shift in policy would need to require primary
processing of all cedar in regional sawmills; essentially the same
provisions as are found with hemlock and spruce. He said everyone
is acutely aware of the timber supply problems facing all sawmills
in Southeast Alaska. He noted his mill can flourish cutting only
cedar which would leave the spruce and hemlock they are now cutting
for other sawmills in the region. He stressed it is economically
unfeasible to process these cedar logs and compete to sell the sawn
products produced while cedar logs in their round form of similar
quality are allowed to be exported. He said the export of cedar in
the round must be stopped and those logs kept at home for
manufacture in regional facilities.
MR. AGE pointed out that over the last 10 years, industry has
exported 430 million board feet of cedar or an average of 43
million board feet per year. An average mill can process
approximately 3.2 thousand board feet of lumber per man per day.
This represents 13,437 man days of employment exported to other
areas each year. Converted to payroll, Southeast Alaska
communities lost $2,526,000 in payroll last year alone and if that
process is continued for the next 10 years, the region can expect
to lose another $25,000,000.
TAPE 95-18, SIDE B
Number 000
MR. AGE stated Pacific Rim is here to beg the USFS to make good on
their promise to provide the 80 million board feet required by the
timber industry. He expressed appreciation for the opportunity to
express his concerns regarding the timber industry.
KIRK DAHLSTROM, PARTNER & MANAGER, VIKING LUMBER, stated Viking
Lumber currently owns and operates the sawmill facility outside the
town of Klawock. Viking Lumber purchased the Klawock Sawmill in
June 1994. He thanked the committee for the opportunity to
testify. He thought when he moved to Alaska eight months ago that
his testifying before committees would be over, as he did not want
to do it anymore. He told committee members he had been testifying
for five years in Washington State trying to fight the spotted owl.
MR. DAHLSTROM said his partners and him saw the potential for a
thriving processing facility, putting people to work from
surrounding communities and raising community economic levels.
This whole idea was contingent upon a supply of timber that he
presumed would be available due to prior SBA and USFS agreements
and wording added to the Tongass Timber Reform Act (TTRA) language
which directed the USFS to provide a supply of timber that would
meet SBA market demand and mill capacity--a supply of 80 million
board feet. He commented he should have known better.
MR. DAHLSTROM stated he and his partners have had an old growth
hemlock sawmill on the Olympic Peninsula of Washington State for 17
years--buying, logging, and processing USFS timber for the first 13
years. He noted that mill is still running because they have
learned to survive on scraps and junk for the past four years. He
said the cut on the Olympic National Forest has gone from 239
million board feet per year to 10 million board feet of scraps and
junk because of the lies of the enviros and the attitude and
gutlessness of the USFS. This loss of available timber has
devastated the community where he was born and raised, forcing him
to either become depressed and despondent or move to Alaska,
risking everything he owned and try again. The small logging
communities in Alaska have no idea what will happen to them if the
USFS does the same thing in Alaska they did to the Pacific
Northwest using the lies about the spotted owls and marbled
murrelets.
MR. DAHLSTROM said after purchasing the mill, spending $800,000 and
six months on reconstruction, Viking began operation of the sawmill
two months ago in December. He added their whole log chipping
operation will start operating in April with an investment of over
$2 million. These two operations will need 50-70 million board
feet of timber to run at full production. He stressed the sawmill
produces lumber for value added products. Every million board foot
produced will put 20 people, yearly, to work in manufacturing
plants, making doors, windows, and moldings.
MR. DAHLSTROM pointed out that the SBA timber sale program was
designed to alleviate the apparent one-sidedness that larger timber
firms had on the timber industry in the mid-1970s. The program was
devised by both the SBA and the USFS and provided that 80 million
board feet was an extremely workable and agreeable figure for a
timber sale program target for the SBA timber operators. In the
process of agreeing that 80 million board feet would be the target
volume, the SBA representative and Regional Forester engaged in a
written agreement ensuring that the USFS would seek to meet 80
million board feet for SBA preferential bid. He said amendments to
this agreement were made in 1986 and 1993 which parallel industry
trends and accommodate the industry. He stressed a problem has
always existed in the USFS's ability to meet this target volume.
MR. DAHLSTROM stated a timber crisis was felt extremely hard in
1994 when the USFS became incompetent in meeting any SBA timber
operator demand. Multiple sales from the Prince of Wales area were
canceled, deferred, or removed and offered for contractual
obligations to the long term contract holder.
MR. DAHLSTROM said HCAs are both unwarranted and unnecessary. Land
Use Designations II (LUD IIs) and wilderness land set-asides
preserve massive habitat acres with the intent of deferring timber
harvest in those areas. This further action is blatant
preservation actions designed to protect two species which are
currently not threatened or endangered. He stated this HCA action
is being implemented even though it has (1) not been signed into
action by the Regional Forester; (2) not proceeded through any
formal Tongass Land Management Plan (TLMP ) amendment process; (3)
and regarded by the USFS as nondetrimental to current timber
harvest. He guessed when there is no current timber harvest, a
federal regulatory agency can say their actions are nondetrimental
to timber harvest.
Number 130
TROY REINHART, EMPLOYEE RELATIONS & PUBLIC AFFAIRS MANAGER,
KETCHIKAN PULP COMPANY (KPC), noted that in the audience was Ralph
Lewis, President and General Manger, KPC; Allen Hayes, KPC Mill
Manager; and Owen Graham, KPC Timber Manager. He stated KPC has
almost 1000 employees, consisting of 5 logging camps, 2 sawmills,
and 1 pulp mill. KPC sells their products to 20 countries and
generates $40 million in annual payroll. He stressed one thing has
not changed in almost four decades and that is KPC's commitments to
Ketchikan, Prince of Wales Island, and the Southeast Alaska region.
KPC is committed to being a continued part of the social fabric and
economic reality of the region.
MR. REINHART stated KPC has a partnership with the USFS--a
partnership built on KPC's commitment to Southeast Alaska, through
the creation of continuous year-round jobs and the commitment of
the USFS to provide KPC with 8.25 billion board feet over 50 years
at economical prices. KPC has and will continue to hold up its
part of the partnership. He stressed KPC has built and operated a
pulp mill, two sawmills, and all the camps and facilities needed to
harvest the regions great renewable resource. He added that KPC's
investment in the region, the people and facilities is not
complete.
MR. REINHART said in the next three years, KPC will invest between
$60-70 million in its facilities. These investments will include
an extended marine out fall to Tongass Narrows providing for better
discharge of treated wastewater, process changes to create the
world's first chlorine free dissolving pulp process and new
pollution prevention measures, to contain any spills which may
occur on its properties. He stated all these investments are a
commitment to the future and continued operations of KPC
facilities.
MR. REINHART stressed a partnership is a two-way street. He said
KPC cannot continue to operate its facilities on thin air. KPC
requires a predictable, certain, and economically priced supply of
timber. For the first 35 years of KPC's partnership with the USFS,
the partnership was met. Over the last five years, the USFS has
not upheld their part of the agreement. He noted three trends
which have occurred over the last five years. First, in only two
years out of the last six has the Tongass met the minimum annual
contractual timber offering to KPC. Second, the amount of timber
under contract has decreased significantly over the last five years
to levels which leave KPC no flexibility due to weather or markets,
and in addition, the amount of road construction to perform
harvesting has increased. Third, the USFS timber offerings to KPC
have been moved to the end of the fiscal year, which effectively
means timber offerings are not accessible for another six to twelve
months, due to timing restrictions and road building.
MR. REINHART stated KPC is not asking for any more than is called
for by KPC's partnership with the USFS. KPC is not asking for
additional volume, but only the timber volume promised and
contractually agreed to. He stressed KPC is committed to being
part of this region's life style for years to come but only with
the legislature's assistance in compelling the USFS to meet their
commitment in KPC's partnership agreement will that be possible.
MR. REINHART said he would use charts to outline KPC's contract
with the USFS's past performance and needs for the future. He
stated (referring to chart number 1) there are three very important
numbers to consider. The first is 8.25 billion board feet, the
total timber volume which KPC is entitled from the USFS per the 50-
year contract which expires in the year 2004. He stated 192.5
million board feet is the average annual offering (at a minimum)
that the USFS is supposed to provide KPC. He explained because of
the shortfalls in offerings, the USFS must offer KPC 225 million
board feet each year until the year 2004 to meet their 8.25 billion
board feet contract volume commitment.
MR. REINHART stated charts 2, 3, and 4 show the accomplishment
record of the USFS over the last 10 years. He said in only two of
the last six years has the USFS met the contract volume.
Therefore, there is reason to be skeptical in the future. He noted
of the 176 million board feet received last year, KPC was only able
to harvest approximately 110 million board feet because a large
significant part of the offering came at the end of the year. He
told committee members the delay in USFS offerings has resulted in
no flexibility for planning KPC's operations to keep the timber
pipeline flowing and people working. He noted the current sale
plan the USFS has given KPC this year continues to decrease in the
amount of volume and the sales being offered are getting later and
later in the timber sale program. A large part of the volume KPC
will get in 1995 will again be in September and October when it is
too late to harvest or begin building roads.
MR. REINHART commented on the importance of having a timber
pipeline, having extra timber in the pipeline enabling flexibility
and the need to get the timber sale offerings earlier in the year.
He said in 1989, KPC had to build .37 mile of road for each million
board feet harvested. He stated through last year, KPC is up to
almost three-quarters of a mile of road. He explained it takes
longer to get access to the timber--previously it took a year to
get all the roads in and now it takes two years to get all the
roads in. He said that is why flexibility is so important and why
the timber sale offerings are needed earlier.
MR. REINHART stated chart 5 shows typical timing restrictions. The
red area shows the times where KPC's operations are curtailed for
varying reasons--inability to build roads or bridges, inability to
actually harvest timber. He said it can be seen that if everything
is overlapped--things like goat winter range, goat kidding
restrictions, swan restrictions, wolf den restrictions, eagles,
fish, etc., the only free window available starts in September
which again causes problems with building roads and causes a
flexibility problem.
MR. REINHART told committee members that KPC works with the USFS to
try to find ways to meet the intent of the timing restrictions,
protect the resources and still keep its operations running and has
been successful in some cases and not successful in others. He
said the bottom line for the community is simple. Because of the
lack of timber received from the USFS, the deficiency that is
within the timber sale pipeline and the timing of those timber
sales, people are out of jobs, the sawmill at Ward Cove is shut
down due to lack of timber, most of the production at the hemlock
mill in Metlakatla is down, and KPC is currently trying to find
enough wood to provide work through April so as to prevent having
a temporary extended shutdown at the pulp mill.
MR. REINHART stated in 1993, KPC's pulp mill shut down for 100 plus
days due to a lack of timber volume. In 1994, a shut down did not
occur but only because KPC was able to purchase chips from the
Wrangell Sawmill and pulp logs from the Sitka pulp mill. Now that
the Alaska Pulp Corporation contract has been canceled by the USFS,
this source of fiber supply has vanished. He said unless the USFS
speeds offerings and begins to meet their commitments to KPC, more
temporary closures may occur in the future.
MR. REINHART pointed out that the leadership of the USFS is now
taking steps to limit timber supply through HCAs. While no final
decision has been made on HCA implementation, HCAs are being
illegally implemented, taking over 400 million board feet of timber
which could have been offered off the market. Even worse, the
decision on HCAs was made on bad science. He stressed the science
is weak for the idea of HCAs. He noted when HCAs are discussed,
goshawks and martens are being talked about, if one follows the
readings of the viable population committee (VPOP). Looking at the
current assessment of goshawks being done by the USFS, they are
showing that almost none of the telemetry points are appearing in
the interior productive old growth. Rather, they are predominately
found at the edge of openings created by clearcutting.
MR. REINHART added that the Draft Plan Amendment map for HCAs shows
that only 3 percent of located goshawk nests fall within the HCA
system. He said in answer to the question do goshawks need large
tracks of old growth, the answer is no.
MR. REINHART stated marten are an introduced species to Southeast
Alaska. Hence, there is no legal obligation for the USFS to manage
for them. The National Forest Service Management Act implementing
regulations call for ensuring habitat to have viable populations of
Native and desired non-Native species. He said there are numerous
Natives in Southeast Alaska who suggest marten have hurt the
ptarmigan and grouse populations, species some Natives consider
important. He stressed the bottom line is that the so-called
evidence supporting an HCA strategy to ensure viable wildlife
populations is crumbling beneath the USFS's feet and their
hypothesis has been shown to be false. There is no evidence that
an additional 21 percent of timber needs to be taken out of the
Tongass timber base.
MR. REINHART told committee members HCAs are not the only problem
as the Goshawk Guidelines are also of concern. He said the HCA
Plan Amendment calls for 8.4 mile circles around goshawk nests,
with no harvest allowed within the 95 percent harmonic mean of the
telemetered areas. He stated the October 1994 Goshawk workshop
talked about having 2.9 mile radiuses of no timber harvest around
the goshawk nests. He pointed out that current goshawk assessment
underway by the USFS shows that few telemetry points reside in
interior old growth. He added there have been active goshawk nests
in second growth documented on Douglas Island. He stressed the
bottom line is there is no scientific evidence showing that large
tracks of land need to be set aside for the protection of the
goshawk.
MR. REINHART stated the only logical choice for Regional Forester
Janik is to select the no action alternative in implementing HCAs.
He said currently 400 million board feet of NEPA approved timber
has been taken from the timber industry. He noted even if the USFS
agreed there is no supporting evidence for HCAs and goshawk
guidelines, they would point the finger at conserving biodiversity.
He said the USFS would also point the finger at the Peer Review of
the VPOP Report done a year ago as evidence that there is a need to
do more for viable populations and biodiversity. He advised
committee members to note that only two members of the VPOP
committee visited Southeast Alaska. Their lack of background led
them to discuss Southeast Alaska caribou and tundra on the Tongass
National Forest.
MR. REINHART stressed that common sense needs to be brought into
the process. He felt there was too much agenda science. He said
HCAs are based on the President's plan for the Pacific Northwest to
lock up more timber on the Tongass National Forest. He noted that
the 1979 TLMP, as amended by the TTRA, has 38 percent of the
productive old growth in congressional withdrawals; of the 3.14
million acres of productive old growth outside of congressional
withdrawals, only 1.94 million is suitable to consider for timber
harvest--hence there is 1.2 million acres of timber that will not
be harvested; therefore, about 63 percent of the productive old
growth on the Tongass National Forest will never be logged.
MR. REINHART said based on common sense, protecting 63 percent of
the old growth on the Tongass National Forest is ample to meet the
implementing regulations of the National Forest Management Act, for
habitat to ensure wildlife viable populations and biodiversity, and
the Endangered Species Act. KPC believes that is balance and
suggests the American public voted out last November the nonsense
everyone talks about in HCAs.
MR. REINHART noted many people talk about whether the Tongass is
overcut. He showed two graphs. The first showed the sustainable
level of harvest which could be cut off the suitable timber lands
on the Tongass National Forest. The second graph showed the
percent of forested land on the Tongass which has been harvested.
He said in 1952, 0.2 percent of the Tongass had been harvested, by
1972, it was two percent, and by 1992, 3.6 percent of the Tongass
has been harvested. He stated the scare tactics of other groups
that the Tongass is being overharvested is not true.
MR. REINHART stressed that KPC wants to stay in Ketchikan and
continue to be a productive part of it but help is needed to break
the gridlock of overlapping environmental laws and frivolous
lawsuits filed by preservationist groups.
Number 375
ROBERT E. LINDEKUGEL, CONSERVATION DIRECTOR, SOUTHEAST ALASKA
CONSERVATION COUNCIL (SEACC) stated SEACC is a coalition of 15
volunteer citizen groups in 12 Southeast Alaska communities. He
noted one of the member groups in Ketchikan, the Tongass
Conservation Society, could not be present. He said SEACC is
dedicated to preserving the integrity of Southeast Alaska's
unsurpassed natural environment, while providing for balanced,
sustainable use of the region's resources.
MR. LINDEKUGEL noted that SEACC understands the purpose of the
meeting is to consider what can be done to solve what the timber
industry calls a timber supply issue. SEACC believes, however,
that the focus and format of this hearing prevents the committee
from understanding the complexity of the issues confronting users
of the Tongass and the interests of all users. He noted everyone
has heard about how much productive old growth is in the forest.
However, only 15 percent of the Tongass has the medium and large
trees that fish, wildlife, the timber industry and all other forest
users depend on.
MR. LINDEKUGEL said the most endangered species on the Tongass are
the workers and families who depend on a healthy ecosystem. He
agreed that not a lot of the Tongass has been cut, but what has
been cut is the most productive portion of the Tongass. He noted
that SEACC has invited representatives from the tourism, commercial
and sport fishing, and small timber operators to also speak,
enabling the committee to understand the breadth of the issues and
the complexity of trying to address those issues.
DAVID SALLEE, KETCHIKAN, stated he was born in Ketchikan in 1941
and is a lifelong Alaskan. He said he logged in the area
continuously for about 35 years, including a period of owning an A-
Frame/cold deck logging operation. He stressed he is not
comfortable with the present climate because it is too full of
contention. He felt the small people have been wiped out. He
commented that what is happening in the timber industry is a skimpy
manufacturing program--timber is cut into baby squares or into pulp
and is shipped overseas into other markets for remanufacture into
finished products.
MR. SALLEE stressed there is a need to start doing a lot more
manufacturing of the state's dwindling timber resources. He would
like to see more small mom and pop businesses and more cabinet mill
little businesses.
JACK LEE, PAST CHAIRMAN, TONGASS SPORTFISHING ASSOCIATION, CHAPTER
573 OF TROUT UNLIMITED, said his organization actively promotes
fisheries, conservation, and enhancement and addresses issues that
impact fisheries habitat and the recreation opportunities they
offer. Unlike many fishing organizations, his organization has a
fairly diverse membership and its board of directors has seats for
sportfishers, charter operators, lodge and related businesses and
agency representatives from ADF&G and the USFS.
MR. LEE stated his organization views the value of the fisheries
resource in terms of the $83 million spent on sportfishing
statewide, with $61 million of that spent in Southeast. This
translates into over 1100 full-time jobs, 950 of which are in
Southeast. These are 1988 figures and have grown with the rapidly
growing tourism industry that sportfishing is an important element
of.
MR. LEE stressed that sportfishers, like loggers and others, are
being impacted by legislation such as the Endangered Species Act.
He said there may soon be major cutbacks in king salmon harvest
limits because of the problems with returns down south. He asked
do people like it? Is it fair? Should the Endangered Species Act
be done away with? He answered no to all points. He felt it would
be far better to learn from the mistakes of others and avoid the
problems which made this legislation necessary. Wise resource
management and habitat protection will assure a more prosperous
future for everyone, regardless of their chosen profession.
MR. LEE said his organization is currently concerned with a local
situation illustrating this point. Returns of wild steelhead have
been alarmingly low for the past several years. The recent
proposal by Senator Murkowski to allow the Landless Native Tribes
to select land in LUD II areas could drastically increase the
problems with steelhead returns. The LUD II areas were given
protected status for their high recreation and high habitat value.
He stressed many of these areas support major runs of wild
steelhead, and logging them could push steelhead populations a step
closer to threatened status.
MR. LEE stated it is time to take off the blinders and deal with
the impacts of logging before they become problems. He said if we
cannot learn from watching the fiasco going on with the timber
industry in the Northwest, there is not much hope. The TTRA and
the establishment of LUD II areas was a good first step. The
establishment of HCAs will also help avoid future problems. He
stressed the timber industry must learn to coexist with fishing and
tourism and their needs. To do this, they must learn to operate
within the guidelines of recent reforms. He urged everyone to stop
the finger pointing and name calling and work on realistic
solutions. In the past, the timber industry has received
assistance helping them stay profitable. He pointed out that if
everyone begins to view habitat maintenance and a clean environment
as part of the cost of doing business, perhaps some solutions can
be determined that everyone can live with.
DALE PIHLMAN, REPRESENTATIVE, ALASKA WILDERNESS RECREATION TOURISM
ASSOCIATION (AWRTA), stated he was born and raised in Ketchikan and
will make personal comments prior to commenting for AWRTA. He said
he fished commercially for 20 years, primarily in Southeast Alaska
and worked for the state for 5 years as a fisheries management
biologist. Currently he is in the visitor industry. He expressed
concern about overharvesting. He noted visitors are attracted to
Alaska primarily because of its image as a land of scenic grandeur.
However, as old growth timber is removed, the state has less
appeal. He pointed out that old growth timber is disappearing at
an alarming rate.
MR. PIHLMAN said he appreciated having the opportunity to testify
and noted the small time allotted to the visitor industry versus
the timber industry. He felt the situation is indicative of the
lack of appreciation for the economic contribution of tourism to
the state's economy. For example, in 1993 the visitor industry
created 15,200 jobs and the logging industry only about 3,185.
Visitors to Alaska spend $1.5 billion, in contrast to the timber
industry's contribution of $565 million to the economy. The
tourism industry generated a payroll of $275-300 million while the
timber industry produced a payroll of about $140 million.
MR. PIHLMAN stated the visitor industry is 2-3 times larger than
the timber industry. Continued clearcut logging is adversely
affecting the visitor industry. He said on his tours he
increasingly hears complaints about clearcut logging. He felt if
excessive logging is not controlled soon, Alaska will be tainted as
a wilderness tour destination and the appeal of a precious
resource, wilderness, will be lost. He stressed wilderness is a
resource and must be protected or the Alaska visitor industry will
diminish in importance.
MR. PIHLMAN said he bears no animosity toward the timber industry.
He noted he and every member of his family have worked either in
the timber industry or in a support industry. He told committee
members he spent a considerable amount of time longshoring with
Representative Williams. He stated he appreciates the frustration
the timber industry faces as the timber supply declines. However,
it is beginning to bear the brunt of years of highgrading and
overharvesting. He urged everyone to take action to reduce
overharvesting before irreversible damage is done to Alaska's
tourism industry.
MR. PIHLMAN noted AWRTA's comments. He said economically, some
good things are happening in Southeast Alaska. Between 1989 and
1993 tourism in Southeast increased 43 percent, providing more
business and job opportunities. He stated AWRTA is concerned about
forest management practices that would adversely impact tourism
businesses, especially those in the tours recreation category that
rely on natural resources of the Tongass. The current level of
harvesting will displace existing businesses and reduce the land
base available for recreation and tourism development. The
Landless Native bill in Congress would adversely affect Southeast
scenic quality and visitor satisfaction.
MR. PIHLMAN pointed out that tourism contributes more to the
state's economy than the forest products industry. He said the
tourism industry needs relief from the current high level of timber
cuts before losing its market share in a domestic and global
marketplace. AWRTA believes the Landless Native bill illustrates
the need to thoroughly evaluate the landless Native issue and
propose a comprehensive solution rather than the proposed piecemeal
approach. He stated tourism companies should receive compensation
for the loss of natural resources. Public policy decisions that
allocate federal and state resources and affect other industries
should be made for the benefit of the full public input.
BRUCE WALLACE stated he is a 30 year resident of Ketchikan and has
been a commercial fisherman for 25 years. He said he has also
worked in construction, mining and at the pulp mill. He described
one of the complications that any administrative decision will
impact. He noted it is directly related to the long term industry
viability. The commercial fishing industry has little or no
disagreement with most of the sentiments expressed. However, the
complication is based in salmon. He pointed out there are 2,900
catalogued salmon systems within Southeast Alaska. He added if
that were expanded to include the drainages and an overlay is done
against the USFS maps, one would find that salmon and therefore
commercial fishing has a direct and ongoing relationship with the
forest. That relationship complicates everything which is in an
administrative decision within the USFS or the public and private
land sectors which the state controls.
MR. WALLACE said he was a member of the Board of Forestry for eight
years. He stated whatever decisions are made, they must be made
with the reflection of the complexity of the interaction between
fish and forest. That basic relationship reflects what is
Southeast Alaska, both from the community and from the resource
base, and has to be a part of the solution. He stressed it is
important to have an agreed data base and he felt that is a current
problem on trying to determine a solution. He told committee
members without agreed data, it is impossible to get a long term
resolution to the problem.
BILL THOMAS, KETCHIKAN, said he was present to give some viewpoints
from the area of subsistence. He stated subsistence is probably
the area having the potential for the greatest risk. In order for
subsistence to survive, there must be good management, good
stewardship, and responsible usage. Subsistence is a good model
for the use of any resource. He told committee members if they
handle subsistence like they handle their bank accounts, they most
likely would be comfortable for a lot longer than they would
otherwise.
MR. THOMAS recalled the discussion about a sustained economy in
Southeast and Alaska. At the same time, everyone hears about the
demise of the economic struggles occurring in other parts of the
country. He said Washington, Oregon and northern California are
good examples. The conditions which have become a failure for them
brings them to the only place they can salvage their livelihood,
Alaska. He stated while Alaskans have been good stewards and
hosts, he did not feel the state can continue to do that for every
part of the Lower 48 that runs into an economic problem. He noted
it was done with the pipeline and many jobs were created. However,
when the pipeline was completed, a large part of the population was
lost.
MR. THOMAS stressed in the effort to be a good steward and provide
good economics for everyone coming to the state to seek relief, it
places a burden on the resources available in the state. He said
he will not speak to any issue of support or nonsupport but
stressed he is committed to supporting those efforts to preserve
the availability and maintenance of subsistence.
TAPE 95-19, SIDE A
Number 000
K.A. SWIGER, EXECUTIVE DIRECTOR, STAND UP!, stated her organization
is a grassroots community oriented group advocating economic
stability and natural resource development. She said she is a
Southeast Alaskan, born and raised. She told committee members
through the pioneering spirit of her family who set their Alaskan
roots nearly 50 years ago, she was raised to believe that Alaska is
a land of opportunity where one can make a respectable living and
enjoy the natural beauty and bountiful resources. She stressed the
Tongass is home to those who have chosen to continue this pioneer
spirit.
MS. SWIGER stated her home, the largest National Forest in America,
is 17 million acres of more than 1000 islands, and 11,000 miles of
shoreline. Accomplishments in this unique area are exemplary. The
visitor industry grows at a rate of 6.4 percent annually--over
400,000 in Southeast last year. She stressed these visitors are
astounded by the abundance and variety of animals in the area's
forest and water. She noted none of the over 400 animal species
are endangered or threatened. She said Alaska has one of the most
restrictive conservation management programs in the country. One-
third of the land is designated wilderness and 80 percent of the
old growth forest is forever designated to wildlife. She noted the
forest provides a sustainable yield of wood products on less than
one-tenth of its land base. Value is added to this otherwise over
ripe commodity in the manufacture of pulp, cants, flitches, lumber,
shakes, shingles, guitar backs, piano sounding boards, and artistic
renderings.
MS. SWIGER told committee members the Tongass is site to numerous
fisheries enhancement projects, which are often the result of
cooperative efforts between federal, state, private timber and
fishing interests. Record catches have been enjoyed for many years
culminating last year in an all around record of 74 million fish in
Southeast. Two-thirds of that catch comes from southern Southeast,
an area of concentrated timber harvest. She stated the forest has
enormous potential as a source of hardrock minerals. She observed
mining has enjoyed renewed interest this last decade. She noted
that Greens Creek Mine on Admiralty Island is a model of successful
development within a sensitive area, and added that the state has
one of the largest known molybdenum deposits in the world.
MS. SWIGER stated roads, transportation corridors, and service
infrastructure have been developed in the state to support the base
industries and communities which serve them. She stressed people
are fortunate and proud to be part of such a richly unique region.
She said, "show me other communities nestled in a National Forest
with virtually no private land from which to develop a tax
base...show me other communities whose seasonal and year-round
economies are so interrelated...show me other communities
developing the natural wealth of the region in accordance with
humans and animals sharing the land. Show me other communities who
must continually battle for existence with seemingly deaf-eared
forces 3,000 miles away."
MS. SWIGER said the people of the Tongass are proud of where they
live. They have demonstrated their commitment to the land by
investing their livelihoods there. The continued abundance of the
resources demonstrates their successful management. They know what
is best for the region. They know the forest can sustain a 450
million board foot yearly harvest, and that 320 million board feet
is not enough to sustain the current industry. They know their
wildlife, and where they roam. They know that 90 percent of the
Tongass is more than enough for their comfortable existence. She
stressed as the mills close and families are put out of work, it is
hard to find credibility in a federal agency promising wood supply
without adequate funding, and a state administration changing its
policy contrary to affected populous leadership.
MS. SWIGER told committee members that Stand Up! was forced into
existence because of the desire to continue to live and work while
using a small percent of the resources of the Tongass National
Forest. Specifically, Stand Up! asks the committee for their help
in getting the USFS to change their opinion that HCA withdrawals
are insignificant to the region, to roll back the HCA
implementations of June 30, 1994, and provide an adequate and
reliable amount of timber to meet the needs of Southeast Alaska's
forest products industry.
KATHI LIETZ, PRESIDENT, ALASKA TIMBER TRACKERS ALLIANCE OF THORNE
BAY, stated she came to Prince of Wales Island eight years ago to
earn college money and immediately fell in love with all that
Alaska had to offer and never went back to school. She met and
married her husband on Prince of Wales Island and they have three
children. She said they would love to stay in Alaska forever but
are slowly realizing that the Alaskan dream they have is but a grim
reality.
MS. LIETZ told committee members that since 1990, she has been
employed by Black Bear Cedar Products, a cedar shingle mill in
Thorne Bay and handles all aspects of the office. She noted that
Black Bear has seen some rough times. The company has weathered
two fires and gone from three partners to one owner. In the 5
years since she has been at Black Bear Cedar Products, she has seen
the business go from 12 employees and gross annual sales of nearly
$1 million to the all time low in 1994 of 4 employees and gross
sales of $300,000. She stated where the company previously
depended on KPC for at least 90 percent of its wood, it now is
searching and scraping for every log. KPC only provided 40 percent
of Black Bear's wood last year.
MS. LIETZ stressed Black Bear takes only cull cedar logs that would
otherwise be burned or dumped and turns them into a quality
finished product. She worries each day whether or not her job will
be there when she gets to work. Black Bear Cedar Products works
very closely with the other small mills in the area. They share
business tips, wood information, and provide statistical support as
much as possible. All of these businesses employ people who have
families and live in communities in Southeast. She explained many
spouses of timber industry employees are themselves employed in the
timber industry or its support industries. Timber dollars touch
every human life in the Tongass on a daily basis.
MS. LIETZ stated the people whose livelihoods depend on the forest
are being held hostage. Their futures are at the mercy of an over
zealous green movement and a lockup mentality that is all the rage
in places like New York, Washington, D.C., and Los Angeles. She
asked are Sitka and Wrangell an ominous sign of what is yet to come
in the remaining communities of Southeast? She stressed not if her
friends, co-workers, families and she has anything to say about it.
She said as always, the pleas of the people of the Tongass are
being drowned out by the big money voices of the Sierra Club,
Wilderness Society and their cohorts.
MS. LIETZ wondered where the proverbial buck stops. When will
families, jobs, communities and economic stability factor in? Will
a human being ever be worth as much as a wolf or a goshawk? She
felt her job, family and community are in more danger of extinction
than any other species of life within the Tongass National Forest.
She questioned where her family and thousands of others go? She
said perhaps they can go into ecotourism, advertise in upscale
magazines and entice the socially and economically elite to get
back to nature in the wilds of Alaska. She noted they can rough it
in a log cabin with no running water or electricity and only
selectively harvested skunk cabbage leaves to wipe their privileged
tushes with. She guessed her family could also sign up for
welfare. They would have good medical coverage, subsidized housing
and ample food stamps to feed them while they enjoy their hard
earned unemployment.
MS. LIETZ found it ludicrous that the state's Governor feigns
concern for the people of the timber industry, yet he openly
supports the proposed HCAs. She felt the HCA concept is rash,
reactionary and scientifically unfounded. She said not nearly
enough time or facts were put into a decision that has such obvious
significant impact on so many lives. She stressed the USFS owes it
to all the taxpayers they serve to do a full and proper study
before implementing the HCAs. It is their job to be stewards of
the lands, not gatekeepers.
MS. LIETZ stated it was honorable of Mr. Janik to promise 320
million board feet of available timber in fiscal year 1995. She
wondered if it truly could be done. She noted the fiscal year is
already one-third over. Time coupled with budgetary restraints and
reinvention plans will make the 320 million board feet goal
virtually impossible to meet. She said the saddest part is that
320 million board feet is not nearly enough to operate those mills
which are still in operation, much less reopen the Sitka or
Wrangell mills.
MS. LIETZ urged committee members not to forget that trees are a
renewable resource. She agreed that an old growth stand is
beautiful but so is a properly managed second growth stand. She
urged committee members to remember there are thousands of people
who depend on the forest for their livelihoods. They are counting
on the USFS and government leaders to consider their well-being
when listening to the outside pressures of the environmental
movement. She stressed the people of the Tongass are counting on
the legislature to make wise decisions about the future of the
timber industry in Southeast. She said they are not faceless
beings, but people like committee members. She urged the committee
to help win the battle for the Tongass, which is a significant part
of the war on the west.
CO-CHAIRMAN WILLIAMS announced a recess.
CO-CHAIRMAN WILLIAMS called the meeting back to order at 11:07 a.m.
ALAIRE STANTON, MAYOR, KETCHIKAN, welcomed committee members to
Ketchikan and the new Ted Ferry Civic Center. She stated what is
being discussed is economic stability, which she has spoken on many
times before. She stressed she was quite speechless, partly
because she is not sure the legislature can do anything about the
present situation, and partly because she wants to allow enough
time for the next panel to talk to everyone gathered about what can
really be accomplished in the Tongass. She noted the committee
understands the situation and recalled the speakers thus far.
MS. STANTON pointed out there are many people present who are part
of the Stand Up! organization and asked them to stand. She stated
not all of those folks work in the woods and not all of them work
at KPC. Many of them provide the service support for the timber
industry and for the rest of the people living in the community.
She told committee members she came to Ketchikan to work for KPC in
April 1954 and has remained in Ketchikan. She stressed her family
now wants the community to have the stability they thought they
were going to have when they first came here as representatives of
the first year-round industry in the area.
MS. STANTON said they have children and grandchildren in Ketchikan
and would like for them to have jobs. She stated if the committee
can help the community in talking to the federal government, the
USFS, and Congressmen who also understand the situation fairly
well, then she appreciates the committee being in Ketchikan.
DENNIS WATSON, MAYOR, CRAIG, stated the Prince of Wales Island is
the most highly impacted area in connection with the timber harvest
in the Tongass. He mentioned he arrived 20 years ago and at that
time there were approximately 1,000 people living on the island and
Craig had 250-300 people. Today, the island has a seasonal high of
7,000 people and Craig has a seasonal high of 2,000 people. He
said most of these changes are related to the timber industry. He
stressed that timber supply is a major issue.
MR. WATSON mentioned he is a commercial fisherman and noted that
industry wants to be factored in because it is also connected with
the health of the forest. He felt the two can coexist and can be
healthy together but there must be some input at the local level.
He hoped to see the state get in unison, from the Administration on
down, on the way Tongass issues are going to be addressed. He said
it is extremely naive to believe that once the federal government
comes in and takes something it can never be returned. He stressed
the timber industry, along with oil, has created the infrastructure
on the island. He told committee members the contract paved the
way for a lot of small folks to get in. Therefore, people cannot
fight amongst themselves on how the issue is going to be addressed.
Rather, everyone must determine a way to meet the needs of the
communities, while still keeping everybody in business.
MR. WATSON stated the Prince of Wales Island is a thriving area and
percentage-wise is up there with the Mat-Su Valley. He said the
island now has the infrastructure and facilities, getting the
island near the 20th Century. He noted the monies received from
the National Forest receipts--$400,000 for the city of Craig--is
big stuff and added that money goes for schools and roads. He
stressed the need for that to continue.
DUANE GASAWAY, CITY MANAGER, WRANGELL, thanked the committee for
the opportunity to testify. He said when Jack Ward Thomas visited
Wrangell, they were told, "The USFS has no legal obligation and no
intention of providing sufficient harvestable timber to supply the
processors currently in the market". He noted thus far, that is
the only promise the USFS has fulfilled. The Wrangell sawmill
closed December 1 throwing 225 people out of work, disrupting their
lives, families, and their 136 children in the Wrangell school
system.
MR. GASAWAY stressed the economic loss to the city of Wrangell is
staggering. Wrangell has lost a $10 million annual payroll
representing 33 percent of the total volume of dollars in the
economy. It is anticipated there will be a $330,000 loss in school
funding in the next budget. He said current unemployment is 15-20
percent now and is expected to rise to 45 percent as indirect jobs
are affected. The city, commencing December 1, began to lose
$40,000 per month in its utility fund. He stated 320 million board
feet of timber is not sufficient to open the Wrangell sawmill and
added it will not keep KPC running at full capacity.
MR. GASAWAY told committee members that HCAs are based on science-
it is called political science being manipulated to serve a
political agenda. He said the environmental assessments in HCAs
ignore the hardship on communities and people in Southeast Alaska.
The environmental assessment is a perversion of the National
Environmental Policy Act and the Endangered Species Act in favor of
special interests and political gain. He stated the environmental
assessment is a trojan horse in the federal administration's
economic war being waged upon Southeast Alaska, its communities,
and its people. People in Southeast know they must diversify their
economy but they cannot do it overnight.
MR. GASAWAY stated there is a need for immediate timber for the
Wrangell sawmill to keep the community going while they diversify
their economy. He said prior to leaving Wrangell the day before,
he received a telephone call from Washington, D.C. and was informed
that President Clinton's Office of Management and Budget had
deleted from the federal fiscal year 1996 budget, Wrangell's
proposal for an Army Corps recognizance study to expand the harbor.
Therefore, as the community looks to other areas of the economy to
expand, they find another front on which war is being waged upon.
MR. GASAWAY said Wrangell and Southeast Alaska in general faces a
crisis. He mentioned a group was in Juneau a week ago, today the
committee is present to offer help, and he is there to reiterate
the need for that help. He said on behalf of the citizens in
Wrangell, he thanks the committee for the opportunity to speak.
ERNESTA BALLARD, PRESIDENT, KETCHIKAN CHAMBER OF COMMERCE (KCC),
stated the Chamber has approximately 400 members who collectively
provide 2,500 local jobs. She said KCC is good at community
participation and is respected and well known for presenting
solutions to many community problems. She stressed KCC has
struggled to stay abreast of the planning process on the Tongass.
KCC has studied maps, read reports, and has testified at so many
public meetings she can no longer keep track. She noted KCC does
the same thing about bond issues, garbage disposal, traffic
improvements, etc., but does not get the same results. Usually the
results are a logical outcome of the analysis. Usually the results
are based on a fair assessment of what is known, what it shows, who
and what is affected, and what it will cost. She stressed that is
not happening on the Tongass issue.
MS. BALLARD said in HCAs, KCC sees management measures put forward
that are based on a hypothesis. KCC sees an environmental
assessment which proposes there is no significant impact to the
withdrawal of 30 percent of the timber base but presents no
quantification of the resulting economic loss. She said the
assessment proposed 8 mile radiuses for foraging protection around
goshawk nests but noted these birds are observed to hunt in open
areas, not in the interior forest which has been placed off limits
for their protection.
MS. BALLARD stated KCC sees timber removed from the market pending
the outcome of revisions to Environmental Impact Statements (EISs)
--EISs they testified about, went to public hearings on, read the
maps, and studied the charts on. She stressed these EISs are
complete and now they are being revised. KCC sees the marten
showing up in viable population studies as an indicator species,
even though it is not native to Southeast Alaska and at the same
time, KCC sees public employees eagerly moving goats from one place
to the other perhaps so they can be protected in the future.
MS. BALLARD noted PACFISH and in PACFISH, KCC sees the possibility
of additional fish habitat protection at a time when record salmon
runs are being experienced. Fortunately, KCC also saw the wolf
proposal go down in defeat. She said these actions on the Tongass
on the part of the USFS simply do not seem to be logically
connected to the facts as observed. She wondered how does KCC
participate as an organization representing 400 members, their
2,800 employees, and their families? How does KCC participate in
a planning process that is spread out over so many fronts? How can
KCC guess what the next issue will be? She stated if every
decision is going to be revised before the ink is dry, how does KCC
know where to look next?
MS. BALLARD stated common sense says the Tongass is well managed.
Fish, timber, and tourism industries are all sustained. Common
sense says there is enough land set aside from harvest to provide
habitat for wildlife. Observation supports this conclusion. She
stressed it is only hypothesis that denies it. She said common
sense says the community's well-being is discounted in the Tongass
planning equation. An annual harvest of 320 million board feet is
not enough to save the jobs provided by KCC's members and the
families they support.
MS. BALLARD said KCC urges the legislature and the Administration
to demand rational management of the Tongass. She encouraged the
legislature to ask for a planning process that is fair...ask that
everything be put back on the table...ask for results that relate
to facts, support planning, support multiple use, support sustained
yield, and support timber harvest...ask for a no action decision on
the environmental assessment, a withdrawal of the HCAs, and a
restoration of the timber that has passed through NEPA...and then
agree to participate in the next round of TLMP.
MS. BALLARD stated KCC urges the USFS, when scoping for the TLMP,
to be sure that alternative sources for wood products are
addressed. Most of these are petroleum based and made from
nonrenewable resources. KCC urges USFS to be sure that the impacts
in Southeast Alaska are quantified to show what happens if 30
percent of the economic base is lost. KCC urges USFS to be sure
that the global impacts of moving timber production to less
developed countries are compared to the extremely successful
environmental protections now at work on the Tongass. She said at
least in that way, there will be a fair debate about the issues.
What is being seen instead is a gradual dismantling of communities.
Timber harvest on the Tongass is being stalled and set back in
incremental actions which are each passed off as insignificant.
The big picture is hidden.
MS. BALLARD said KCC looks forward to an opportunity to participate
in a fair planning process. She thanked the committee for the
opportunity to express KCC's frustrations. She noted there is no
private property base on which to build communities but the
responsibility for education and public welfare and safety has been
assumed. She stated it is desirable to be able to continue to
provide these from the private sector tax base.
PHIL JANIK, REGIONAL FORESTER, ALASKA REGION, USFS, stated he
appreciates the opportunity to appear before the committee and
provide information regarding the management and use of natural
resources on the Tongass National Forest. He mentioned that with
him from the USFS is Fred Walk, Timber Director; Fred Norbury,
Ecosystem Planning and Budget Director; and Dave Rittenhouse,
Forest Supervisor of the Ketchikan Area of the Tongass. He said
the committee specifically asked him to address the timber program
on the Tongass. He noted he will do so but added it is important
that it be done in the context of the entire Tongass and in
conjunction with the other related resources and programs.
MR. JANIK told committee members the Tongass National Forest offers
the Southeast Alaska panhandle beauty, value, and opportunities for
people. Its value to people is diverse including economic,
cultural, social, ecological, and spiritual. He stressed the
forest is a complex of land, water, and living resources that
represents a splendor unparalleled anywhere else in the world. It
is a special place of intense local, national, and international
interest and value. He noted that people come from everywhere to
see its beauty and live the exceptional experiences the Tongass and
all of Southeast Alaska offer. He stated the Tongass is a major
contributor to subsistence use and lifestyles of rural residents
and is extremely important to the cultural heritage of Alaska
Natives.
MR. JANIK stated the Tongass is also a working forest, rich in
resources and opportunities having significant economic values,
such as minerals, timber, fisheries, and tourism. Such resources
and use opportunities contribute significantly to domestic and
foreign economies and are of particular importance to the residents
of Southeast Alaska and dependent communities. He mentioned a few
highlights from the Tongass. About 80 percent of all salmon
harvested in Southeast Alaska are produced in the streams and lakes
of the Tongass, providing the major source of salmon to the sport,
commercial, and subsistence fishers. Timber harvesting on the
Tongass represents about 50 percent of timber harvested in
Southeast annually. The Tongass has some of the richest mineral
deposits and largest operations of its kind anywhere in the
national forest system.
MR. JANIK continued that the tourism industry and recreation use
now draw over 500,000 visitors a year to Southeast. This use has
doubled in the past 15 years. The Inside Passage is the most
visited attraction in the state, much of this due to the beauty of
the Tongass. In addition to simply Tongass-watching from a cruise
ship or marine ferry, the Tongass offers 149 cabins for recreation
and emergency use, 505 miles of hiking trails, numerous
opportunities for canoeing or kayaking, helicopter tours, flight
seeing, fishing, and other adventure sports and wildland
experiences. He said the explosion of tourism in Southeast has
exceeded all expectations of economic benefits to communities,
while also challenging agency and communities in managing the
increased use.
MR. JANIK said given these exceptional opportunities on the
Tongass, it is no wonder the Tongass is often an area of intensive
debate over what ought to be the appropriate combination of uses.
He stressed the USFS is bound by many laws which require that
management of all forest resources be accomplished in a sustainable
manner. The National Forest Management Act, Alaska National
Interest Lands Conservation Act, Tongass Timber Reform Act,
Multiple Use Sustained Yield Act, and the Endangered Species Act
are examples of laws that directly or indirectly document the legal
expectation of sustainability of all renewable resources.
MR. JANIK told committee members that sustainability of all
resources over the short and long term is fundamental to the
multiple use mission of the USFS and the national forests the USFS
has been entrusted to manage. Sustainability involves both land
stewardship and land uses, not one or the other. He noted that
land stewardship is a precursor to sustained land uses. He stated
sustainability is achieved through the analysis and deliberation
that occurs in examining and responding to the values, needs, and
wants of people within applicable environmental laws.
Sustainability is also the key to long term economic stability and
predictability for natural resource industries and dependent
communities.
MR. JANIK explained it is the job of the USFS, with the help of all
interests, and the state and other federal agencies to deliberate
and assist in resolving resource issues. He said ideally, the
forum for resolution should be open, inclusive, and constructive,
with the participants helping shape the outcome in full
appreciation of the governing laws, associated principles, values,
needs, and wants of people and the applicable science. He noted
that an assessment of risks is also part of meeting the
sustainability test.
MR. JANIK stated the timber management program of the Tongass is
based on the Amended TLMP, which establishes an Allowable Sale
Quantity (ASQ) of 4,500 million board feet of timber per decade.
Under the National Forest Management Act, the ASQ is the maximum
amount that can be offered and sold each decade. The amounts
actually offered each year depend upon many factors such as the
level of appropriations, the time required to prepare timber sales
after appropriations are received, success in obtaining permits and
rights of way, objectives for other resources, and the issues
raised by administrative appeals and legal challenges.
MR. JANIK added that the USFS is also required by the TTRA to seek
to provide timber from the Tongass. Section 101 of the Act reads,
"Subject to appropriations, other applicable laws, and the
requirements of the National Forest Management Act of 1976, except
as provided in subsection (d) of this section, the Secretary shall,
to the extent consistent with providing for the multiple use and
sustained yield of all renewable forest resources, seek to provide
a supply of timber from the Tongass National Forest which (1) meets
the annual market demand for timber from such forest and (2) meets
the market demand from such forest for each planning cycle."
MR. JANIK stated the USFS is required to provide a sustainable flow
of timber from the Tongass National Forest within the limits of the
law and regulations. He stressed the USFS is not only required to
do so, but is also committed to doing so. He said that commitment
includes USFS's contract obligation to KPC and timber for the
independent program. It is part of USFS's job and an important
part of the USFS multiple use mission.
MR. JANIK said the actions the USFS has taken on the Tongass are
for the purpose of ensuring the USFS meets the comprehensive
sustainability test and does not contribute to taking any resource
below the sustainable level. The actions are responsive to new
information that suggests if precautionary measures are taken now,
more severe and adverse effects can be avoided in the future. He
stated the USFS's approach is one of prevention rather than costly
correction. He noted the USFS has the opportunity to learn from
the lessons in the Lower 48 and address concerns and symptoms
earlier on so they do not develop into events over which the USFS
may lose control.
MR. JANIK stated concerns regarding some wildlife species on the
Tongass were raised by an interagency committee convened by the
USFS. The committee was convened to assess the condition and trend
of old growth habitats and associated wildlife species on the
Tongass. He said the committee recommended HCAs, or HCA strategy,
as the best way to provide for old growth habitat requirements.
Their evaluation and recommendations were peer reviewed by a
separate group of scientists through an agreement between then
Regional Forester, Mike Barton and Pacific Northwest Research
Station Director, Charlie Philpot. He noted the peer reviewers
endorsed the committee's work and also concluded that immediate
management actions were considered necessary to preserve options
while additional information was gathered and evaluated. The
committee's assessment focused on all species associated with old
growth habitat and did not just examine the goshawk and wolf
habitat issues.
MR. JANIK told committee members that more recently, the U.S. Fish
& Wildlife Service (USFWS) received petitions for listing the
Alexander Archipelago wolf and the Queen Charlotte goshawk under
the provisions of the Endangered Species Act. As shown by their
decision to accept the petitions, the USFWS indicated they were
giving serious consideration to the points raised in the petitions.
While the USFS was already evaluating the overall recommendations
for old growth habitats, the petitions for listing of the wolf and
the goshawk added to the significance of that evaluation. He noted
that additional recommendations were received from a group of
scientists regarding goshawk habitat. The petitions also led the
USFS to recognize that interim measures could help prevent listing
of these subspecies and thus avoid additional complications to the
timber program that a listing could create.
MR. JANIK stated in December, the USFS, the USFWS, and the ADF&G
entered into a formal agreement that should help prevent listings.
He said that group pledged to work together cooperatively on
habitat and species management concerns, including the examination
of available scientific information and its interpretation. He
told committee members that the decision by the USFWS not to list
the wolf as a threatened species is a success story coming from
this commitment to work together. USFS believes their decision is
correct and credible. Together, conservation issues can be
addressed in a manner that reduces effects to industries and
dependent communities and avoid the costly efforts to recover
listed species.
MR. JANIK explained the USFS is pursuing a three step approach that
emphasizes prevention rather than correction. The three steps are:
1) Rescheduling of the 1994 and 1995 timber sales to preserve
options for addressing scientific recommendations and wildlife
concerns that have emerged; 2) preparing an amendment to the
existing Tongass Plan with interim measures to guide project level
activities until the Tongass Plan revision is completed; and 3)
completing the Tongass Plan revision to directly address the
resource concerns that have been raised and to address the
socioeconomic implications.
MR. JANIK stated with respect to the first part of the strategy,
the USFS deferred offering part of the timber sale volume that had
been prepared. The deferrals will help maintain planning options
for consideration in the TLMP revision. He said the habitat
approach adopted in the Plan amendment or the Plan revision may not
allow all of these sale areas to be offered in the future. He
noted that in June 1994, the USFS projected a 281 million board
feet timber program for fiscal year 1994. By the end of the fiscal
year, USFS actually delivered 307 million board feet of new offers
and, with re-offers, put 337 million board feet on the market.
USFS anticipates the fiscal year 1995 timber program to be at the
320 million board foot level to supply timber to the KPC long term
contract and to the independent timber sale operators.
MR. JANIK said the USFS exercised considerable flexibility
preparing the fiscal year 1994 and fiscal year 1995 timber offering
projections by carefully and thoughtfully identifying where HCAs
and timber sale adjustments were permissible, so as to preserve
planning options while delivering as much timber volume as
possible. Examples of timber sales where such changes were
incorporated include the Saginaw and Bohemia sales on the Stikine
Area, the Shelter Cover sale in the Ketchikan area and the
Northwest Baranof, Neka-Humpback, and the Hanus sales on the
Chatham area.
MR. JANIK stated the USFS will continue to exercise flexibility
where possible. He said USFS's field people, of all disciplines,
have worked side by side in meeting these challenges. They have
spent many long days and weekends trying to be responsive to both
the USFS land stewardship and land use obligations. He expressed
appreciation for their efforts and personal sacrifices to get that
job done. He noted the most recent example is the re-evaluation of
the Luck Lake units on Prince of Wales Island.
MR. JANIK said the USFS also recognizes that policies such as
approval of the export of cedar and other tree species must be
reviewed in the context of the domestic timber supply. He noted
that the USFS is currently conducting such a review. He stated the
Plan amendment process, part two of the strategy, is underway. A
draft environmental assessment was circulated for public comment on
September 30, 1994. The USFS received comments from over 2,500
individuals, groups, and agencies. He noted that the USFS is still
evaluating those comments. Many of the comments are opposed to the
USFS proposal. However, comments from the USFWS and the state of
Alaska are generally supportive of the USFS's proposal, but the
USFWS urges consideration of additional habitat management measures
for both the wolf and goshawk.
MR. JANIK added that the state of Alaska also emphasizes the
importance of these issues to the timber industry of Southeast
Alaska. He said the USFS remains convinced that some form of
interim direction is needed to maintain the management options,
minimize the risk to the timber industry, and prevent more serious
impacts in the future.
TAPE 95-19, SIDE B
Number 000
MR. JANIK stated the Plan revision, the third part of the strategy,
is also underway. He mentioned that the USFS plans to finish the
revision as soon as possible, with a target date of June 1996. He
said the USFS is in agreement with the many respondents to the
environmental assessment that the Tongass plan revision effort is
the appropriate vehicle to address these complex resource and
socioeconomic issues. He told committee members the USFS has
restructured the planning process to involve the USFS Pacific
Northwest Research Station as a full partner in the revision. The
USFS has also incorporated personnel from the USFWS, the National
Marine Fisheries Service, and the Environmental Protection Agency
in the full range of planning activities.
MR. JANIK said the intent is to ensure that the USFS's decisions,
with respect to the wildlife and fish issues, benefit from a
broader interpretation of available scientific information. The
viewpoints of the federal agencies that have statutory and
regulatory responsibilities with respect to wildlife, fish, and the
environment are considered as part of the scientific information.
Involvement by the state is also expected, essential, and welcome.
He added that informational open houses will soon commence and be
conducted throughout Southeast Alaska.
MR. JANIK said although the relationship between the wildlife
issues and timber production on the Tongass have received the most
attention, other issues are also being assessed in the revision.
These issues include use of alternative timber harvest and
silvicultural systems to accomplish forest management objectives
and provide additional flexibility in issue resolution. He stated
in the Tongass for too long, there has always been a decision faced
as to either cutting trees or not cutting trees in terms of trying
to meet environmental obligations. He explained the USFS has
commenced a study and will be examining some alternative means of
harvesting trees, whereby they might be modifying forest structure
but not eliminating it over a course of a number of acres through
the form of a clearcut. He noted the USFS is not going to get away
from clearcutting but does want to have other options available for
harvesting trees that might relieve some of the tension of that cut
or no cut two way option. He noted that other examples are
protection and sustainability of anadromous fish habitats,
protection of the karst/cave resources on the forest, and wild and
scenic river considerations.
MR. JANIK stated he understands Sitka's and Wrangell's financial
difficulties resulting from the closure of the Alaska Pulp
Corporation mills. He said the USFS is going to try and help as
best they can in two ways. First, the USFS will continue to try to
get as much timber out on the market as possible. Second, the USFS
is trying its best to bring forward through Forest Service sources
community assistance funding. He noted the USFS well exceeded a
$150,000 investment in 1994 in that regard and hopes that figure
will be significantly higher in 1995, perhaps $1 million or more.
He stressed the USFS does care and is very concerned about the
situation.
MR. JANIK stressed the USFS cannot do this job alone. The USFS
intends to actively engage the other federal and state agencies,
tribal governments, and interested publics. He said how the
Tongass is managed should be determined through a collaborative
process, and the USFS is committed to that kind of interaction. In
addition to the open house information and listening sessions the
USFS will conduct throughout Southeast Alaska, they welcome other
interactive forums that might be suggested or arranged. Such
sessions must be open to all interests so that the USFS meets the
requirements of the Federal Advisory Committee Act. He stated from
such sessions could emerge a better mutual understanding of
people's expectations regarding timber supply, the demand for
timber, wildlife conservation, and the feasibility of meeting those
expectations.
MR. JANIK mentioned that he had been told that during the
deliberations associated with the TTRA legislation, the Southeast
Conference played an instrumental role in bringing people together
to interact, which helped lead to the resolutions achieved in that
effort. He suggested perhaps a similar forum could be used to
assist the USFS with the revision. He said the USFS is very
encouraged by the cooperative spirit demonstrated by the federal
and state agencies and by the partnership approach being emphasized
by Governor Knowles in how government entities interact with each
other and with the public they serve. The USFS is eager to
participate in that kind of partnership.
MR. JANIK stated during the meeting of December 8, 1994, that
Representative Williams arranged in Ketchikan, he personally agreed
to meeting quarterly with representative interests and members of
the public in Southeast Alaska. He stressed the Forest Supervisors
of the Tongass and he reaffirmed their commitment to participate in
such regular sessions along with key members of their Regional
Office and Forests.
MR. JANIK recalled the letter of invitation for the hearing said
the Resources Committee hoped the hearing would lead to a better
understanding of how the state, the federal government, affected
communities, and the timber industry could work together to solve
problems facing timber-dependent communities in the region. He
stressed the USFS is committed to such a collaborative approach.
He suggested four ways the state, the legislature and/or state
agencies can help the USFS.
MR. JANIK said the first suggestion is establishing and helping the
USFS with forums for public involvement, especially going through
the TLMP revision process. Next, help the USFS review, in a broad
sense, all of the federal and state permitting system processes the
USFS is required to comply with as timber projects are moved
through the various gates of approval. He said there has been
discussion about forming a policy group, consisting of federal and
state policy makers who will discuss some of the major issues which
are particular challenges, as well as continuing and expanding
state involvement in many of the studies needed to further
interpret some of the science where there are voids. An example
was mentioned earlier and that is because of limited funds, etc.,
many of the goshawk surveys are only being conducted in areas where
there is a need to clear timber. Ideally, the sampling for goshawk
nests should be Tongass-wide, in a statistically valid sampling
process. He mentioned that the USFWS has indicated they would help
pay for that process.
CO-CHAIRMAN WILLIAMS thanked Mr. Janik for his presentation and his
efforts to answer some of the questions in his letter of
invitation.
REPRESENTATIVE JOE GREEN acknowledged that he is coming from ground
zero and stated all he knows about the problem is what he has read
in the paper. He recalled that Mr. Janik had referred to a 4,500
million board feet of timber available per decade, then had
mentioned the 320 million board feet available in 1995, and then
related to the fact that the USFS is going to try and get as much
timber available as possible but because that is going to be less
than is necessary, Mr. Janik understands the financial difficulties
in Sitka and Wrangell. He noted that Mr. Janik had said the
federal government planned to try and come up with some funding to
help the conditions. He asked if the USFS is only going to make
two-thirds of timber available of what is necessary, would it not
be more prudent to increase the amount of timber available and
forget handing out dollars.
MR. JANIK stated he did not mean to suggest in any way that the
rural assistance program was a substitute for timber. The USFS
fully recognizes that delivering timber to the market is the most
crucial thing which needs to be done in terms of the USFS's ability
to help the communities dependent on timber. He stressed he was
only trying to point out that the USFS does care about the changes
going on with Sitka and Wrangell and will do its best with regard
to the rural assistance monies available. He hoped those monies,
along with other monies coming from other sources, will help make
a difference in terms of current challenges.
MR. JANIK said in regard to the figures Representative Green quoted
from his prepared statement--the 4,500 million board feet per
decade is the Allowable Sale Quantity from the forest plan and is
the maximum amount identified. He stated the USFS would like to
try and achieve that level but has found they cannot achieve it
because of other restrictions being dealt with. He pointed out the
320 million board feet for fiscal year 1995 is the best the USFS
can do as projected currently. He said the USFS continues to look
for other opportunities as they did in 1994 to determine if
additional units can be released.
MR. JANIK mentioned with the environmental assessment being
finalized, and with some of the new technical information which has
emerged since last September, the USFS may find some room for more
flexibility but that remains to be seen. He stressed he does not
want to mislead anyone. He reiterated the USFS is going to try its
best to get as much timber out in the market as possible without
running some of the risks mentioned earlier.
REPRESENTATIVE JOHN DAVIES clarified the 320 million board feet for
1995 results from a judgment call within the USFS as to what is
required to avert listings and is not a legal requirement.
MR. JANIK responded the 320 million board feet is the USFS's
interpretation of its legal requirements regarding the
environmental laws they are compelled to follow and the USFS sees
some risks if the USFS does not respond to the information in the
fashion they have, then they would be vulnerable to that. He
stated the 320 million board feet does relate to the USFS's ability
to produce that level in complying with other regulations they are
required to follow. He added the debate is that is a judgment call
on what the law does require the USFS to do.
REPRESENTATIVE DAVIES noted KPC's average annual 225 million board
feet (to meet the contract) and the SBA 80 million board feet
totals 305 million board feet and if another 60 million board feet
was added for Wrangell, the total would be around 365 million board
feet. He wondered if 365 million board feet is completely out of
the question.
MR. JANIK replied 365 million board feet for the fiscal year is not
achievable. He said the 320 million board feet is the best the
USFS can do unless some additional units can be found. He pointed
out it is important to note there is not agreement between the USFS
and KPC as to what the contract obligation is in terms of volume.
He noted that the USFS had a recent contractor's decision on the
obligation of the USFS delivery on the contract which is under
discussion currently. He stated the part of the 320 million board
feet which is identified for KPC for fiscal year 1995 is 220
million board feet and the other 100 million board feet is
identified for offerings for the independent program.
MR. AMBROSE asked Mr. Janik to explain to the committee that the
307 million board feet actually delivered by the USFS is not trees
cut.
MR. JANIK said the terms he used in his presentation basically
meant that the USFS offered up for sale 307 million board feet of
timber of new offerings. In addition to that, there was another 30
million board feet of reoffers. Therefore, the total offering to
the timber market put up for sale was 337 million board feet for
fiscal year 1994. He thought Mr. Ambrose's point was much of that
volume was not immediately available for harvesting, depending on
the time it was released.
MR. AMBROSE stated there has also been an anadromous fish habitat
assessment being prepared. He said it is his understanding the
assessment has been through the Office of Management & Budget and
is now back in Agriculture. He wondered if there is anything in
that report which is going to require additional protections.
MR. JANIK responded he may sound evasive when answering the
question even though he does not mean to because the Appropriations
Committee of Congress has asked the USFS to prepare that report.
He said that came about as a result of Senator Stevens' amendment
for the fiscal year 1994 which prohibited implementation of the
PACFISH strategy being considered in the Lower 48. He added what
came from that amendment, through conferencing, was an instruction
to the USFS to conduct a study to see if additional protective
measures were needed on the Tongass for anadromous fish and
watershed integrity. He told committee members that report was
completed and is moving through the approval process to delivery to
the committee. He pointed out it would be very awkward to give the
details of that report until the committee has a chance to receive
it.
MR. JANIK stated there is nothing in the report that indicates any
kind of immediate measures to be taken of an emergency status. He
said there are some things in the report the USFS will be examining
in the TLMP revision through the normal course of that planning
process which will involve full public disclosure and interaction.
REPRESENTATIVE SCOTT OGAN noted that he offered a bill in the
house, HB 83, which would require state agencies to scrutinize
federal mandates and either negotiate with the federal government
to implement changes in that mandate or possibly sue the federal
government for changes. He asked Mr. Janik if he had the power to
eliminate or modify any of the federal environmental laws to help
implement the USFS's multiple use goals, what would those be and
how would he change them.
MR. JANIK replied he would not offer any suggestions on what should
be eliminated, as many of those environmental laws and regulations
were developed in good faith and with sound reasoning. He would
suggest that through the various kinds of forums and interactions,
the USFS can do a better job analyzing the science that is an
interpretation of its obligations and bring a broader base to bear
on that of all responsible agencies and interests as well as then
deliberating and trying to find some resolutions to some of the
issues.
SPEAKER PHILLIPS recalled that Mr. Janik had commented on the
contract which existed with KPC. She asked if it was extremely
clear that the USFS does have a 50 year contract with KPC to
provide timber.
MR. JANIK replied yes.
SPEAKER PHILLIPS recalled that Mr. Janik had said, "The Forest
Service is bound by many laws which require that management of all
forest resources be accomplished in a sustainable manner". She
asked if Mr. Janik considers the USFS contract with KPC to be part
of those laws which bind the USFS on their responsibility on the
forest.
MR. JANIK responded yes and added that a contract is a binding
instrument.
SPEAKER PHILLIPS asked if the USFS feels it is fulfilling the
content of that contract on an annual basis.
MR. JANIK said the USFS strongly believes it is meeting its
obligations under the KPC contract.
SPEAKER PHILLIPS recalled Mr. Janik talking about the USFS's desire
to give grants to communities. She stressed the communities do not
need grants, they need logs. She noted that Mr. Janik had clearly
left out any written testimony that the USFS wanted to provide
extra timber, should be providing extra timber, needs to be
providing extra timber. She stated the only comment Mr. Janik made
was the USFS may be able to give grants to these communities in the
amount of $118,000. She stressed that amount of money does not
sustain a community.
MR. JANIK asked Speaker Phillips to consider the number of times he
referenced the USFS's strong intent to deliver as much volume of
timber to the market as possible. He stated he is fully aware that
the USFS's ability to bring money forward is no substitute for
timber on the market.
CO-CHAIRMAN WILLIAMS asked Mr. Reinhart if KPC would be willing to
continue to operate on the long term contract if the extension was
beyond the year 2004.
MR. REINHART stated KPC has a commitment to Ketchikan to go through
the year 2004 and if a workable agreement can be reached for an
extension, KPC would like to stay in the community and continue to
operate their facilities. He said KPC believes in the community
and Southeast Alaska.
CO-CHAIRMAN WILLIAMS asked Mr. Reinhart to comment on Mr. Janik's
comments about making timber available. He said this is a problem
which the community has heard a lot about from KPC and the USFS.
MR. REINHART said it is part of the shell game going on. KPC has
many numbers and every time they start to discuss the numbers and
begin to narrow the gap, the USFS comes up with a new way to
present the numbers to keep people confused. He noted he had
outlined the contract numbers which KPC believes that contract
calls for, but the USFS continues to make the majority of the
volume available in September. He stated even though USFS says
they will give KPC 220 million board feet, if it comes late in the
year, that is not what is going to go through KPC's mill. Last
year, the USFS gave KPC 176 million board feet and KPC was only
able to get 110 million board feet to the mill which does not keep
their people employed, their sawmills running, their pulp mill
running and the loggers in the woods logging.
REPRESENTATIVE DAVIES said he appreciates the problem in regard to
getting the timber offering late in the year the first time. He
asked if that is a continuing problem. He wondered if the offering
is always in September, would not the previous September go into
the next year, etc.
MR. REINHART said some of those delays do not delay KPC for a year
but create delays of two years. Therefore, it becomes a compound
problem. He stressed the USFS has not met their volume. One year
the USFS gave KPC just under 50 million board feet and the next
year they gave 167 million board feet. He stated KPC has such a
small pipeline, they have no flexibility left and when those
numbers are going up and down, KPC will always be behind.
MR. AMBROSE observed that folks such as Mr. Seley--small
businessmen that are independents looking for SBA sales--seem to be
pitted against the long term contract, acknowledging the fact that
a lot of the infrastructure provided helps the small businessmen
out. He said there are those who contend that if the long term
contract goes away, there will be lots of timber jobs based on
operations of Mr. Seley's size. He recalled that Mr. Seley had
said that someone from the USFS had told him he would have a hard
time finding a market for his product. He wondered if Mr. Seley is
out there by himself, is there a market there the USFS does not
think is there now.
MR. SELEY responded he is not sure who gave that statement and why.
He stated there is not a problem for finding markets for his
products. He said in regard to the KPC operation, he feels it is
crucial that long term sale volume be provided because KPC is a
buyer of chips, they plan to assist in the remanufacture of rough
baby squares from his plant, they are one of the local buyers of
pulp wood, etc. He stated KPC is the key part of the industry. He
stressed there is not an argument between the majority of the
independent sector and the long term contract.
MR. AMBROSE wondered if he was correct that when the volume for Mr.
Seley's part of the industry was going down, someone said there is
not a market for his product.
MR. REINHART stated perhaps he is talking about appraisal problems
--some sales did not sell. He said KPC has sales which sometimes
the USFS appraises as deficit sales and independent operators like
Mr. Seley are not able to get those on the board because there is
not a profit associated with them. He noted it depends on how the
sales are put together.
MR. AYRES asked Mr. Seley what prevents the state from having in-
state processing requirements and is that something he would
support.
MR. SELEY said absolutely. He felt the only thing which stops more
value-added in-state processing facilities is the commitment and
the USFS's ability to keep a commitment for a viable supply of
timber.
MR. AYRES stated if there is a certain amount of timber available
and there are going to be losers, why isn't it the logs drifting
down the channel. He wondered why there is not a requirement for
those logs to be processed. He stressed for every tree cut, there
should be jobs in Alaska.
MR. SELEY agreed. He recalled Mr. Age earlier stating his desire
to manufacture cedar at his plant and if he manufactures cedar, he
displaces what he is now cutting in spruce and hemlock for KPC. He
felt industry will again take grips with that problem and develop
the manufacturing capability for cedar.
MR. AYRES felt that is something the state and the legislature
could help with. He mentioned that someone slipped him a note
saying the Supreme Court has said Congress has not authorized the
state to require in-state processing so if the federal government
does not authorize it, it cannot happen.
CO-CHAIRMAN WILLIAMS said many of these things can happen today if
there is a volume of timber available. The current problem is the
amount of timber needed is not made available by the USFS. He
stated KPC can consume 220 million board feet of timber and Mr.
Seley's mill can consume 70 million board feet of timber. He
stressed to get the value-added, there is a need for a volume of
timber.
SPEAKER PHILLIPS stated her question is for Mr. Janik and Mr.
Reinhart. She asked what the process is when they are allocated a
certain amount of board feet per year and they are unable to
process that all in one year. She wondered if they can carry over
to the next year that which they were not able to process.
MR. REINHART said in days gone by, KPC and others had 2-3 years
worth of operating volume within the pipeline and could adjust
their operations depending on their volume needs, wildlife
constraints, etc. He stated today KPC has 6-9 months worth of
operating volume. He added KPC can carry its volume over and they
previously had the surplus volume to do that.
SPEAKER PHILLIPS gave an example. She said KPC was allocated 220
million board feet and because the offer came in so late in the
year, they were only able to process 150 million board feet. She
asked if KPC can take the additional 70 million board feet and
stockpile it for the next year.
MR. REINHART stated yes--it moves into the next year and KPC tries
to develop it and work it into their timber program.
FRED WALK, DIRECTOR FOR TIMBER MANAGEMENT, USFS, said when the USFS
releases timber under the long term contract, they expect there be
an appropriate amount of time for the road construction work and
the harvesting to take place, and that time frame would be from 3-5
years before the timber the USFS offered would be all harvested,
the contractual work completed, and the operation completed.
CO-CHAIRMAN GREEN recalled that Mr. Janik had said the 320 million
board feet was USFS's legal interpretation. He asked if that
interpretation was made before the information about the goshawk
was available--maybe the goshawk does not really live in the older
forest and the information on the martens--which would have
influenced their decision.
MR. JANIK said the USFS has tried to be as responsible as possible
in looking at what its legal obligations are and balancing that out
with delivering as much timber to the market as possible. He
stated the USFS will continue to examine those recommendations as
it gets smarter about all the information, and wants to do that
with a broader group of people than those who have been involved to
date. He noted if the USFS does find additional flexibility
through that kind of interpretation, it will be pursued
aggressively. He stressed the USFS is wanting to provide and do
its part for a sustainable timber industry in Southeast Alaska. He
added the USFS is trying its best and is trying to prevent further
adversity which could emerge if it does not take action now.
MR. JANIK noted what he said about the finalization of the
environmental assessment will be the next inning on that subject
because the USFS does have additional technical information.
MR. AYRES asked what keeps the state from requiring in-state
processing.
MR. JANIK felt that subject should be examined. He said there may
be some federal implications but noted it is an area that should be
looked at.
MR. REINHART stated there are two parts to the export component.
He said on federal lands for everything other than cedar, there are
domestic manufacturing requirements. He noted that KPC does not
export spruce and hemlock but runs it through their facilities.
KPC has requirements set through regulations the USFS has. He
commented in regard to the question about cedar--KPC has talked to
Governor Sheffield, in his work at Wrangell, about KPC's interest
in sawing some of that cedar. He noted there are some things which
need to be done to ensure a timely progression, so the industry is
not disrupted and the timber pipeline is not further disrupted.
MR. REINHART said the second part is the land which the committee
and Governor Knowles controls--the state forests. He stated that
effort will have to be between the state legislature and the
federal government because there are no requirements for domestic
manufacturing.
RALPH LEWIS, PRESIDENT & GENERAL MANAGER, KPC, stated he would like
to address the cedar issue which has always been a KPC concern in
terms of manufacture. He said the only thing keeping KPC from
doing that is getting the red cedar into the market. Times have
been changing and the restrictions and requirements on red cedar is
disappearing in the Lower 48. Therefore, people are beginning to
show interest in KPC's red cedar. He noted that previously, red
cedar was on the very highest and furthest north was the lowest
quality, so the only value was in the export of the logs.
MR. LEWIS stated the red cedar higher value gave positive stumpage
rates. He stressed exporting that cedar has bailed out timber
sales. He said with the price going up, those sales are
profitable. He noted there is a misconception that added-value
brings more money to the stump and he stressed that is not
necessarily true. If KPC processed red and yellow cedar, it would
be less valuable to the USFS, not more. It would put more jobs in
Alaska but would reduce the value.
MR. LEWIS said if that is hard to believe, one needs to look at the
hemlock and spruce which KPC cuts and processes in Alaska, where
the private lands can export it. Those logs have $350-700 a
thousand more value than processing them here in Alaska. He stated
when people start talking about processing the wood, the return to
the seller of the product is going to be reduced (the USFS). If
that is going to be done, there will be below cost timber sales or
small stumpage value sales. He stated the problem with it is the
Lower 48 trying to stop the timber sales. He stressed there is a
balancing act going on.
TAPE 95-20, SIDE A
Number 000
REPRESENTATIVE DAVIES said one of the things learned today is that
the numbers mean different things to different people. He recalled
that Mr. Janik had said 100 million board feet would be allocated
to the SBA program. He asked Mr. Seley if that 100 million board
feet means at least 80 million board feet.
MR. SELEY stated there is a difference between the SBA program and
the independent sale program. He recalled that Mr. Janik had
referenced the independent sale program but did not recall him
referencing the SBA program, which is a commitment between the SBA
and the USFS. He said the independent sale program involves a
volume of wood which gets thrown out and every time there is a
shortfall on the SBA sale volume, the USFS says it could have been
picked up through the independent program and if the USFS falls
short on the KPC contract, they say it could have been picked up
through the independent sale program.
MR. SELEY said SBA operators have to have the 80 million board feet
of SBA designated timber made available. Last fall, the sale of
approximately 20 million board feet was sold in the independent
sale program, purchased by a non-SBA firm with no manufacturing
capability in Southeast Alaska.
REPRESENTATIVE DAVIES asked Mr. Lindekugel to comment on the
numbers being discussed and what those numbers mean from his
perspective.
MR. LINDEKUGEL responded supply issues are very difficult and what
needs to be considered is that a small fraction of the forest is
being talked about which supplies this volume to support a certain
percentage of the jobs in the Southeast economy. He stressed that
timber also supports other diverse aspects of the Southeast
economy. He said his organization is willing to work with people
in Southeast to determine solutions and recently worked on
conceiving, received fundraising for and planned a workshop in
Sitka on forest enterprises which will happen in early March. This
workshop will focus on different options, given the fact that there
is a smaller timber volume available and there is a need to
maximize the job output from that volume.
MR. LINDEKUGEL stated in addition, his organization has repeatedly
gone to the table and gave committee members an example. He said
his organization is very interested in working toward solving the
problems. He noted Wrangell was hit hard by the Alaska Pulp Mill
closure. He pointed out that 91 million board feet of timber came
up on the block in September. Alaska Pulp Corporation (APC)
elected not to bid on any of that timber and instead shut down its
mill indefinitely. He said purchasers paid up to 50 times the
dollar amount that APC was getting under its former long term
contract. He stressed the Wrangell facilities can be used as a
demonstration project for adding manufacturing capabilities which
would produce more jobs. He noted there are many options to
explore.
MR. LINDEKUGEL told committee members that SEACC members live
throughout the panhandle and depend upon the forest resources in
many different ways and they want to be at the table, working with
people to solve the problems that change brings. He stated change
either has to be managed or it will control. A person can stay a
step ahead of it, looking into the future and maintaining the
options available or they can be cut out before they are explored.
CO-CHAIRMAN WILLIAMS clarified that Mr. Lindekugel was saying there
was enough time for APC to bid on the 90 million board feet of
timber made available in September in order to keep the mill
working throughout the winter.
MR. LINDEKUGEL stated he does not know what kind of flexibility the
APC had in terms of available timber supply. He said the APC
received over 60 million board feet in close out activities on the
long term contract after the contract was closed, which is about
the volume APC cuts on a yearly basis. He said APC chose not to
play the game. He stressed APC was willing to get the timber when
they were paying $1.07 per thousand board feet in cash but was
unwilling to go on the competitive market and bid for that timber.
Therefore, that timber increased in value due to competitive
forces.
CO-CHAIRMAN WILLIAMS clarified that Mr. Lindekugel was saying that
the 90 million board feet of timber made available in September was
very good timber, was not a deficit sale, and the sale areas were
available for winter type logging.
MR. LINDEKUGEL responded he did not know if the areas were
available for winter type logging.
CO-CHAIRMAN WILLIAMS asked Mr. Lindekugel if he knew what type of
timber was made available--deficit sale, good timber, etc.
MR. LINDEKUGEL stated that APC claimed it was a deficit sale.
Purchasers competed in a bidding process and raised the price of
that timber 50 times over what the USFS appraised it. He stressed
that fact suggests it was not a deficit sale. He said people are
not going to bid on timber if they cannot sell it and manufacture
it.
CO-CHAIRMAN WILLIAMS clarified there is 90 million board feet of
timber available for the sawmill now. He said if the USFS is going
to turn down a bid 50 times more than what they appraised it at,
there is something wrong with the system, unless they have not cut
it already. He stated if the 90 million board feet of timber is
available at 50 times more than the cost, that volume should be out
and readily available for the sawmill.
MR. SELEY stated the 90 million board feet was timber that was
originally earmarked for APC under their long term contract. He
said he cannot speak on their behalf but he felt their closure was
a result of years of not receiving volume on a timely basis to keep
their operation running. He stressed that 90 million board feet of
timber was like asking them to take a 200 mile trip with 100 miles
worth of gas in the tank hoping they would find a pump down the
road. He noted it is too difficult to manage an operation with an
unsteady supply of timber coming in spurts.
MR. SELEY stressed if the industry gets the supply, it will make
the commitment. He said he does not care how many million board
feet his mill does or does not run--he works on dollars. He stated
he has to have enough revenue to cover costs and perhaps a margin.
CO-CHAIRMAN WILLIAMS thanked everyone for their participation. He
said the committee was given a lot of good information and he hoped
they could put it to use. He closed by referring back to a few
opening remarks. He said Speaker Phillips spoke of the
relationship between production, the economy, and civilization. He
stated everyone heard today of the many, many people willing to
risk their own futures to go into the forest products business in
Southeast Alaska. He recalled that people spoke of trust and
credibility. He stressed from his experience, trust is not
possible among strangers. He noted that everyone present has
gotten to know each other much better and added that trust may grow
from the session because knowledge certainly has. He thanked
everyone for their testimony.
CO-CHAIRMAN WILLIAMS pledged to continue to talk to fellow
legislators, the Administration, the Congressional delegation, Mr.
Janik and all interested parties who have acceptable solutions to
the concerns raised.
ADJOURNMENT
There being no further business to come before the House Resources
Committee, Co-Chairman Williams adjourned the meeting at 12:40 p.m.
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