SENATE LABOR AND COMMERCE COMMITTEE April 5, 1994 1:40 p.m. MEMBERS PRESENT Senator Tim Kelly, Chairman Senator Steve Rieger, Vice-Chairman Senator Bert Sharp Senator Georgianna Lincoln MEMBERS ABSENT Senator Judy Salo COMMITTEE CALENDAR SENATE JOINT RESOLUTION NO. 51 Expressing support for the development of a fiberboard plant in Sitka; encouraging the Alaska Industrial Development and Export Authority to continue its efforts to assist with that development; and requesting the United States Forest Service to continue a long-term timber purchase contract necessary to supply material to the plant. PREVIOUS SENATE COMMITTEE ACTION SJR 51 - No previous action to record. WITNESS REGISTER Senator Robin Taylor, Chairman Senate Judiciary Committee State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Testified in support of SJR 51 Andy Romanoff Southeast Alaska Conservation Council 419 Sixth St., #328 Juneau, AK 99801 POSITION STATEMENT: Opposed to continuation of 50-year timber contract Ron Flinn Southeast Regional Office Department of Environmental Conservation 410 Willoughby Ave, Suite 105 Juneau, AK 99801-1795 POSITION STATEMENT: Testified in support of SJR 51 ACTION NARRATIVE TAPE 94-24, SIDE A Number 001 CHAIRMAN TIM KELLY called the Labor and Commerce Committee meeting g to order at 1:40 p.m. He brought SJR 51 (SUPPORT FOR SITKA FIBERBOARD PLANT) before the committee as the only order of business. SENATOR ROBIN TAYLOR, Chairman of the Senate Judiciary Committee which sponsored SJR 51, testifying in support of the resolution, explained that it encourages the federal government to proceed and allow the development of a medium density fiberboard plant in Sitka. That community seeking to recover from the recent closure of their pulp mill in every way they can. Alaska Pulp Corporation (APC) is proposing to develop a medium density fiberboard plant (MDF) in lieu of the original facility. Preliminary studies have shown that an MDF facility is feasible, however, a further more exhaustive examination is necessary and is taking place. The Alaska Industrial Development and Export Authority (AIDEA) is working with Alaska Pulp to fully examine this project. A portion of the economics of the project involves the 50-year contract to harvest timber in the Tongass National Forest. If this contract is cancelled unilaterally by the Forest Service, there is a concern that the fiberboard plant will not be economical. The Chief of the U.S. Forest Service has set a deadline date of April 15 for a decision as to whether to allow the contract to continue or to cancel it. Support for Alaska Pulp's efforts is the basis of SJR 51. SJR 51 asks that the contract be continued to allow for the completion of this study, and if proven feasible, to permit an MDF pulping facility to operate in Sitka. Senator Taylor urged the prompt consideration and passage of SJR 51. Number 061 SENATOR KELLY asked it further legislation would be required if AIDEA were to try to bond this project. SENATOR TAYLOR acknowledged that it would if, in fact, AIDEA would need to have more than $10 million of authority. He said he understands that if the feasibility study that is currently being conducted proves to show a very feasible economic operation, the banking institutions of Japan have already indicated that they will finance the venture. Number 090 ANDY ROMANOFF, representing the Southeast Alaska Conservation Council (SEAC), expressed their frustration that there was no teleconference capability for the hearing on SJR 51. Mr. Romanoff directed attention to and described a U.S. Forest Service map representing a portrayal of vegetation on the Tongass in the year 2140. He said the APC contract was written to provide 5 billion board feet of timber to the mill. At present, there are approximately 2.1 billion board feet left. He said in looking at the map, it raises serious question as to what is going to be left for any economic base in the future. The contract is designed, in a sense, to liquidate the forest so quickly that once all of the old growth of commercially viable forest land is gone, there will be no timber available. Mr. Romanoff related that U.S. Forest Service has determined that an allowable sale quantity, which is how much timber can be cut each year in a certain area, is around 64 million board feet per year in the Chatham area. Presently, 90 million board feet are being cut in the Chatham area. Mr. Romanoff said the 375 jobs that were lost in Sitka by the closing of the pulp mill were lost before there was any talk of terminating the 50-year contract. He noted that Sitka received $1 million in federal assistance for retraining laid off workers and to encourage a study of alternative economic ideas and options. Mr. Romanoff stated that SEAC does not oppose the MDF plan, but they do not believe it needs a long-term contract to make it a viable option. Number 230 RON FLINN, Southeast Regional Office, Department of Environmental Conservation, said SJR 51 is primarily aimed at economic consideration and doesn't really address environmental concerns that DEC might have, but they have no objections to the continued operation of the mill. However, there is not much information as far as what the operation of a MDF facility would mean as far as the statutes and regulations that DEC implements. Number 259 SENATOR LINCOLN asked if DEC has looked at this in terms of environmental concerns such as the fisheries, etc. RON FLINN responded that DEC has worked with the mill for a long time on water quality issues, solid waste issues and air quality issues. However, they have not had an opportunity to evaluate the current proposal to operate as a MDF facility because APC hasn't got that far into the project and hasn't submitted any information for the department to review. Number 290 There being no further witnesses present to testify on SJR 51, SENATOR KELLY asked for the will of the committee. SENATOR SHARP moved that SJR 51 be passed out of committee with individual recommendations. SENATOR LINCOLN objected, stating that there was not an opportunity for interested people to testify on the resolution via the teleconference network. The roll was taken with the following result: Senators Sharp, Rieger and Kelly voted "Yea" and Senator Lincoln voted "Nay." The Chairman stated the motion to move SJR 51 out of committee had carried. There being no further business to come before the committee, the meeting was adjourned at 2:00 p.m.