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Bad Contract Is What Needs Cutting

The Tongass National Forest, like Alaska itself, is a land of superlatives. It’s the largest remaining temperate rain forest in the world. Its grizzly bears are some of the biggest, its bald eagle populations some of the largest and all five species of Pacific salmon spawn here. The Tongass is our largest national forest, with 5.7 million acres of wilderness. Unfortunately, not all of the Tongass’ superlatives are positive. It is being clearcut at an alarming rate and loses more tax dollars than any other national forest in the country.

According to the General Accounting Office, taxpayers lost $102 million between 1992 and 1994 selling public timber in Tongass National Forest to private companies. That’s how much it cost the public to “allow” timber companies to clearcut old-growth trees and degrade the ecological health of the Tongass. Money-losing timber sales are not unique to the Tongass; almost every national forest loses money, but the tax dollars lost on the Tongass were twice the amount of any other forest.

Fortunately, taxpayers are now in a position to stop this giveaway. At the heart of the Tongass’ unparalleled losses is a 50-year, monopolistic contract signed in 1954 and held by the Ketchikan Pulp Co., a subsidiary of Louisiana-Pacific Corp.

Elsewhere on public lands, logging companies must enter into a competitive bidding process for public timber, but on the Tongass, the price that Louisiana-Pacific’s KPC pays is neither competitive nor representative of fair market value. KPC paid an average of $6.95 per 1,000 board feet of public timber between 1991 to 1994. During the same period, independent loggers in the Ketchikan area paid an average of $97 per 1,000 board feet of timber - almost 14 times higher than the price paid under KPC’s exclusive contract.

To compound the problem of taxpayer losses, KPC “pays” for more than 70 percent of the timber it purchases on the Tongass by building logging roads. The Forest Service accepts new logging roads in the place of cash as payment for public timber. This is ludicrous.

The present KPC contract is scheduled to run out in 2004, but Alaska’s congressional delegation has introduced legislation to extend KPC’s contract by 15 years.

KPC says that a contract extension is needed so the company can pay for required pollution controls as well as millions of dollars in fines assessed for pollution violations.

In 1995, KPC pleaded guilty to one felony and 13 misdemeanor counts for intentionally dumping pollutants into a cove. The company agreed to pay $3 million in criminal fines for these offenses, as well as $3.11 million in civil penalties for hundreds of violations of the Clean Air Act and Clean Water Act. As part of the criminal plea agreement, KPC agreed to upgrade pollution prevention controls in its aging mill.

The mill’s obsolescence is another result of the exclusive contract, protecting the company from competition that would drive it to improve efficiency.

The company claims that without the guarantee of continued subsidies through a contract extension, the mill will have to shut down. But the company seems to be as dedicated to the truth as it is to pollution control.

As far back as 1976, the company used the threat of a mill closure to sway public opinion.

Last March, KPC played the same card, blaming its recent mill closure on a shortage of timber despite the fact that the company already had roads built to access approximately 25 million board feet of timber. Even the forest supervisor on the Tongass believes that the shutdown had more to do with market conditions than timber supply.

Taxpayers have an opportunity to regain control of the Tongass National Forest. Last December, the Forest Service told KPC that it was in breach of its 50-year contract “as a result of the discharge of pollutant-laden effluents from KPC’s pulp plant.” The contract can be canceled for a serious breach.

The benefits to taxpayers will be significant: Better management of a very precious asset, a more equitable return on our resources, tax dollars that can go to helping the public rather than a single multinational corporation and the improved health of our forests, fish and wildlife in southeast Alaska.

Louisiana-Pacific’s record on the Tongass is shameful and should not be rewarded with more taxpayer subsidies. By canceling this anachronistic 50-year contract because of the Ketchikan Pulp Co.’s breach, the Tongass National Forest can once again be managed for those who own it, the American people.