[Congressional Record Volume 140, Number 40 (Thursday, April 14, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: April 14, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
              TERMINATION OF THE ALASKA PULP CO. CONTRACT

  Mr. STEVENS. Mr. President, it is with deep regret that I announce to 
the Senate that the U.S. Forest Service has terminated the long-term 
contract with the Alaska Pulp Co. I am told that today the contracting 
officer, the regional forester of the Tongass Forest, has notified the 
Alaska Pulp Co. [APC] that the Government is terminating the APC 
contract because of the 1993 shutdown of the mill in Sitka.
  I think that this is a very difficult decision for Alaska. We have 
tried to meet with the administration to discuss this. The contract to 
provide timber for the Sitka pulp mill was the first investment entered 
into by the nation of Japan following World War II. It was a 50-year 
contract that had 17 years left to run. The impact of the economy was 
such that the mill was shut down in order to consider a new system, a 
pressed-wood system which would be more environmentally sound and 
employ about two-thirds to three-fourths of the employees that are 
currently there in the mill.
  The long-term contract gives permission for APC to close down the 
mill temporarily. As a matter of fact, it specifically provides that 
the contract may be extended for the period that it is closed down for 
economic reasons.
  We have been received courteously by the Secretary of Agriculture, 
the Assistant Secretary of Agriculture, and the regional forester in 
our protest against this action.
  I deeply regret the impact this action will have on southeastern 
Alaska in general, and the community of Sitka in particular. As a 
lawyer, I informed the Secretary of Agriculture that I do not believe 
that they are on sound ground. Unquestionably, the matter now will go 
to the court to determine the damages for the cancellation of the 17 
years remaining on the long-term contract.
  Clearly, the Forest Service has not carefully considered the matter 
of breach. The Sitka mill has been receiving timber and cutting timber 
in their sawmill ever since the time that the matter of a cancellation 
of this contract was first raised by the Forest Service.
  I would challenge anyone to read the contract and find any ground for 
the cancellation of the contract because the mill was shut down for 
economic reasons in order to pursue a different process to preserve the 
jobs that were brought about by the investment of Japanese nationalists 
in our State.
  It is a matter that was not anticipated by us. I think it is a 
reaction to extreme environmental interests. I predict now that we will 
have a very difficult time in the Tongass Forest in trying to maintain 
a job base utilizing the forest resources that are there.
  The Tongass Forest was created at a time when people believed that 
having a sizable amount of timber in Federal ownership would create a 
yardstick whereby the Government could measure the performance of the 
private timber industry in the United States. The theory was that under 
Government management, under Federal management, with scientific 
management concepts, with the concepts of sustained yields, that the 
Federal forest system would be a way to measure the capabilities of the 
private forest system in our country, and would provide alternative 
sources of supply in the event that some of the forest products, or 
many of the forest products of our country, came under a monopoly 
ownership.
  Unfortunately, over the years Congress has restricted more and more 
of the timber that was available for harvest to sustain the basic 
processing industry of southeastern Alaska, and the consequences of 
that restriction have been that now only 10 percent of this forest is 
available for harvest, and under a 100-plus-year timeframe. In other 
words, the cutting cycle is more than 100 years for 10 percent of the 
forest.
  This action today I think is a contract termination action in name 
only. It is an announcement that this administration no longer will 
countenance the harvest of timber from the Federal forests in order to 
carry out long-term commitments for the sale of timber that is 
necessary to support the substantial investments necessary to bring 
about modernization of the industry, and particularly modernization for 
processes that are pollution-free, and are such that they would be 
producing products that have a greater economic viability on the world 
scene.
  Again, Mr. President, I regret the action of the administration that 
was announced today in Juneau, canceling the balance of the 50-year 
contract with those members of the Japanese nation that invested in a 
long-term program in my State.
  I ask unanimous consent that this news service report from the Forest 
Service be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                   U.S. Department of Agriculture,


                                Forest Servcie--Alaska Region,

                                       Juneau, AK, April 14, 1994.

   U.S. Forest Service Terminates Long-Term Contract With Alaska Pulp

       Juneau, Alaska--In a letter to the Alaska Pulp Corporation 
     (APC) today, Contracting Officer Michael A. Barton, Regional 
     Forester of the U.S. Forest Service, notified the corporation 
     that the 50-year timber sale contract between the government 
     and APC was being terminated as a result of APC's 1993 mill 
     shutdown in Sitka.
       The decision to terminate comes six months after the 
     corporation's closing of the Sitka pulp mill and followed 
     numerous discussions between APC and the Forest Service 
     concerning contract obligations. The termination means that 
     the Forest Service will offer no more timber under the APC 
     long-term contract.
       The Wrangell mill currently has a five month operating 
     supply of wood. The Forest Service will continue to work with 
     APC to supply wood for its Wrangell mill. However, the 
     company would have to bid on short term timber sales as part 
     of the Tongass independent sales program or obtain wood for 
     its mills from other purchasers.
       Barton expressed concern over the disruption caused by 
     APC's September 30, 1993 closing of the pulp mill. ``We 
     deeply regret APC's closure of the mill and the loss of jobs 
     to not only the Sitka area, but the potential effects 
     throughout Southeast Alaska. We are willing to explore with 
     earnest the economic viability of any facilities with APC or 
     any other interest using the Forest Service authority to 
     prepare a ten-year timber sale package for advertisement and 
     bidding. We remain committed to helping communities through 
     collaborative planning to develop year-round industries in 
     the Southeast using existing authorities and the forest 
     resources.''
       In his April 14 letter, Barton said APC had not 
     demonstrated sufficient cause to show why the contract should 
     not be terminated. The Contract requires continued year-round 
     operation of the pulp mill. Barton concluded that lack of 
     present commitment to reopen the existing or converted mill 
     facility and other factors warranted contract termination.
       The contract with APC is one of two long-term timber sale 
     contracts awarded in the 1950's to utilize low-grade wood 
     from the Tongass National Forest and help establish an 
     employment base in Southeast Alaska. The APC contract would 
     have expired in 2011. The other contract is with Ketchikan 
     Pulp Company and is not affected by this decision.

  Mr. STEVENS. I yield the floor.
  Mr. McCAIN addressed the Chair.
  The PRESIDING OFFICER (Ms. Moseley-Braun). The Senator from Arizona 
is recognized.

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