Razing Alaska

The U.S. Forest Service faces charges of administering the 17 million acre Tongass National Forest primarily for the benefit of two large timber companies: the Alaska Pulp Corporation (APC), owned by a Japanese group, and the Ketchikan Pulp Company (KPC), a subsidiary of the U.S. multinational Louisiana-Pacific. Critics charge that the Forest Service has cut trees in areas that were important to wildlife survival, failed to protect fish streams and ignored subsistence needs.

Covering an area larger than West Virginia, the Tongass is a vital resource for many groups: its populations of deer and fish provide food for local communities; its stands of huge old spruce and hemlock trees support a large logging industry; its streams rear 90 percent of the salmon that are the basis of a large commercial fishing industry in southeast Alaska; it supports the largest concentrations of bald eagles and grizzly bears in the country and also populations of black bears, otters, woodpeckers and pine martins; and its scenic beauty draws tourists to the area.

The Tongass is huge, but most of its area is covered by rock and ice, tundra vegetation or scrub trees. The controversy is focused on the forest's most productive areas, often found in stream valleys, which support high-volume closed-canopy forests of high quality, old spruce trees which are easily accessible to the timber companies. These areas are also important for wildlife and fish protection, however. Timber industry supporters dismiss environmental critics by pointing out that over 90 percent of the Tongass will never be logged. But Bart Koehler of the Southeast Alaska Conservation Council says the area that is scheduled for cutting is "the biological heart of the forest." He adds, "It's as if somebody came to you and said, 'I'm going to cut out your heart, but don't worry because 90 percent of you will still be OK.'"

Logging subsidies

The Forest Service, which is responsible for managing the Tongass, has a long history of favoring the timber industry. The two pulp mills were drawn to southeast Alaska in the 1950s by generous fifty-year contracts offered by the Forest Service as an incentive to build mills which were considered a risky investment. The contracts included prices for timber purchased from the National Forest that could be adjusted down but not up over five-year periods, a guaranteed exclusive timber supply and substantial latitude to choose what timber to cut.

In 1980, Congress passed the Alaska National Interest Lands Conservation Act (ANILCA), setting aside large areas of wilderness in Alaska for preservation, including 5.4 million acres in the Tongass. Under the threat of a filibuster from Senator Ted Stevens, R-Alaska, Congress inserted a provision to protect the southeast Alaska timber industry: the Act provided for a permanent appropriation of "at least $40,000,000 annually or as much as the Secretary of Agriculture finds necessary to maintain the timber supply from the Tongass National Forest to dependent industry at a rate of 4.5 billion board feet measure per decade." (A board foot is a 12 inch by 12 inch by 1 inch board of timber.)

Between 1980 and 1988, the Forest Service sold an average of 470 million board feet each year from the Tongass, while an average of only 320 million board feet per year was harvested.

The General Accounting Office (GAO) calculated that unnecessary infrastructure constructed for the unharvested area cost the Forest Service $131 million from fiscal years 1981 to 1986. Roads built to make this excess timber available--"roads to nowhere"--have become a symbol of the wastefulness of the Forest Service's operations in the Tongass.

The timber companies have been accused of "highgrading" the forest--taking the best and most valuable trees and stands and leaving the rest behind. Matthew Kirchhoff of the Wildlife Society testified in Congress that "virtually all of the logging on the Tongass to date has occurred in higher-volume, old-growth stands located along valley bottoms, rivers and low-elevation hillsides. These are far and away the most productive, and generally the most accessible sites in the forest.... They generally comprise the most important wildlife habitat as well."

Abuse of the contracts

By virtue of operating the only pulp mills in the region, having long-term contracts that guaranteed them exclusive access to large volumes of Tongass timber and operating sawmills as well, APC and KPC quickly became economic powers in the region. Dozens of independent logging companies went out of business or were acquired by the two larger companies. The last to be taken over was Reid Brothers, which filed an anti-trust action against APC and KPC in 1973, charging that the firms conspired to drive it out of business.

Martha Reid, wife of one of the Reid brothers, described the practices of the pulp companies to the Alaska Women's Commission. "What [the companies] would do is pay [the loggers] for their logs, and then after they had gotten them going, they would pay them less than they knew it cost to log � deliberately �to make them go broke. Then, they would take the outfit over, hire the person who owned it as a manager and continue to pretend that it was an independent logging firm. For political reasons, it was important for the companies to have that image."

In 1981, a U.S. district court found in favor of Reid Brothers and awarded the company $1.5 million. APC and KPC also settled out of court with several other independent loggers. The district court also found that the two large timber corporations had conspired to drive other companies out of business and to reap oligopolistic prof-its. The court determined that the companies had "concertedly refused to compete against each other," thereby lowering bids and reducing the revenue of the Forest Service; set up "front" companies to bid on sales reserved for small loggers � to which the Forest Service had awarded contracts despite the fact that the companies had no history of logging; exchanged confidential information about log pricing and wages; and engaged in preclusive bidding to shut their rivals out of certain areas and prevent other proposed mills from obtaining timber supplies.

In the wake of the Reid Brothers decision, the Forest Service established a team to review the operation of the long-term contracts. The team found that the long-term contracts gave the two companies several "natural ad-vantages" over their competitors. The team concluded that the anti-trust violations of the two companies had cost the federal government an estimated $63 to $81 million.

In 1982, shortly after the Reid Brothers decision and while the Forest Service review was still in process, the Forest Service granted both companies retroactive "emergency rate redeterminations" due to poor market conditions, which further reduced the rates that the companies paid for timber. The average short-term sale price on the Tongass is $55.11 per thousand board feet. KPC paid an average of $3.09, and then $2.12 until 1988. Since then, KPC has been paying a closer-to-market rate, but it won substantial concessions in negotiating this price with the Forest Service. According to a 1989 House Interior Committee report, the concessions ensure "that KPC will continue to receive timber at 1951 rates until the end of the contract term in the year 2004." APC has been paying an average of $1.48 per thousand board feet since 1982. This figure will soon be renegotiated as well.

Not satisfied with this virtual giveaway, APC filed a breach of contract claim against the Forest Service in 1987, alleging over $80 million in damages for the 1981-85 operating period. The suit is based on the company's assertion that the Forest Service was required to set rates that would allow it to make the same profit as the other long-term contract holder, KPC. The Forest Service denies that the contract requires this.

In addition to low stumpage rates, the companies also benefit from direct federal spending on the Tongass timber program. Federal spending on roads, surveying and other timber preparation activities constitutes a huge subsidy. According to the House report, the Forest Service spent $386 million from fiscal year 1982 to 1988 on the Tongass timber program, while receiving only $7.6 mil-lion in payments from the lumber companies, for a loss of roughly 98 percent, or $54 million a year. The Forest Service justifies this loss by pointing to the jobs that the industry creates. There are currently about 2,100 people directly employed in Tongass timber operations, so the $54 million dollars a year works out to roughly $26,000 per job � an expensive program.

The heart of the forest

Forest Service sources say that there is tremendous pressure within the Service to give the companies access to high-quality timber. This has led to abuses in the implementation of timber plans and to falsified documentation to cover up the mismanagement.

In the summer of 1989, a group of biologists from the Alaska Department of Fish and Game inspecting logging activities in a KPC long-term sale area on Prince of Wales Island happened to discover areas that had been clearcut, but had not been scheduled for cutting in plans that had been released to the public. According to Jack Gustafson, one of the biologists, the areas cut had been designated to be retained to benefit wildlife or to protect streams. An Environmental Impact Statement for KPCs 1984-1989 logging plan released by the Forest Service showed one logging unit ending one-quarter mile from Logjam Creek, a very productive fish stream. The Forest Service changed the unit to allow logging right up to the banks. Yet even after logging had taken place, a subsequent Environmental Impact Statement released to the public showed that the cut had taken place within the original unit, away from the stream.

The Fish and Game biologists also identified "salvage" sales in areas which had been designated for retention. (Salvage sales are conducted when a large proportion of the trees in a stand are blown down.) Very few blow-downs were observed in these areas, leading a Forest Service biologist who was on the trip to speculate that the salvage operations in those areas were conducted only to provide more high-volume timber for KPC. The Forest Service often expands salvage sales to include a "logical setting" for timber removal. The state biologists point out that clearcutting large areas for salvage "creates another wall of timber for additional blowdown and, presumably, more 'salvage' operations."

State officials emphasize that they do not have adequate staff to oversee the Forest Service's operations and that the discrepancies they have uncovered may be only a small fraction of the total problem.

Logging in the Tongass threatens not only fish, but a tremendous variety of animals, including the nation's largest concentrations of grizzly bears and bald eagles. One Forest Service report predicted that by the year 2054, the end of the projected 100 year cutting cycle, bald eagles, Sitka black-tailed deer, pine martins, black bears, river otters and hairy woodpeckers would undergo declines of between 39 and 64 percent. This wildlife fills subsistence needs, provides recreation and draws tourists. It is also valued by many for its own sake, as part of a natural ecosystem. The old-growth stands themselves also have an aesthetic appeal. The trees can grow to be hundreds of years old and many feet in diameter.

The cumulative effects of logging in the Tongass have adversely affected native groups which depend on deer, fish and other forest resources for subsistence. Two native groups have filed suits to enjoin logging in certain areas, alleging that the Forest Service has violated ANIMA by not giving adequate protection to subsistence resources. Ernestine Hanlon, one of the plaintiffs, told a Congressional committee that "our fisheries and seafood have been affected already through river erosion: salmon spawns have been washed away, log yards and dumps cause continuous oil leakage into waters, and bark from logs stored in waters are causing untold damage."

Timber vs. fish

Estimated to employ roughly 4,000 people, the fishing industry provides more jobs than any other industry in southeast Alaska. Fishing is also an important component of subsistence for many Alaskans, a tourist attraction and a recreational opportunity for natives. The industry is heavily dependent on salmon and other anadromous fish which are in turn heavily dependent on an undisturbed Tongass forest. The forest nourishes the streams when dead trees fall in, retains water to moderate the flow of the streams and provides shade and shelter, moderating the temperature. Logging can lead to streams receiving loads of silt, or being blocked by lumber debris. Unfortunately, the low-lying stream channels which support so many anadromous fish also support big, accessible, high-quality trees.

Fisherpeople and environmentalists have complained that the Forest Service is too eager to accomodate the logging companies by allowing them to harvest trees in sensitive areas; the Forest Service has responded that it uses "best management practices" to weigh the different resource values in the Tongass. The Service has consistently opposed legislation that would prevent logging within 100 feet of streams that support anadromous fish and their important tributaries, claiming that people in the field are best qualified to determine where logging is appropriate and where it is not.

Jim Brooks of the National Marine Fisheries Service disputes the Forest Service's assertion. He has long sup-ported mandatory buffer strips, pointing to the Forest Service's history of putting timber values first, and to the temptations to cut in stream areas. "The best spruce occur most abundantly along watercourses. One tree may be worth many thousands of dollars."

The Salmon Bay Protective Association, a group of 12 fisherpeople, has filed suit in an attempt to require the Forest Service to provide better protection for salmon streams.

According to Joseph Mehrkens, who retired from the Forest Service and now works for the Southeast Alaska Natural Resources Center, a study done by the Southeast Natural Resources Council showed that fisheries' protection is "hands down ... the highest and best use" of trees near streams. "Anything less [than full protection of streams]," he argues, "is to say to the commercial fisher-men that we are going to take jobs away from you.... They're asked to give up a public resource that's vital to their wellbeing, plus they're asked to pay their tax dollars to subsidize the timber industry."

Pollution problems

APC and KPC are also harming the environment through toxic emissions and dumping. Both mills have a history of violations and of agreements with the state and federal governments allowing standards to be relaxed while they work to comply with environmental regulations.

In 1986, the Sitka Conservation Society filed a 60day notice with the EPA that it intended to sue the APC mill for violations of the Clean Air Act. In the interim, the state of Alaska, apparently operating at the behest of APC, filed suit against the mill, preempting the Society's suit. Dina Henkins of the Alaska Department of Environmental Conservation describes the suit as "perfunctory." She adds, "As I recall, it was [APC's] attorneys' preference" that the state file suit.

APC has also had trouble disposing of its incinerator fly ash. After its own landfill was closed, it began dumping the ash, which contains dioxin, in a municipal landfill near a school. Public opposition forced the company to stop after a few months. According to Sever, APC then started using the ash in its water treatment facility. This has damaged the facility, he says, and "now they are dumping tremendous amounts of fly ash and red liquor [a solution of industrial chemicals] into the bay." The EPA confirms that it is considering an enforcement action against APC for its water discharges, but refuses to re-lease any details. The company has now received permission to resume using the municipal landfill after first encasing the fly ash in large bags.

Each mill has been inspected by the EPA three times for PCBs. KPC was found to be in violation of regulations all three times, most recently in November 1988; APC was cited twice, and inspectors identified "several possible violations" in the most recent inspection, in May 1990. The two companies have also been cited by the state for illegal handling of hazardous waste. KPC was cited on six counts, and APC on five. For both mills, the counts included maintaining open containers of hazardous waste, burning hazardous waste without notifying the EPA and failing to provide worker safety training.

In Sitka, residents complain that the APC mill causes air quality problems. Edwards says, "if we have a period of stagnant air [the mill pollution] hangs in there real low and thick. ... You can only see a couple hundred feet." Natasha Calvin, who lives in Thimblebury Bay, near the APC mill, says that during weather inversions, there is "a very acid smoke. ... When it contacts your nasal passages you just kind of clutch up." She added that the silicon-brass fittings on her family's boat have become pitted due to air pollution.

Timber reform

Since 1987, several efforts have been made in Congress to end the taxpayer subsidies of the large timber corporations and the misuse of the Tongass's immense resources. Representative Bob Mrazek, D-NY, and Senator Timothy Wirth, D-Colo., have led the fight for Tongass timber reform. They have called for a repeal of the subsidy and mandated timber sale provisions in ANIMA, additional wilderness protection and cancellation or modification of the long-term contracts with the pulp mills. Legislation is likely to be enacted this year, but its exact content and how it will be implemented are still uncertain.

Alaska Pulp and Ketchikan Pulp were given sweetheart deals to set up their pulp mills in an effort to build an economy in southeast Alaska. With the cooperation of the Forest Service, however, they have run amok � stifling competition, destroying fisheries and wildlife habitats and treating a valuable national resource as their own private treasure chest. It is fortunate that the Tongass is so large and that there is still much of it worth saving. But it is not an inexhaustible resource; Congress must act quickly to save some of it.

A Jobs Program - of Worker Abuse? Since the long-term contracts and the ANILCA timbering provisions have been defended as providers of jobs, APC and KPC's history of poor labor relations is particularly ironic. In 1984, APC workers made huge concessions to the company, which claimed it was on the brink of bankruptcy. "They said they were $100 million in the red, and ... we agreed to across-the-board pay cuts of $2.40 an hour" and to giveup many other benefits as well, explains Florian Sever, a former employee of APC. We made concessions "with the proviso that whenever market conditions got better, we would be the first ones to be repaid." When conditions improved, however, APC refused to restore the workers' wages, and introduced a plan for training workers to do multiple tasks and breaking down the mill's craft lines in an effort to reduce the number of workers employed. Three hundred members of Local 962 of the United Paperworkers International Union struck APC in 1986. The mill broke the strike by bringing in scabs from outside Alaska and conducting an election to decertify the union. Under law, however, the company was still required to give first preference to strikers when vacancies opened up in the mill and to allow those hired to retain their seniority. But, according to Sever, "They treated all Ethel people who went out on strike as new hires off the street." The National Labor Relations Board (NLRB) recently decided a case in favor of the strikers, and will require that the mill give back pay to several people who were either not reinstated, or who were reinstated at lower-level positions than those they held before the strike. An NLRB administrative law judge found that the company had further violated the Act by maintaining "an overly broad no-solicitation rule," which prohibited the distribution of literature at the mill and was instituted shortly after the strike; and by "distributing a brochure to employees stating that only 'non-union' employees are eligible for accidental death and disabiI-ity benefits." In 1987, Sever testified at a House hearing in favor of the Tongass Timber Reform Act, citing the need to change APC's labor practices as well as reform its pollution record. He was subsequently fired. Both the House Interior Subcommittee on Oversight and Investigations and the NLRB have concluded that APC fired Sever as a result of his testimony. KPC has treated its workers with the same contempt. According to Wayne Weihing, a former mill maintenance worker, KPC broke its labor contract and shut down the mill where he was employed for four months in 1984. After the shutdown, wages and benefits were slashed. Weihing says he believes "they were really trying to force us out on strike so they could do the same thing they did [at the APC mill] in Sitka." Ketchikan Spruce mill, which was bought out by Louisiana Pacific (the owners of KPC), was closed as a result of a strike and never reopened. Although the companies talk about the need for jobs in southeast Alaska, most of their employees are recruited from outside the area. The APC strike was broken by scabs brought up from the Pacific North-west. According to Weihing, KPC continues to lure workers from the lower 48 with "flowery" advertisements. The cost of living in southeast Alaska is very high, though, and the workers who come up are often disappointed. Both mills have had a nearly 100 percent turnover in the last 3 or 4 years, according to Sever and Roger Arriola, a KPC employee. The two companies have also been accused of exposing their employees to dangerous levels of sulfur dioxide and asbestos. According to Weihing, two KPC employees had to be taken to the hospital last summer because of exposure to sulfur dioxide. Sever also experienced health problems as a result of his job. He relates how "one time I had to get the inside of my nose chemically cauterized ... because it started bleeding and wouldn't stop" due to exposure to sulfur dioxide. The State Department of Labor fined KPC $10,000, the maximum fine, for a "willful violation" of asbestos regulations in 1989, and asbestos problems have also been an issue between APC and its union. Sever, in fact, alleges that worker agitation on asbestos is one of the reasons that the mill sought to break the union. - J.D.

Jonathan Dushoff works with the Washington, D.C.-based Taxpayer Assets Project, which examines the U.S. government's management of a wide range of assets.