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quiring Ketchikan — assuming that this bill is passed — that would 

 require Ketchikan Pulp to waive claims arising out of future oper- 

 ations or the future Tongass Timber Reform Act claims that 

 haven't already been perfected. 



The Chairman. You heard testimony of the Forest Service. They 

 oppose the contract extension. It does not allow them to preserve 

 management options. Are you familiar with those terms? What do 

 they mean? 



Mr. Leonard. The concept of maintaining options is an impor- 

 tant concept. I think when we do things, we want to preserve the 

 option — as many options as we can. We can't, however, maintain 

 options to the extent that you don't do anything. For too many peo- 

 ple maintaining options has become a code word for don't do any- 

 thing, leave the world like it is. And I think it is important that 

 we go ahead and take the actions necessary to maintain these pulp 

 mills. 



It is important to understand that if these pulp mills close, we 

 lose some major options, major alternative actions in Alaska, the 

 economics of operation, the employment that is associated with the 

 pulp mills. If they are lost, then we lose some important options 

 in Alaska that we shouldn't lose. 



The Chairman. Referring to the history of the long-term con- 

 tracts, a lot of people don't understand it, but the reason for grant- 

 ing them in the first place — why was there a long-term contract? 



Mr. Leonard. The major purpose in long-term contracts was rec- 

 ognition that if you are going to provide a facility that is equipped 

 to produce pulp, that we are talking about major investments. We 

 were talking about $100 million investments then. We are probably 

 talking about $500 million investments today. And there must sim- 

 ply be stability of supply in order for that to happen. 



I think it is well to look at history elsewhere in the country. All 

 of the pulp mills that have been built in this country outside of 

 Alaska, with only one exception that I am aware of, have been built 

 on the basis of a private timber supply or with an extremely di- 

 verse supply tied to the operation. The two timber sales based on 

 long-term contracts in Alaska resulted in construction of both pulp 

 mills, and one pulp mill at Snowflake in Arizona was built based 

 on a relatively long, 25-year contract with the Forest Service in Ar- 

 izona. All of the rest have been based on private timber supply. 



But private timber supplies don't exist in Alaska. At the time the 

 long-term sales were made, all of the timber supply belonged to the 

 public. There was a substantial transfer of some of that timber to 

 the natives, but virtually all of that has gone into the export mar- 

 ket and has not contributed to the economy there. 



The Chairman. George, they have stated — Mr. Miller may be 

 aware of this, but most other people — and he and I don't agree on 

 it necessarily, but most other people don't understand that if we 

 hadn't had the long-term contracts, there would have been no pulp 

 mills. Is that correct? 



Mr. Leonard. I am certain of that. 



The Chairman. OK, if we hadn't had the pulp mills, none of 

 those trees that are on saw logs would ever have been brought out 

 of the woods; they would have been left laying on the ground like 



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