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The timber manufacturing facilities in Southeast Alaska face a unique set of 

 circumstances that require unique solutions. First, the only major source of available 

 timber for our facilities is federal timber from the Tongass National Forest. The Forest 

 Service holds monopoly power over the timber supply. The smeill amount of private 

 timber is normally exported as round logs to countries that have job protective pricing 

 that favors raw materials over finished products. Timber harvested from Federal lands 

 in Alaska, and in Alaska alone among the states, must receive primary manufacture in 

 Alaska, and is subject to additional export restrictions. Second, the nearest domestic 

 mairket for timber products is 600 miles away with a foreign country (Canada) in 

 between. This puts Alaska meinufacturing at an extreme competitive disadvantage to 

 forest products manufacturers in the Pacific Northwest. Third, the cost of 

 manufacturing In Alaska is much higher than in other parts of the world, in part 

 because many of those other regions outside the United States have much less stringent 

 environmental standards for msmufacturing facilities. These economic circumstainces 

 are similar to those that existed in the 1940s when the Ketchikan long-term sale was 

 first proposed. 



Unilateral Contract Changes 



The 1990 Tongass Timber Reform Act (TTRA) drastically and adversely affected 

 the long-term agreement with the Forest Service which forms the basis for KPC 

 operations. Not only did TTRA further reduce the available commercial timberland 

 base which underpins the Forest Service's long-term volume commitment to KPC, it 

 unilaterally altered a bilaterally £igreed-to contract. The unilaterally modified timber 



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