183 



the open market—iust like every other timber purchaser in the country They can also purchase 

 logs from private owners 



The Delegation is spreading the myth that the Tongass is the only source of logs in 

 Southeast Alaska. But from 1985-1995, private Alaska Native Corporations ciearcut and 

 exported 4 2 billion board feet of timber— more than half of all the timber cut in Southeast Alaska. 

 Over that time, the Tongass timber program cut a yearly average of 339 mmbf Native 

 Corporations cut and exported in the round an annual average of 383 mmbf including 72 mmbf of 

 pulp logs a year In 1994, Sealaska Native Corporation sold pulp logs to pulp mills in British 

 Columbia KPC was unwilling to bid for these logs, preferring to wait for cheap, taxpayer 

 subsidized timber under their long-term contract 



L-P has plenty of timber available. What L-P wants is cheap, taxpayer-subsidized timber, 

 without competition in the bidding process. 



2. Delegation/L-P Claim: L-P claims it needs this new deal in order to obtain financing to clean 

 up the pulp mill 



The Facts: In 1994, L-P was the 24th-largest forest products company in the world '^ 

 That year, L-P had the highest return on investment of any forest products company in the 

 world '^ L-P has eight years of timber remaining on its current contract. That is far more 

 than many forest products companies have Clearly, L-P has access to credit According to the 

 March 1996 L-P 10-Q: 



Significant capital has also been expended for environmental projects (such as 

 pollution control equipment) and upgrades of existing production facilities. L-P is 

 budgeting capital expenditures, including timber and logging road additions, for all 

 of 1996 orS27S million to S325 million. "■ 



L-P has invested in facility upgrades and environmental controls elsewhere. L-P's one-year 

 capital expenditure is up to S325 million, yet the company is unwilling to undertake a five- 

 year'^ program to improve KPC, whose purported total expense is S200 million. The 

 problem is not L-P's credit-worthiness, but the reluctance of its Board and management to 

 commit capital to the KPC pulp mill. L-P and the Alaska Delegation want US citizens to 

 commit the capital L-P is unwilling to commit. 



L-P told its shareholders that its required environmental upgrades would cost no more 

 than $20 million~not $200 million. In the March 1996 10-Q, L-P states, with respect to the 

 settlement of the recent civil lawsuit against KPC: 



'^Pricc Waterhouse; ForestProducts Survey 1994-North America at 37. Measured by sales value. 



I'ld al 36 



'"L-P March 1996 10-Qal7 



"According to CEO Suwyn, June 29, 1996 oral lestimony before this Committee. 



