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A Forest Service Internal review team also found after passage of 

 ANILCA that the two pulp mills cheated the Forest Service out of $60-$82 

 million by price-f ixing . double -invoicing, and other illegal and deceptive 

 practices . Though the Forest Service itself estimated this magnitude of loss, 

 it has recovered less than $10 million from the pulp mills to this day. 



Despite such underhanded activities , APC and KPC have been given 

 additional special treatment by the Forest Service. In 1981 and 1982, under 

 the terms of their sweetheart contracts, they were granted "emergency rate 

 redeterminations" reducing stunpage prices (how much the companies pay for the 

 timber). For KPC, all timber stumpage was reduced by 96%, bringing the price 

 down to 1951 base rates (except for hemlock which sells for an average of 

 $1.36 per thousand board feet). APC's stumpage payments for spruce and cedar 

 were reduced by 99% to bring them down to 1956 base rates. For example, APC's 

 spruce sawlogs were appraised at $215 per thousand board feet, but they now 

 pay only $2.26 for that timber! The current selling value of prime Sitka 

 spruce is estimated by the Forest Service to be over $600 per thousand board 

 feet. Cedar appraised at over $1000 per thousand board feet is bought by APC 

 for $1.22! 



The pulp mills are currently pointing to increased demand for 

 their products as examples of the fitness of the Tongass timber program. A 

 January 1988 timber industry article in the Alaska Construction and Oil 

 Magazine states that 1987 prices for "...Sitka spruce and especially hemlock 

 lumber and log prices reached or exceeded record prices paid in the high-mark 

 years of 1979 and early 1980." Yet under the terms of the 50-year contracts, 

 the two mills continue to pay prices from 95 percent to 75 percent lower than 

 stumpage fees in the late 1970s. 



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