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tion and I will say one more time, your interpretation of why the 

 subsidy has to be offset with the recognition that there was no wil- 

 derness in the Tongass before 1980. What we did is we made 5.4 

 million acres of wilderness out of the Tongass in 1980. 1.7 million 

 acres of that was commercial timber that was put into wilderness. 

 Now that is the offset to the question of the viability which $40 

 million annually made available up until proposed legislation 

 which would end the need for strictly the price of wilderness. I do 

 not think that is appropriate, unless you want it, and we can 

 debate the merits of it while we have got a hearing here. 



Now there is private land in southwest Alaska. Most of it is 

 owned by the native corporations and for the most part they export 

 those logs in the round for saw logs because they can get an awful 

 lot more for them than they can by selling them to the existing 

 sawmills. The problem we have is what to do with the pulp logs off 

 the private land because they have no value as timber and are ba- 

 sically unable to be marketed unless you have something such as 

 the pulp mills which basically use them for wood fiber so it is a 

 relatively good forest management practice because if we did not 

 have the pulp mills you would have the native corporations export- 

 ing the round logs and probably doing some selective logging and 

 leaving the pulp in the woods. This gives us an opportunity to use 

 that timber and it simply makes sense. 



Now I was here when you had a mill called Ketchikan Spruce 

 Mill and when I worked in it it cut regional lumber and it supplied 

 logs to Anchorage and Fairbanks and Palmer and supplied the do- 

 mestic Alaskan market. Then one day we got a barge service from 

 Seattle and Tacoma. We could load a boxcar in Seattle with lumber 

 and unload it at any number of ports in Alaska and that killed the 

 industry locally because you could not compete with kiln dried fir, 

 finished lumber in the small markets of Alaska. That mill basically 

 shut down for awhile until it finally developed the export market 

 because we just cannot compete in these small markets anywhere 

 in Alaska, even Anchorage and Fairbanks, to any degree with fin- 

 ished lumber because it is cheaper to bring it up in a boxcar on a 

 barge, you have all the diversification of grades, materials and so 

 forth. That is the reality of Alaska, that is what makes it so diffi- 

 cult initially because we have a one-way transportation system and 

 everything is going up and bypasses Southeast Alaska, because it is 

 cheaper to load it out of the port of Tacoma or some other place 

 and bring it all up and you can bring a van or a boxcar of domestic 

 lumber and lay out to your door, all the cuts you want and you can 

 put a little mill in the Ketchikan area and in Petersburg, go up in 

 six months and nobody will give it any financing anyway and that 

 is the reality and the uniqueness of this market. 



That is why when you make one change the resulting changes 

 are seven or eightfold. When you consider the realities, the pulp 

 mills cannot export any of their logs because they are under Forestr 

 Service contracts and there is no other area in the bylaws with the 

 exception of native corporations and native corporations sell most 

 of their pulp to the pulp mills so you know you have somewhat of a 

 balance. The state does not have any timber in southeastern 

 Alaska so that is the dilemma that we live in. So when you reflect 

 on this subsidy you have to keep in mind what the public of the 



