Murkowski Proposes Southeast Initiative to Aid Regional Economy

Effort Includes Timber Industry Retooling and Landless Native Compensation Bills

WASHINGTON, D.C. -- U.S. Sen. Lisa Murkowski, R-Alaska, today introduced two bills designed to stimulate the economy in Southeast Alaska, a region of the state that has been hard hit by the downturn in timber-related jobs.
The two bills are:
  • The Southeast Alaska Timber Industry Retooling and Restructuring Act to help firms retool to maintain jobs in the region.
  • The Unrecognized Southeast Alaska Native Communities Recognition and Compensation Act to set up urban corporations for Natives in Ketchikan, Wrangell, Petersburg, Tenakee and Haines.
In addition to the two bills introduced today, Murkowski announced that she will add to her Southeast legislative initiative with the introduction of two other bills following the upcoming Easter congressional recess – a Sealaska land settlement proposal and a measure designed to increase federal funding for new ferries and terminals.
Murkowski pointed to a recent Juneau Economic Development Corp. study by the McDowell Group that found that the Southeast Alaska regional population is declining and aging. The study found the average age of Juneau residents was 38.1 years – six years older than the state as a whole. The region also is losing private sector jobs, with 37 percent of the employment and 42 percent of all wages now coming from the public sector.
“The Southeast region has been hard hit by the downturn in the timber industry, by a growing decline in state government employment and by a potential decline in tourism,” Murkowski said. “The region also is seeing a decline in population. It is time that we work to reverse these trends by offering a comprehensive federal program to settle Native land ownership issues and deal with declines in the timber industry.” 
Following are details of the legislation introduced today:
Southeast Alaska Timber Industry Retooling and Restructuring Act:
Joined by U.S. Sen. Mark Begich, D-Alaska, as chief co-sponsor, Murkowski introduced legislation to help the Southeast Alaska timber industry modernize by moving into new types of timber operations as a way of stimulating employment in the Panhandle.
The bill would authorize up to $40 million in grants to long-time timber and timber-related companies in Southeast Alaska to help them either move into modern value-added processing or perhaps to take advantage of new non-timber economic opportunities.
“Given what we have seen in recent years as far as the price and availability of timber to our Panhandle mills, it is vital that we aid the industry to find innovative ways to make new products and develop new ways to provide year-round employment to Southeast’s workforce. Given that the federal government has been a prime reason for the slowdown in timber activities, it is only right that it take the lead in providing assistance to get this struggling industry moving again,” said Murkowski.
“Communities in Southeast Alaska have been hurting for years. Today’s economic crisis has made it even harder for timber-based small businesses to survive,” Sen.  Begich said. “This bill will help the timber industry retool so they can be competitive and help ensure that we have a diversified economy in Southeast for decades to come.”
Murkowski noted that back in 1954, the U.S. Department of Agriculture encouraged the development of a sawmill and pulp mill timber industry in the Tongass National Forest in Southeast. From the startup of the pulp mills in Ketchikan in 1954 and in Sitka in 1961 to passage of the Alaska National Interest Lands Conservation Act in 1980, the Tongass was producing about 600 million board feet of timber a year, generating 3,500 direct and 2,500 indirect jobs and providing the largest number of year-round jobs in the region.
But following passage of ANILCA and the follow up Tongass Timber Reform Act of 1990 the two pulp mills closed in the mid 1990s, and sawmills have tried to survive on the once anticipated 268 million board feet a year of allowable timber harvest. But a litany of federal forest policy changes from the Clinton-era roadless policy, to changes in Forest Service sale and road policies, to sale delays caused by litigation have resulted in harvest levels falling to 28 million board feet from federal lands and less than 50 million from private lands in 2008. That harvest level is far below the 192 mmbf reached in 2006 and about half of the 144 mmbf of 2007. Recent years have been drastically down from the 495 million board feet harvested from all lands as recently as 1997.
Year round timber employment, according to U.S. Forest Service in 2007, the last year of current full data, was 402 jobs, just 13 percent of the employment of a decade earlier. The impacts on the region’s economy have been clearly documented. According to a report by The McDowell Group consultants, total timber-related payroll in 2007 hit just $17 million, compared to $300 million in 1990 helping to cause higher unemployment rates in the region.
The timber retooling act would call on the federal government to acknowledge its role in the reduction of economic activity in the region. By the act, the government would on a one-time basis, allow the Secretary of Agriculture to provide economic development assistance/grants to allow existing timber facilities to retool either to adopt new timber production practices that can operate profitably on smaller harvests or to convert timber plants to new types of manufacturing/business operations.
Firms – sawmills, logging companies and road construction companies involved in timber work for at least a decade -- that seek funding for “retooling projects” must submit business plans and demonstrate the likelihood of success. More importantly they must commit to the “extent practicable” to continue to employ substantially the same number of employees for a “reasonable” period after completion of a retooling project. To limit the impact of the aid, grants may only go to businesses that operated in the Tongass for not less than 10 years prior to Jan. 1, 2009. And the program sunsets within two years with the maximum authorization of aid being $40 million.
The bill would allow companies that used to build Forest Service timber roads, for example, to buy more appropriate equipment to bid on federal highway work and water and sewer line work. It could help firms move into sand and gravel operations. It could allow sawmills with water access to be converted to marine repair facilities or into wood treatment plants. And it might allow some mills to convert to higher value-added products requiring less raw materials, such as door and window sash manufacturing.
Firms would not have to give up on future timber operations in order to gain the aid, once sale levels are stabilized and market conditions improve, the hoped for outcome of the current Tongass Roundtable timber discussions.
“These changes may ease environmental pressures on timber stands, while aiding the region’s economy by helping to replace the former year-round jobs in a region now nearly solely dependent on fishing, tourism income and government-sector spending, for employment. At a time when Congress is spending nearly $800 billion to stimulate employment, this measure is a reasonable expenditure to help potentially transition employees to 21st Century jobs,” Murkowski said.
Landless Natives/Unrecognized Southeast Alaska Native Communities Recognition and Compensation Act:
Murkowski introduced this bill in an effort to right the inequity that Native residents in five villages in Southeast -- Ketchikan, Wrangell, Petersburg, Tenakee and Haines -- were the only Alaska Natives not to benefit from the operation of both regional and village or urban corporations when the lands claim settlement was approved.
“Nearly 38 years have passed since the Alaska Native Claims Settlement Act became law and still the Native peoples of five communities in Southeast Alaska -- the five ‘landless communities’' -- are still waiting for their fair and just settlement. It is long past time that residents in these communities receive the same benefits that all other villages received. It is a simple matter of fairness,” Murkowski said.
The Alaska Native Claims Settlement Act awarded $966 million and 44 million acres of land to Alaska Natives and provided for the establishment of Native Corporations to receive and manage such funds and lands. The beneficiaries of the settlement were issued stock in one of 13 regional Alaska Native corporations – 12 based in Alaska. Most beneficiaries also had the option to enroll and receive stock in a village, group or urban corporation.
Murkowski said that for reasons still unclear, the Native peoples of the ``landless communities'' were not permitted by ANCSA to form village or urban corporations. The communities were excluded from the benefit even though they did not differ significantly from other communities in Southeast Alaska that were permitted to form village or urban corporations under the Alaska Native Claims Settlement Act.
For example, Ketchikan had more Native residents in 1970, the year of a membership census, than Juneau, which was permitted to form the Goldbelt urban corporation. This finding was confirmed in a February 1994 report submitted by the Secretary of the Interior at the direction of Congress. That study was conducted by the Institute of Social and Economic Research at the University of Alaska.
Under Murkowski’s bill, Natives in the five towns will be able to form “urban” corporations. The corporations would be offered and could accept the surface estate to 23,040 acres of land – one township as granted to all other village corporations. Sealaska Corporation, the regional Alaska Native Corporation for Southeast Alaska, would receive title to the subsurface estate of the designated lands.
The urban corporations would each receive a lump sum payment ($650,000) to be used as start-up funds for the newly established corporations. The Secretary of the Interior would determine other appropriate compensation to redress the inequities faced by the unrecognized communities, potentially including access to a federal surplus property ownership account.