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Ketchikan sawmill owner Steve Seley has no more faith in old-growth timber.

"I can guarantee you we're not going to invest in any more old-growth equipment," he said.

These are the environmentally friendly timber catch phrases on the Tongass: "Second growth." "Value added." "High value added."

These are apparently the way to a sustainable timber industry and to conservationists' hearts. Timber companies in Southeast Alaska say they're all for younger, smaller logs and making fancier wood products or biofuels. But getting there takes new equipment and new skills. And money.

That's why U.S. Sens. Lisa Murkowski and Mark Begich have introduced a new bill in Congress, the Southeast Alaska Timber Industry Retooling and Restructuring Act. If passed, Southeast sawmills, logging companies and road construction companies could access a $40 million loan pot to stay in business.

It's one of four bills Murkowski introduced to help Southeast's economy. The others are Sealaska's lands entitlement bill, a proposal to create five new Alaska Native urban corporations in the region, and funding for ferries and terminals.

The loans would be open to sawmill owners, logging companies and road constructors who have been in business for a decade. They'd have to supply a business plan and guarantee they'd have at least as many employees after retooling. And the retooling itself would be either for equipment to stay competitive in Alaska timber, or to stick around but find something other than timber to do.

"Retooling seems to be the only option we have for any kind of survival," said Jackie DuRette of Ketchikan-based DuRette Construction, which now specializes in building remote logging roads. She's brainstorming about getting into sand-and-gravel supply.

DuRette and Seley started talking about retooling two years ago. The mills have been starving for years, along with related businesses like DuRette's. The owners do not blame the banks for lacking confidence in their business model, which was based on a larger timber supply.

"I believe what industry has to do is think outside the box. They've got to listen to the needs of the majority, which at this point is the environmental and conservation groups," said Seley. "Can we build confidence with them that we're the new industry, and we're willing to play ball?"

Seley's last timber sale was just sued by environmental groups. Lately he's turned his attention to a stewardship idea: thinning logs from beachside forest to improve deer browse, and turning those smaller-diameter logs into wood chips for fuel in super-efficient boilers. And this is a man who spent the last 35 years cutting old growth.

Wes and Sue Tyler of Icy Straits Lumber in Hoonah are also hoping to retool with help from the government. Wes Tyler already has a wish list of equipment for his high-value-added wood products: an end matcher to fit molding together that would maximize the short wood pieces, or a way to run his kiln on wood instead of fossil fuels. He wants to do as much with local materials as he can, and sell them as locally as he can.

"It would help save our bacon here, because we are really, really struggling," he said.

The Southeast Alaska Conservation Council has been involved in many lawsuits to stop timber sales and protect Tongass old-growth, and now says it supports sustainable timber harvest on the Tongass. Spokesman Mark Gnadt said that might include this retooling bill. The bill is brief about whom and what it would allow.

SEACC hasn't taken an official position yet on the bill. Gnadt said he is asking around to gauge whether it will help the little guys.

"Are they really going to use that money to get into second growth and higher-value-added products?" he said. "We do think it has a lot of potential."

Not all timber operators support it. Ron Sharp, a small-scale operator of Port Saint Nick Lumber in Craig, read it as a bill "that wants to dissolve some of the mills."

"The way I read it, if you had a mill on the water, you could make a boat yard out of it," he said. "I'm really against it."