Judge says Tongass log contract cancellation was improper

Posted: Tuesday, May 30, 2000

KETCHIKAN (AP) - A court of claims judge in Washington, D.C. has ruled in favor of Alaska Pulp Corp. in its $1.4 billion lawsuit against the federal government, U.S. Sen. Frank Murkowski said.

The U.S. Forest Service canceled the 50-year contract APC held for cutting timber in Tongass National Forest in January 1994. The government contends that APC violated the terms of the contract in effect until 2011 when it closed the Sitka pulp mill in June 1993.

APC officials said they were looking for a more profitable product for the pulp logs, such as medium density fiberboard. APC contends that although the contract specified construction of the $60 million pulp mill by 1961, three years after the contract was signed, there was no stipulation that the mill operate continuously for 50 years.

APC had continued to honor the contract by harvesting 80 million board feet of timber a year, running its saw logs through its Wrangell sawmill and selling its pulp logs to Ketchikan Pulp Co.

Judge Lawrence M. Biskar of the Court of Federal Claims agreed with APC in an order released just before the Memorial Day holiday.

Murkowski told the Ketchikan Daily News that the next step will be to determine damages. The company already lists its amount at $1.4 billion. Murkowski said that does not include damages to communities of Southeast Alaska, especially Sitka and Wrangell, and to the people of the area.

After that determination, the government can appeal Judge Biskar's decision and the amount of damages to a federal appeals court and the case filed in March 1995 could take several more years to settle.

Murkowski was in Ketchikan over the weekend to speak at the Ketchikan High School commencement.

Under another motion pending before the court, APC attorney Jim Clark of Juneau says that the Forest Service's implementation of the Tongass Timber Reform Act of 1990 materially breached the contract, to APC's detriment. The government contends that the 1990 act was not the cause of APC's economic problems resulting in the pulp mill running at a loss when operations were suspended.

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