Bailout plan triggers split

Young, Murkowski dispute best way to help Kake Tribal after bankruptcy

Posted: Tuesday, May 30, 2000

ANCHORAGE -- Alaska U.S. Rep. Don Young is trying to find a way to bail out a bankrupt Native village corporation in Southeast Alaska, but his efforts are being complicated by U.S. Sen. Frank Murkowski.

Young's plan would swap existing Kake Tribal Corp. land for new land that it could log on Kupreanof Island, west of Petersburg. Murkowski's amendment calls for the trees to be locally processed.

Kake Tribal officials see Murkowski's proposal as unworkable.

``It's a good idea, but it just doesn't fit our situation here in Kake,'' said corporation president Sam Jackson.

Jackson said the cost of electricity is so high in Kake that it would be virtually impossible to attract an industry to process the wood locally.

Local processing has been championed by environmentalists opposed to the export of raw logs to Japan or other countries. Murkowski also likes the idea of local processing, which he sees as a way to draw investment capital and jobs to struggling Southeast Alaska timber towns.

``There are local processors who will pay for those trees,'' said Mark Rey, Murkowski's senior forestry adviser on the Senate Energy and Natural Resources Committee. ``There are people who will process that timber locally if Kake chooses to cut that timber.''

According to Jackson, the tribal corporation and its 675 shareholders would lose as much as half the potential revenue for the timber if local processing is required.

``This is the most critical piece of our Chapter 11 bankruptcy puzzle,'' Jackson said. ``We've stabilized our operations. But our operations can't satisfy all of our obligations.''

When it filed for bankruptcy protection last October, the corporation reported debts of about $15 million.

Legislation proposed by Murkowski would have required the Forest Service to exchange about 2,500 acres of Kake Tribal's uncut timberlands for an equal value of trees elsewhere in the Tongass National Forest. The Clinton administration opposed that fix.

Young's deal, which passed the House last week, would not involve the Tongass. Instead, Kake would swap about 1,400 acres of uncut trees for state-selected timberlands of equal value. Congress also would be authorized to buy a conservation easement on the remaining 1,100 acres of Kake Tribal property.

Jackson said he hopes to talk Murkowski into changing the local-processing provision before the bill comes up for final passage in the Senate.

``We're going to see if we can soften that stance,'' he said.

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