Alaskan Town Mulls a Future Minus a Mill

A FEW miles up a winding road from the heart of this scenic town stands a shuttered mill, silent testimony to a government experiment that went awry.

Alaska Pulp Corporation's idled mill is a relic of the 1950s, when the United States government opened up 6 million acres of Alaska's lush Tongass National Forest for subsidized logging operations. The effort was to boost the local timber industry.

Alaska Pulp closed the mill a year ago, citing increasing environmental regulations, new logging restrictions, and government pressure to bring timber costs into line with market conditions.

Others blamed the closure on the moribund state of the world market for the mill's product -- dissolving pulp, a material used to make rayon, waferboard, and other industrial materials.

Now, a year later, both the future of the pulp mill and the town it has so long supported remain uncertain. This former Russian colonial capital, with a population of 8,500, is in limbo.

It offers a case study of a town in transition, like so many others across the US, caught between huge economic and ecological forces.

Sitka City Manager Gary Paxon is dealing with the loss of a fifth of the city's property tax and possibly a mini-exodus from Baranof Island, Sitka's location. But so far things have not turned out as badly as first predicted, he concedes, thanks to a booming tourism industry, healthy commercial fishing harvests, and other economic diversification.

''The good news is we've got a long and rich history,'' he says, smiling. ''We used to be the pearl of the Pacific, before San Francisco.''

Don Muller, a local environmental activist and bookstore owner, is also optimistic. He notes that last April the US Forest Service cancelled Alaska Pulp's Tongass timber contract, which was not scheduled to run out until 2011. The end of Alaska Pulp's long-term contract, which came after it closed the pulp mill, will aid small wood-products operations, like those making musical instruments and other specialized goods, he insists. ''It's the best thing that's ever happened in terms of Forest Service practices for Sitka.''

Since the pulp mill closed, over $1 million in federal and state assistance has flowed into Sitka, some of it funding a career-transition program for the nearly 400 workers who lost their jobs.

Another source of new Sitka money was the resolution of a bitter class-action lawsuit brought by kayak seller and environmental activist Larry Edwards. He had charged Alaska Pulp with poisoning waterfront property values with mill air and water pollution. The $3.27 million settlement, approved by a Juneau-based state judge in November, allocates $2 million into a community trust fund to provide cultural programs and scientific education.

When running, the mill was a frequent battleground for combat. Disputes erupted over its Japanese ownership, labor practices, timber needs, dominance of the local economy, and its waste discharges that critics say bleached seaweed, poisoned fish, killed lichen on nearby trees.

Mr. Muller speaks of the time in 1992 when a protestor chained himself to his store's door in support of Alaska Pulp. ''I bet this is the only bookstore in the United States that's ever had somebody chain themselves to it. I think that's quite an honor,'' Muller says as customers browse in his shop.

Down the street, City Manager Paxon blames Sitka's economic downturn on the Clinton administration and environmentalists like Muller. ''He's a revolutionary,'' Paxon says of the book seller. ''He's out to close down the Tongass. He's the enemy of a lot of people.'' But mill supporters have begun to discover common ground with mill critics, Paxon adds, softening his tone and noting that Muller and other local environmentalists have helped out in newly organized community panels that seek ways to build a diversified economy. ''I think we are talking with each other better and we're finding that we all want and need the same things,'' Paxon says.

The roots of Sitka's battles run deep. Five decades ago, the Tongass was considered territory waiting for conquest by axe and chain saw. To encourage development, the Forest Service in the 1950s offered long-term supply contracts for cheap and plentiful timber to companies that promised to build and operate pulp mills. Contracts went to Alaska Pulp, the first post-World War II Japanese investment in the United States, and to the Ketchikan Pulp Company.

But over the ensuing years, knowledge about ecology grew and public attitudes about natural-resource management changed. Wilderness areas were established, land claims of Alaskan natives were settled, alternative uses such as commercial fishing, tourism, recreation, and traditional native food-gathering received increased attention.

Today, every management plan and every adjustment in the timber-sale program is the arena for fights over the Tongass's trees, streams, mountains, fish, and animals. Logging supporters argue that generous timber contracts are the lifeblood of an industry that has few other timber sources, now that Native-owned forest lands have been depleted of their trees. Ecologists point out, however, that the federal Tongass Forest lost $23 million in 1992 alone. To illustrate what's behind such loss figures: Alaska Pulp's recently cancelled liberal contract would have enabled it to buy lumber in a certain area at $2 per thousand board-feet when current bidders have paid up to $95.

The end of that contract triggered another step by Alaska Pulp. It shut down a sawmill Nov. 30 for the winter, and perhaps longer, claiming the Forest Service was not supplying enough timber. But the company declined to bid in a sale of 27 million board feet that was held a day before it said it would close the mill.

Critics of Tongass timber practices have lost key allies with the Republican takeover of Congress. Nonetheless, Alaska Pulp vows it has pulled out of the Tongass pulp business for good.

*Second of two articles. The first appeared Jan. 6.