SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Environmental Improvement Timber 
Contract Extension Act''.

SEC. 2. MODIFICATION OF LONG-TERM CONTRACT REGARDING TONGASS NATIONAL 
              FOREST.

    (a) Definitions.--In this section:
            (1) The term ``board feet'' means net scribner long-log 
        scale for all sawlogs and all hemlock and spruce utility grade 
        logs.
            (2) The term ``contract'' means the timber sale contract 
        numbered A10fs-1042 between the United States and the Ketchikan 
        Pulp Company.
            (3) The term ``contracting officer'' means the Regional 
        Forester of Region 10 of the United States Forest Service.
            (4) The term ``mid-market criteria'' means an appraisal 
        that ensures an average timber operator will have a weighted 
        average profit and risk margin of at least 60 percent of normal 
        in a mid-market situation, representative of the most recent 10 
        years of actual market data.
            (5) The term ``proportionality'' means the proportion of 
        high volume stands (stands of 30,000 or more board feet per 
        acre) to low volume stands (stands of 8,000 to 30,000 board 
        feet per acre).
            (6) The term ``purchaser'' means the Ketchikan Pulp 
        Company.
    (b) Findings.--Congress finds the following:
            (1) On July 26, 1951, the Forest Service, on behalf of the 
        United States, and the purchaser entered into a contract to 
        harvest 8,250,000,000 board feet of timber from the Tongass 
        National Forest in the State of Alaska. While the contract is 
        scheduled to end June 30, 2004, it acknowledges an intention on 
        the part of the Forest Service to supply adequate timber 
        thereafter for permanent operation of the purchaser's 
        facilities on a commercially sound and permanently economical 
        basis. This legislation is necessary to effectuate that intent.
            (2) A pulp mill or similar facility is necessary in 
        southeast Alaska to optimize the level of year-round, high-
        paying jobs in the area, to provide high value added use of 
        low-grade wood and by-product material from sawmilling 
        operations, and to maintain a stable regional economy.
            (3) The purchaser plans to make environmental and 
        operational improvements to its pulp mill, including conversion 
        to an elementally chlorine free bleaching process, expansion of 
        wastewater treatment facilities, relocation of the existing 
        wastewater outfall, and improvements to chemical recovery and 
        power generation equipment. Total capital expenditures are 
        estimated to be $200,000,000, $25,000,000 of which the 
purchaser has already invested.
            (4) Extension of the contract for 15 years is the minimum 
        reasonable extension period to allow amortization of these 
        environmental improvement and energy efficiency projects.
            (5) Ketchikan is the fourth largest city in Alaska. Its 
        economic and job base are extremely dependent upon the 
        continuation of the contract, which provides the principal 
        source of year-round employment in the area. The purchaser has 
        stated among its goals and objectives the following:
                    (A) Continuation of a long-term commitment to 
                Ketchikan and southeast Alaska, including maintenance 
                of a stable Alaskan workforce, utilization of Alaskan 
                contractors, vendors, and suppliers to permit those 
                businesses to hire and maintain Alaskan employees.
                    (B) Participation in the Forest Service's land 
                management planning process with other users so that 
                the process may be completed expeditiously with maximum 
                information.
                    (C) Adherence to sound principles of multiple-use 
                and sustained yield of forest resources providing for 
                the production of sustainable contract volumes for the 
                purchaser and the other timber operators in southeast 
                Alaska and the protection and promotion of other forest 
                uses, including tourism, fishing, subsistence, hunting, 
                mining, and recreation.
                    (D) Protection of air, water, and land, including 
                fish and wildlife habitat, through compliance with 
                applicable Federal, State, and local laws.
                    (E) Commitment to continue to explore new processes 
                and technology to maximize the use of timber harvested 
                and increase the value of products manufactured in 
                southeast Alaska.
            (6) The national interest is served by a policy that 
        accomplishes the proper stewardship of publicly owned assets in 
        the Tongass National Forest, a fair return to the United States 
        for public timber in the Tongass National Forest, and a proper 
        balance among multiple use interests in the Tongass National 
        Forest to enhance forest health, sustainable harvest, and the 
        general economic health and growth in southeast Alaska and the 
        United States in order to improve national economic benefits. 
        The national interest is best achieved by fostering domestic 
        forest product markets and by modifying the terms of the 
        contract pursuant to subsection (c).
    (c) Contract Fairness Changes.--The contract is hereby modified as 
follows:
            (1) Extension.--The term of the contract is extended by 15 
        years from June 30, 2004.
            (2) Sale offering plan.--The contract shall include a plan 
        describing the amount of volume, location, and the schedule by 
        which the purchaser shall receive the timber required by 
        paragraph (3) for the remainder of the contract term. The plan 
        shall be coordinated with the Tongass Land Management Plan.
            (3) Volume requirements.--The volume of timber required 
        under the contract shall be provided in 5-year increments of 
        962,500,000 board feet, which the purchaser shall be obligated 
        to harvest in an orderly manner, subject to the following:
                    (A) Until March 1, 1999, when the next 5-year 
                increment is provided to the purchaser, the Forest 
                Service shall provide the purchaser with at least 
                192,500,000 board feet per year of available timber at 
                a date certain each year and shall maintain a supply of 
                timber adequate to insure the purchaser can reasonably 
harvest 192,500,000 board feet each year.
                    (B) To ensure harvest in an orderly manner, the 
                contracting officer shall provide for the construction 
                by the purchaser of roads in portions of the 5-year 
                increment area of timber in advance of the 5-year 
                operating period by including such roads in the 
                environmental impact statement prepared for the 5-year 
                operating period.
                    (C) Timber selected for inclusion in the 5-year 
                increment shall meet the mid-market criteria.
            (4) Appraisals and rates.--The contracting officer shall 
        perform appraisals using normal independent national forest 
        timber sale procedures and designate rates for the increments 
        of timber to be provided. The rates shall not be designated at 
        a level that places the purchaser at a competitive disadvantage 
        to a similar enterprise in Pacific Northwest and those rate 
        shall be the sole charges the purchaser shall be required to 
        pay for timber provided.
            (5) Measurement of proportionality.--The Forest Service 
        shall measure proportionality using the following criteria:
                    (A) Measure for groups of all contiguous management 
                areas.
                    (B) Measure proportionality by acres.
                    (C) Measure proportionality over the entire 
                rotation age.
            (6) Conversion or replacement of pulp mill.--The purchaser 
        may convert or replace, in part or in whole, its pulp mill with 
        a facility that manufactures any other value added product that 
        utilizes pulp logs as a raw material component.
            (7) Unilateral termination.--The unilateral termination 
        clause of the contract is eliminated.
            (8) Subsequent modifications.--Any clause in the contract, 
        as modified by this subsection, may be further modified only by 
        mutual agreement of the Forest Service and the purchaser and 
        may be so modified without further Act of Congress.
    (d) Effective Date for Contract Modification.--
            (1) Effective date.--The modifications made by subsection 
        (c) shall take effect 45 days after the date of the enactment 
        of this Act.
            (2) Ministerial duty to modify the contract.--Not later 
        than such effective date, the contracting officer shall revise, 
        as a ministerial function, the text of the contract to conform 
        with the modifications made by subsection (c) and implement the 
        modified contract. The contracting officer shall make 
        conforming changes to provisions of the contract that were not 
        modified by subsection (c) in order to ensure that the 
        modifications made by such subsection are implemented.
    (e) Transition Timber Supply.--Timber volume available or scheduled 
to be offered to the purchaser under the contract in effect on the day 
before the date of the enactment of this Act shall continue to be 
offered and scheduled under the contract as modified by subsection (c) 
along with such additional timber volume as is necessary to satisfy the 
timber volume requirement of 192,500,000 board feet per year.
Output: Environmental Improvement Timber Contract Extension Act - Extends and modifies the timber contract between the United States and the Ketchikan Pulp Company with regard to the Tongass National Forest, Alaska.