The U.S. Forest Service has lost millions of dollars in income from two timber companies found guilty of an antitrust conspiracy in Alaska, but the Department of Justice has declined to prosecute them, according to a House investigation.
Forest Service estimates of its losses to Louisiana Pacific-Ketchikan (LPK) and Japanese-owned Alaska Lumber and Pulp (ALP), the two major timbering firms in the 16-million-acre Tongass National Forest, range from $63 million to $81 million.
Documents made public by Rep. James H. Weaver (D-Ore.), chairman of the House Interior subcommittee on forestry, indicate that the Civil, Criminal and Antitrust divisions of the Justice Department all declined to go along with Forest Service recommendations for legal action.
Bill Brizee, an attorney in the office of general counsel at the Department of Agriculture, parent agency of the Forest Service, said the USDA was puzzled by the Justice Department's refusal to move on the criminal or antitrust fronts. But he said the Civil Division is continuing to collect information on the damage question and possible legal action.
The Forest Service damage calculations were in two separate assessments, based largely on disclosures in the 1981 trial of a civil suit by a small logging company in Alaska charging the two big firms with restraint of trade and conspiracy.
The 9th U.S. Circuit Court of Appeals affirmed the June, 1981, district court ruling against LPK and ALP. A request for reconsideration was rejected and a spokesman for Louisiana Pacific, based in Portland, Ore., said last week that the firm intends to carry its appeal to the Supreme Court.
Although much of the data put together by the Forest Service reviewers was related to events before 1975, when the suit was filed, both studies released by Weaver said there was evidence that the companies had continued questionable practices that were depriving the government of earnings from timber sales.
In its referral to the Antitrust Division, the USDA counsel's office said that the companies maintained false logging invoices, made false statements in connection with their bidding practices and made false representations in association with record keeping.
The companies are operating on a 50-year contract dating back to the 1950s. Prices they pay for the publicly owned timber are set far below mainland rates as an inducement to harvest timber in the Tongass, largest forest in the national system.
LPK, for example, pays $3.05 per 1,000 board feet on high-value timber that sells for $150 or more per 1,000 board feet in the Pacific Northwest. ALP pays $1.48 for the same timber, according to Weaver's investigators.
The prices are set by the Forest Service after reviewing information provided by the companies on how much timber they cut and their processing and operating expenses. The damage reviews by the Forest Service indicated the firms had overstated expenses while underreporting the amount of timber cut.
The rates fixed under the 50-year contract, according to the USDA general counsel's communications with the Justice Department, also have allowed LPK and ALP to outbid smaller competitors on independent sales in the Tongass, offsetting their losses with profits assured under the long-term arrangement.
In one reply, the deputy assistant attorney general for antitrust, Helmut Furth, conceded that the 50-year contract gave the two companies monopoly power, but he declined to initiate criminal or civil action because statutes of limitation had expired. Justice, however, did not carry out the investigation of post-1975 activities sought by the USDA.
Weaver said the documents accumulated since 1981 by his staff investigators show "a long history of chicanery in the Tongass National Forest by these companies and virtually nothing being done by the Forest Service or the Department of Justice to stop it."
"We're frankly amazed at what we've read and very much appalled that the Forest Service has not taken steps to remedy any of this except in minor ways," Weaver said.
Jerry Griffith, a Louisiana Pacific official in Portland, said Friday that the firm's Alaska subsidiary, wholly owned by LP since 1976, had followed "the letter of the contract," and he accused Weaver of conducting a "malicious" assault on the company.
"This has become a very pregnant political cow to milk by some of our little friends back there, principally Mr. Weaver among them ....We really can't specifically comment on his charges because he has refused to see our people or share his documents ....This isn't the first time Mr. Weaver has maliciously assaulted us, and it is hard to understand his motivation. It's the most unfair assault we've had."
Weaver said he is scheduling subcommittee hearings to delve deeper into the Tongass situation. "There are enough allusions in these documents to the possibility that this conduct continues today that a thorough investigation is needed," he said.
John B. Crowell Jr., a former general counsel of LPK's parent company, the Louisiana Pacific Corp., is assistant secretary of agriculture for natural resources and environment, the overseer of the Forest Service.
Crowell, during controversy over his nomination in 1981, promised the Senate he would recuse himself from any matters involving his former company and the Forest Service. Weaver said he had found no indication that Crowell has been involved in the Tongass issue since his confirmation.
"I have found no connection between Crowell and this case," Weaver said, "but it is an impossible situation. If the documents we have now had been available at the time of his confirmation, it is likely he would not have been confirmed."