After trying without avail to help a home-state timber company avoid federal clean-water laws, Sen. Ted Stevens (R-Alaska) has engineered an alternative solution that the taxpayer, not the company, would finance.

Stevens wedged an amendment into an appropriations bill that would give the Alaska Pulp Corp., a Japanese-owned pulp mill in Sitka, Alaska, $7 million from the U.S. Treasury to curb its pollution.

Stevens' office said the money would finance a "demonstration" waste-water plant at the pulp mill, which dumps about 16 million gallons a day of untreated waste into Alaska's waters.

Some of Stevens' colleagues have another term for the grant. "An unwarranted federal bailout" was the phrase four key members of the Environment and Public Works Committee used when they unsuccessfully tried to keep the amendment out of the financing bill for the Housing and Urban Development Department and independent agencies.

The provision also has created a stir in the pulpwood industry, where most mills have been operating for years with pollution-control equipment that they paid for themselves.

"This is the only mill that hasn't complied, and it's one with which we have to compete," fumed one timber lobbyist. "We had to put in all the environmental controls and we paid through the nose."

According to a lawyer for Alaska Pulp, the bailout is justified because the mill's location along the rugged Alaskan coast makes standard technology unusable. "Without this grant, it would be tremendously expensive," he said.

The mill's competitors contend, however, that there is "nothing new" about the antipollution technology contemplated for Alaska Pulp.

An aide to Stevens acknowledged that the technology has already been proved, but said the money is needed to save the financially pressed mill and jobs it provides. "This will not only help the industry, but it will help the mill and the community," she said.

But the proposal hasn't gone over well even in Alaska, where the state's largest newspaper, the Anchorage Daily News, called it "bad policy for the country." Nor has it done much to endear Stevens to some of his Senate colleagues, who need to trim $1.1 billion to hold the HUD-independent agencies appropriations bill within its budget target.

It isn't the first time Stevens has helped out Alaska Pulp, whose 198 shareholders include some of Japan's leading financial institutions and corporations, among them the Industrial Bank of Japan, Mitsubishi and Yamaha.

Last year, Stevens and Sen. Frank H. Murkowski (R-Alaska) effectively blocked action on the Clean Water Act by refusing to abandon their demands that the company and a similar mill in Ketchikan, owned by the Louisiana-Pacific Corp., be exempted from the law.

Both mills have been operating under waivers from the law for more than a decade, and are still not complying with pollution-control requirements that other companies have been required to meet since 1977.

The Environmental Protection Agency refused to extend the waivers last year, rejecting the companies' argument that they deserved an exemption because of a "unique" situation.

The Alaska senators wanted Congress to override the decision, but the Clean Water Act's sponsor, Sen. John H. Chafee (R-R.I.), said he'd sooner let the bill die than grant a legislative exemption. Die it did.

Louisiana-Pacific has since agreed to install the pollution-control equipment on its own. The Clean Water Act, however, is still awaiting congressional approval. The Senate finally acted on the measure this summer -- after Stevens and Murkowski attached an amendment intended to make clean-water compliance easier for the state's log dumps.

The Senate is expected to approve the full spending bill, including the demonstration project, next week. That provision is not part of the House appropriations bill, but is considered to have a better than even chance in the Senate-House conference because Stevens is expected to be a conferee.