First Quarter Lumber Recovery

"Prospects for sawmill profitability have increased significantly in 2010, leading curtailed and closed sawmills in the South to reopen," observes Forest2Market in a May 6 news release, pointing to a "gap between input and output prices" in Southern yellow pine although indeed noting rising sawtimber prices.  Forisk Consulting reported a 6.1% increase in pine sawtimber consumption in the South during the first quarter, and a 1.1% demand increase for pulpwood, venturing: "Look for pulpwood demand to reach pre-decline levels by 2013, as OSB and bioenergy facilities increase consumption."

First-quarter reports from paper companies generally included optimistic forecasts, including from the fine papers sector, although in the meantime the recent rise in the value of the dollar against the euro may mean that the protection currency factors have provided to U.S. basic industries' international competitiveness may soon fall away.

USDA Releases "Rural Transportation" Study

We have noted--and the American Trucking Associations are becoming increasingly vocal on the point--that the federal Department of Transportation has taken up a strident anti-truck line in recent policy statements.  ATA President Bill Graves recently pointed to "comments that have been made that appear to disparage the efficacy of our industry, of moving freight by truck . . . suggesting that DOT has positioned itself to favor one mode over another."  The May 11 Transport Topics saw fit to publish a comment from former Transportation Secretary Samuel Skinner (who served under the elder President Bush), attempting to defend current Transportation Secretary Ray LaHood:  "The priorities are being driven out of the White House, and that's not a reflection on Ray LaHood," whom he characterizes as a "logical person and a good thinker."  Skinner notes, "When the president speaks, people respond."

White House influence may be detected in Department of Agriculture policy positions, as well.  On April 27, USDA released an approximately 500-page Study of Rural Transportation Issues "in response to Section 6206 of the Food, Conservation, and Energy Act of 2008."  And, to be sure, the Study shows most interest in rail options--devoting nearly 7 pages in the Executive Summary to praising rail's potential to broaden its reach in enhancing economic development in the rural U.S.--in mining and manufacturing, as well as in farming and forestry-and proposing massive new investment toward that end as well as further dismantling rail's suite of antitrust exemptions to increase its competitiveness in service to communities.

This Executive Summary devotes a single page to trucking's role, beginning auspiciously thus:  "Trucking is critical for American agriculture.  The industry carries 70 percent of the tonnage of agricultural, food, forest products, alcohols, and fertilizers.  It links farmers, ranchers, manufacturers, and service industries to grain elevators, ethanol plants, processors, feedlots, and ports.  More than 80 percent of cities and communities are served exclusively by trucks."

The "howevers" begin a bit further down the page, where the authors take a dim view of any prospects for efficiency improvements or--apparently--any new direction in federal investment:  "Agricultural interests argue that farm and forest products are heavy, bulky, and of low value, making transportation a large component of their final price and would like to see a limit of 97,000 pounds with a sixth axle on Interstates.  Studies have indicated that trucks do not bear the full cost of the damage they cause to highways.  Increasing allowable weight without a sixth axle would increase pavement maintenance costs, requiring more revenue for maintaining the highways.  Also, existing bridge design capacities may not permit bridge loadings without significantly shortening bridge lives, which would of course increase the required investment in highways."

The Study's Chapter 13, dedicated in more detail to trucking options, stays within those

parameters, summarizing the proposal for truck weight reform without proposing a cost-benefit analysis or expressing any vision for improving trucking's efficiency within a comprehensive infrastructure improvement plan.  In short, the Study concedes trucking's dominant position in agriculture and forestry but suggests the only new direction for development is investment and new paradigms in rail.  (USDA has made this massive Study available for download, chapter by chapter, at http://www.ams.usda.gov/AMSv1.0/RuralTransportationStudy)

Independent Contractor Reclassification: Stakes Edge Upward

We noted in March that the President's 2011 Budget Proposal included a proposal to eliminate the Section 530 safe harbor, which protects legitimate independent contractors from reclassification as employees, with the assertion that this reform would save the Treasury $7 billion over the next decade in recovered employment taxes.  We are pleased to say that although budget negotiations are continuing, there has been no signal so far that this $7 billion in phantom revenues is attracting any undue attention.

It does, however, concern us, that the new Chairman of the House Ways & Means Committee, Rep. Sander Levin (D-Michigan) has expressed the priority of lowering taxes for the middle class without suggesting where compensating revenues would come from.  This sort of statement--posed to draw bipartisan interest--may cause legislators and interest groups to make another scan of unclaimed revenue possibilities with some kind of official endorsement, regardless of the shakiness of this untapped revenue claim's connection to reality.  In congressional bookkeeping, $7 billion in funny money is still $7 billion to spend.

FRA staff has joined representatives of other industries making extensive use of independent contractors--direct sellers, real estate agents, construction businesses, private care providers, trucking firms, hospital emergency rooms, and many other interests coordinated through the Independent Contractors Coalition--in visiting congressional staff, particularly on the Senate side, to educate them about the impacts of Section 530 repeal on industries, productivity, employment, communities, and--finally--the tax base.

FRA members who would like to supplement the Coalition's work by making their own contacts, as constituents, may wish to contact FRA's National Office at 301-838-9385 and speak to Director of Communications Neil Ward or President Richard Lewis for support materials and other background.

When bad legislation passes, policymakers will respond, "we never heard from you."  Let's make sure they do hear from us while this issue is ripe.

FRA Defends Reforestation Guestworker Status

Timely action by the Forest Resources Association's National Forestry Contractors Task Group has saved the U.S. wood supply chain an estimated $145 million in annual reforestation costs, by successfully opposing the U.S. Department of Labor's proposal to transfer reforestation guestworkers from the H-2B visa program to the more burdensome H-2A program. The Department of Labor announced the favorable outcome this spring.

"This decision comes at a time of widespread concern about a decline in treeplanting nationwide," commented FRA President Richard Lewis. "Preserving reforestation contractors' ability to respond flexibly to the logistical realities of ensuring timely reforestation and related stand-improvement tasks will keep us on track as a competitive industry."  U.S. reforestation draws heavily on guest workers brought in from Mexico and Central America through a special work visa program which the Department of Labor regulates.

In FRA's submitted comment to the record on DOL's proposal, Lewis pointed out that the H-2A visa program, directed toward conventional farm work, does not have the flexibility to deal with the special needs of treeplanting, brush clearing, and precommercial thinning. He noted that the need to determine work locations and working hours, and to schedule inspected housing, months in advance of actual work, ignores the logistical decisions that must often be made within very short time-frames, because of weather and other variables.

FRA's statement also observed that guestworkers employed in reforestation under the H-2B program are already covered under the federal Migrant and Seasonal Workers Protection Act (MSPA), which addresses basic issues of housing, sanitation, and fair treatment.

The Department of Labor has stated that it will also revise the H-2B guestworker visa program rules in 2010. FRA's National Forestry Contractors Task Group is organizing now to participate in this Rulemaking process as well.

Domtar's "Put It On Paper" Campaign

We recently noted the printing and graphics industry's defense of using paper as a means of conserving forests at its http://www.printgrowstrees.org/ web site and campaign.  Domtar has recently launched a similar campaign, "Put It On Paper," to combat (says Domtar CEO John Williams) "simplistic messages" about alleged forest destruction, which induce consumer guilt over the use of paper to print out e-mails and web pages.

"There is an appropriate use for paper," notes Williams.  "You should feel comfortable to use it appropriately and you shouldn't be feeling there is some environmental negative when you use it.  People do not have to feel guilty about using paper to print."

The campaign will use (yes) print ads but also have a strong social media dimension via Facebook and YouTube, "in order to reach younger people, who tend to be printer-averse."

Greens Knock Washington Biopower Project

A 60-megawatt woody biomass-fuel power plant proposed for Shelton, Washington, to be operated by Adage LLC, is under attack by "citizen activists" claiming the emissions will cause local health problems and more general carbon balance effects, who have mounted a web site at http://www.nobiomassburn.org/ to put their case, as well as a recall petition against two County Commissioners who advocated the project.  According to the May 2 Bellingham [Washington] Herald, Mason County is experiencing double-digit unemployment, and the project, when proposed in February, was more than welcome for the hundreds of construction and operating jobs it would provide.  The Herald's account implies that Adage's feedstock would be entirely "wood debris."

One of the Commissioners under attack, Tim Sheldon, refers to project opponents as "a very small group led by certified kooks" who have "created a lot of heat, light and smoke with misinformation.  I think most people in Mason County are very interested in what Adage can do for our community."  There does appear to be an out-of-state influence.  "Dr. William Sammons, a Massachusetts-based pediatrician and staunch opponent of burning wood for energy" addressed a town hall meeting of 200 in Shelton in late April, claiming that EPA's air-quality stipulations are not strict enough in the matter of fine particulates, and adding the observation that "wood is not a true renewable resource like solar or wind."

Carbon Balance: Heavy Industry Weighs In

A group of associations representing energy-intensive U.S. industries, including the American Forest & Paper Association but also including aluminum, steel, chemical, and cement interests, have issued a statement claiming that "between 1990 and 2008, industrials was the only sector of the U.S. economy in which greenhouse gas emissions fell.  By contrast, during the same period, GHG emissions rose in the commercial, electricity, residential, transportation, and agricultural sectors," noting in addition that U.S. industrial GHG emissions fell more than three percent in 2009.  The associations, under the banner of the American Materials Manufacturing Alliance (AMMA), attribute this reduction not to any contraction in their sectors but to energy efficiency improvements.  AF&PA's CEO Donna Harman points out, "our members have reduced their greenhouse gas emissions per ton of product by 14% since 2000, and while we are proud of the accomplishments we've made so far, we can achieve more with the right policies that protect our international competitiveness."

Pennsylvania: "Negligible" Stream Impacts from Logging

The Pennsylvania Department of Environmental Protection's Integrated Water Quality Monitoring and Assessment Report--submitted to the U.S. Environmental Protection Agency--again demonstrates that timber harvesting is a negligible contributor to stream impairment in the state.  The Agency found that of the 9,413 stream-miles designated as "impaired" in the state, only 19 miles show silviculture as a cause of impairment, and only 2 miles are attributed to logging roads.  The leading causes of stream impairment are "abandoned mine drainage" (5,475 miles), agriculture (5,380 miles), and urban stormwater (2,299 miles).

The Pennsylvania Forest Products Association points out that this continued strong record of performance "remains a featured talking point for our industry as the Department of Environmental Protection revises its Chapter 102 regulations and Pennsylvania examines options to meet its Chesapeake Bay pollution reduction mandates."