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Timber Talk 6/10/13

Posted By John Dorka, Monday, June 10, 2013

Ohio Legislative and Policy News

  • Ohio Senate Budget Changes - The Senate Finance Committee completed its work on the state budget and voted the budget with a host of changes (almost 300 amendments) out of committee for full Senate vote on June 7, which the Senate approved. The budget now must go to a conference committee between both chambers. The vote was 23-10, mostly along party lines Here are just a few points about the Senate version, some of which may be of interest to OFA:
    • There is a 50% small business tax cut, but not for personal income taxes. That could change in the conference committee, since the House had a different version of a smaller business tax cut while maintaining some level of personal income tax reduction. The Senate version offers a 50% reduction for "pass through” businesses to deduct 50% of their annual income up to $750,000;
    • Changes to the Commercial Activity Tax (CAT) remain as an option for discussion as a way to increase general revenues so that both the small business tax cut and personal income tax cuts can be funded;
    • The school funding formula was changed and should increase funding for primary and secondary education by $221 million. A total of $13.65 billion over two years would go the schools. This amount of funding provides $5,745 per pupil in FY 2014 and $5,800 per pupil in FY 2015;
    • In spite of continued and mounting pressure to increase Medicaid funding from a number of interests, the Senate elected not to change the current funding standards. It appears that the issue will be handled as stand-alone legislation after the budget in passed. There is a surprising amount of bi-partisan discussion to do something to look at and address Medicaid funding;
    • Clean Ohio funding was doubled from $26 million to $52 million for the biennium.
    • The Senate gave local governments the authority to discuss tax breaks and business deals in private, similar to authority given to JobsOhio to keep certain economic development information private on business deals. This authority for local governments already exists in West Virginia, Kentucky, and Indiana.
    • The Senate rejected a budget amendment offered by Sen. Bill Seitz (R-Cincinnati) to change Ohio’s current energy efficiency standards. The standards were established in the state energy bill (SB 221 in 2008) when Ohio passed new renewable energy standards. Some believe that the standards, which are scheduled to fully play out through 2025, will become increasingly more difficult to accomplish.
  • Administration Proposed New Oil and Gas Severance Tax Formula - The legislature has not been favorable at all to the Governor’s severance tax proposal and shot it down at every chance in both chambers of the House. However, the Governor is taking another approach and hoping it will be included in the conference committee version of the state budget. Originally proposed as increasing the severance tax to 4%, the new proposal would increase the tax to 4.5% with 25% of the amount collected re-directed back to 33 Appalachian Counties where most of the drilling is taking place. The remaining 75% would fund a statewide income tax reduction. Over 5 years, there would be an expected $370 million returned to the counties and $1.1 billion in tax cuts. The oil and gas industry remains opposed to the tax increase proposal. Here is an article on the issue.

Federal Legislative and Policy News

  • EPA Does Not Disappoint - We discussed the Silviculture Regulatory Consistency Act (S. 971 / HR 2026) in the last report and mentioned why it is important that this legislation be passed, particularly to stem off future regulation. It has recently been reported that the EPA has already drafted, but not published, an "Advanced Notice of Proposed Rulemaking” to consider options and exercise its authority to regulate forest roads. The National Alliance of Forest Landowners has found that the advance notice is expected to propose minimum criteria for state BMP programs and terms that designate federal compliance certification, which will make the programs de facto regulated. There will also be guidelines for prioritizing and addressing water quality issues with discharges from forest roads. There will be guidelines for accountability measures and public involvement. So there you are. This is why we need to support the proposed legislation.
  • Senator Cruz Proposes "Voluntary” Check-off Programs - During recent Farm Bill activity, Sen. Ted Cruz (R-Texas) filed an amendment to the Senate version of the Farm Bill making participation in commodity "check-off” programs, which would include the forest products programs, voluntary instead of compulsory. The authority for Commodity Check-off programs is established under federal law but each is administered and run a designated industry trade group. Once the industry establishes the desire for a check-off program through a vote of its members, then industry members who meet size and production criteria are required to pay the designated check-off amount. Sen. Cruz would like to make such programs voluntary for industry members.

OFA Forestry and Wildlife Camp Sees Major Jump in Registration
The OFA Forestry and Wildlife Conservation Camp takes place the week of June 10-15. Based on Sunday registrations, 114 campers registered and showed up for camp this year. This is the largest registration in a number of years, and significantly higher than 2012 when 77 attended the camp. That is nearly a 50% increase, which is pretty amazing. Even more, camp attendance had been slowly eroding for the previous 3 years. Maybe, the trend is reversing and we can expect an increasing trend in the near future. Of particular note is that a larger than normal percentage of attendees are first-time campers which bodes well for return trips from many campers. The OFA Camp Committee of Jeremy Scherf (DOF), Ryan Waid (Glatfelter), and Marne Tichenel (OSU Extension) came up with a number of new marketing and outreach ideas and tools that together may well be the reason interest in camp shot up so much this year.

Low-Cost Carbon Credits Driving Europe to Import Coal, Wood, and Biomass
Here is a surprising change of events. This article from Sustainable Plant indicates that US coal and logging industries are growing, at least partially due to fuel demand in Europe. It appears that expensive alternative fuels in Europe along with declining carbon credit costs are creating incentives for European energy producers to burn solid fuels. A few of the surprising points in the article:

  • The number of new coal-fired power plants in planning or construction in Europe is rising;
  • The electricity production of existing coal-fired power plants is up substantially;
  • A large number of dedicated biomass power plants are underway;
  • Major investments are being made to convert coal-fired power plants to burn combinations of biomass and coal;
  • Coal imports are soaring;
  • Gas-fired power plant construction is down.

Because of this, wood pellet imports from the US are soaring. I take issue with the final point in the article about trees and carbon emissions. The explanation negates the argument for planting more trees to be used for fuel. Even though the article makes the point that trees are "carbon neutral” it argues against it at the end.

Not Enough Raw Material Supply for the Pellet Industry?
In related information on wood pellets, an article on the National Hardwood Flooring Association website, reports that there may not be enough raw material supply for the expanding wood pellet demand. It appears from the article that the issue isn’t so much that the material isn’t there, it relates to the availability of certified wood to meet European demand. According to European Union regulations, the only wood eligible for import is that which can be certified as sustainably grown and legally harvested. As of now there are 121 operating pellet plants in the US, producing 8.3 million metric tons per year with another 16 proposed plants in the works, with an additional production of 6.5 million metric tons. (1 metric ton = 2,205 pounds; I didn’t know). It remains a confounding issue that US sourced wood is not in and of itself considered coming from sustainably managed forest. US forests are not declining in amount, are growing more wood than harvested or lost to mortality, and studies show that the wood is acquired legally.

FRA Letter to the Editor in Wall Street Journal on US Timber Harvesting
Deb Hawkinson, President of the Forest Resource Association (FRA) recently had a letter to the editor published in the Wall Street Journal (WSJ) concerning a response to criticism from environmental groups that state BMP programs are not effective and that logging threatens forest cover. The criticism apparently stemmed from the fact that Europe is getting an increasing amount of wood fiber from the US South in the form of wood pellets for energy. The claim is that it is sourced there because of a lack of regulation and sustainability standards. The response is brief but excellent and makes a good case for the sustainable management that is taking place in American forests. Along that same line, there was another letter to the editor in the WSJ from Rolling Stones Keyboardist and managed forest advocate Chuck Leavell which provides similar arguments to those of Deb Hawkinson but does so in a longer narrative and as a forest landowner. Both are worth taking a moment to read.

AHEC Supports First Ever "Design Mission Middle East 2013
The American Hardwood Export Council officially endorsed the first ever mission in the middle east for decision makers, designers, architects, engineers, consultants, and other involved in major construction projects. The purpose of the mission is to facilitate business for a large architecture and design market in the middle east. AHEC believes it is important to be there to support American Hardwoods as a favored material for construction, particularly for interior design. In addition to the inherent value of US hardwoods themselves, it is an opportunity to talk about the strong environmental performance of American grown and supplied hardwood. US forests are sustainably managed, have an expanding forest base and there are low carbon emissions with the use of wood.

Ohio State Patrol to Target Seatbelt and Aggressive Driving Violations on I-70 this Summer
The Ohio State Patrol will team up with the Indiana Patrol over the next 3 months to target seatbelt and aggressive driving violations on the entire length of I-70 through Ohio and Indiana this summer. The OSP advises in will use a variety of monitoring techniques and tools to determine violators. OFA members, employees and others should always be careful, but be especially watchful on I-70 this summer.

Upcoming Events - (See the OFA website for the full list of upcoming events)

  • OWIN Summer Meeting - July 24-25, 2013, Christopher Conference Center, Chillicothe, OH.
  • Thousand Canker Disease (TCD) Training - July 31, 2013, Butler County Extension Office, Hamilton, OH. This is a cooperative effort between Ohio and Indian Extension Service. It is a day-long seminar designed for foresters, land managers and anyone who has an interest in what TCD means to our walnut resource. Register on-line at the Ohio Woodland Stewards website. There is a $20 registration fee which includes a lunch. The seminar runs from 9:30 am to 3:45 pm and includes a field visit.
  • OFA Lumberman’s Outing Golf and Clay Shoot, September 11, 2013; The Pines Golf Course, Orrville and Lost Bird Clay Shooting, Fredericktown.
  • Paul Bunyan Show, October 4-6, 2013, Guernsey County Fairgrounds.

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