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Timber Talk 11/25/13

Posted By John Dorka, Tuesday, November 26, 2013

Hardwood Check-off” News
Federal Register Notice on Hardwood Lumber and Hardwood Plywood Research and Promotion Program -
Last week, the USDA released for comment the Hardwood Lumber and Hardwood Plywood Research and Promotion Program, more often referred to as the "Hardwood Check-off” program. This proposal has been in discussion for several years and it now appears that the USDA, which has ultimate responsibility over commodity check-off programs, is moving ahead with the formal notice. The notice is for a 60-day public comment period which will run through January 13, 2014. Briefly here is how the check-off will work:

  • According to the order, the purpose of the program is to strengthen the position of hardwood lumber and hardwood plywood in the marketplace and maintain and expand markets for hardwood lumber and hardwood plywood.
  • The jurisdiction for the check-off comes through federal legislation with oversight from the USDA. However, the check-off funds are administered by a board of forest products industry members which must be approved by the USDA.
  • The program is financed by an assessment on hardwood lumber, hardwood lumber products, hardwood lumber value added products, and hardwood plywood manufacturers.
  • This is the initial assessment rate:
    • $1.00 per $1,000 in sales of hardwood lumber and hardwood lumber products;
    • $0.75 per $1,000 in sales of hardwood lumber value-added products; and
    • $3.00 per $1,000 in sales of hardwood plywood.
    • Hardwood lumber manufacturers with more than $2 million of annual sales and hardwood plywood manufacturers with more than $10 million of annual sales would be assessed the fee. Manufacturers under these thresholds would be exempt.
    • The program takes effect only if a majority of manufacturers who would be assessed the fee vote to put it into place. A referendum would be held among eligible manufacturers.

You can read the formal order here and here is the main page for the proposal with a brief description and outline for the order. Those who would like to comment may do so on-line and can comment here. Those who prefer to provide written comments can mail or fax to the following address/number:

  • Promotion and Economics Division, Fruit and Vegetable Program, AMS, USDA
    1400 Independence Avenue SW., Room 1406-S, Stop 0244
    Washington, DC 20250-0244
    Or by fax: 202-205-2800

Industry Approves Paper Check-off Promotion Program
As the hardwood industry reviews and debates the hardwood check-off program, the paper and paper packaging industry recently voted overwhelmingly to approve a paper check-off program. The vote for that industry took place October 28 through November 8. USDA indicated that 85% of the companies which voted, who collectively produce 95% of the industry production, approved the measure. You can read a brief news release on the issue put out by the American Forest & Paper Association. There is also a Softwood Check-off Promotion Program that has been in place since 2011. That program promotion is directed toward architects, builders, and other professional wood consumers. The Paper Check-off is intended to direct promotional efforts to the consuming public, with messages about the sustainability and environmental benefits of paper products.

Glatfelter 2013 Best Seller List of Books/Steve Brown News
Thinking of buying books as Christmas presents?  If so, you may want to take a look at the list of 2013 Best Sellers  that are printed on Glatfelter paper.  The list has about 40 titles and a half dozen are award winning books, with one Embers of War: The Fall of an Empire and the Making of America's Vietnam by Fredrik Logevall (Aug 21, 2012) the winner of the 2013 Pulitzer Prize.  Purchase an important forest product and help an Ohio forest products industry member-company.  Mentioning Glatfelter, many  have no doubt also heard that Steve Brown, Glatfelter Director of Operations, Fiber Supply has announced his retirement and will be leaving for the gentler pages of the next chapters of his life in March, 2014.

Ohio Legislative News
Municipal Tax Overhaul Goes to Senate for "Lengthy” Review.
HB 5, Municipal Tax Collections, passed the House last week after nearly 3 years of deliberations on the issue. The bill now goes to the Senate where it is expected to be considered over a long period of time, with no interest in moving it quickly. In spite of the long review and deliberation in the House, there is still significant opposition to the bill coming from the Ohio Municipal League (OML), which believes that the process used to make late changes in the bill was a "bait and switch” of sorts that left OML out of the full review process. The supporters of the bill believe that it will create municipal environments more conducive to business growth and development. Among items that the supporters believe support business development are, the law will:

  • Consolidate tax returns to improve Ohio's competitiveness and reduce the cost of compliance and administration by reducing unnecessary returns;
  • Codify 11 common-law elements of the domicile test and permit the tax administrator and taxpayers to use other facts to show residency;
  • Amend the law pertaining to the apportionment of income to mitigate negative revenue impact to municipalities and reduce costs;
  • Create uniform audit and appeal procedures to ensure fair, local enforcement of municipal tax;
  • Enhance current LGF reporting of tax amounts collected each calendar year for publication in an effort to increase transparency;
  • Establish uniform due dates for all municipal tax returns and uniform withholding requirements for all employers;
  • Establish standard interest rate and penalty provisions to prevent imposition of usurious interest rates;
  • Create a single layer of tax by specifying that only a city of residence can tax an individual partner, while all other cities must tax partnership at the entity level;
  • Treat S-Corp owners the same as current law.

Some have considered Ohio’s municipal tax collection system among the worst in the country as there are more than 600 municipal corporations with no current standardization among them. The bill is intended to fix many of the problems. In other action relating to the tax overhaul, the County Commissioners Association of Ohio asked the Senate Tax Reform Subcommittee to expand the state sales tax base to more services and would like to increase the current 1.5% permissive tax level to 2% for the benefit of counties. County Commissioners would also like authority to enact permissive motor vehicle license taxes for more money to fund road and bridge maintenance.

Senate to Unveil a Compromise on In-State Renewable Energy in HB 58 - Senator Bill Seitz (R-Cincinnati), Chairman of the Senate Public Utilities Committee has agreed to go with a compromise version of HB 58 which would maintain renewable energy standards in Ohio for several more years and would drop references to Canadian hydropower. Sen. Seitz originally wanted to eliminate the current requirement that half of Ohio’s renewable power come from in-state sources. The standard requires that by 2025, 12.5% of Ohio’s energy must come from renewable sources and that consumption must drop by 22%. The compromise version will include a preference for Ohio-produced renewable energy as long as it does not cost 5% more than out-of-state renewables. The reference to Canadian power has been dropped from the bill. However, there are current efforts to get Canadian power tied into the PJM footprint and when that happens and when that happens, the bill would allow it to be counted as part of the renewable portfolio standard. Opponents to the compromise which is a coalition of mostly environmental groups that includes the Ohio Manufacturers Association (OMA) and the Ohio Hospital Association have an alternative proposal which would remove all the changes that would raise electricity bills, such as the shared savings language, and would eliminate provisions that water down energy efficiency standards, such as allowing utilities to count old power plant upgrades. It appears the coalition proposal will get no traction with the committee.

Ohio Ballot Board Unanimously Approves Green Energy Constitutional Amendment Language - Last week, the Ohio Ballot Board unanimously approved a controversial plan to amend the constitution to authorize the issuance of $13 billion in bonds for green energy projects. The Ohio Ballot Board does not take a stand on the issue but merely determines whether the issue comprises one or more ballot issues. Secretary of State John Husted chairs the Board spoke about concerns he has with the proposal. He stated that in his opinion, the proposal would benefit out-of-state interests and preclude oversight from Ohio policymakers. The plan proposes a commission which would determine how the money is spent and it would be incorporated in Delaware but operate in Ohio. Secretary Husted said "It's highly irregular and a bit startling that an entity that seems to have no connection to Ohio is in a position to amend the Ohio Constitution, and I would highly recommend to the voters that they reject it if it ever becomes a question before them."

House Passes Senate Joint Resolution Urging Federal Balanced Budget Amendment - Last week, the Ohio House passed SJR 5, Balanced Budget Amendment, urging Congress to propose a balanced budget amendment to the U.S. Constitution. The resolution had been passed by the Senate in late October. The resolution also would authorize Ohio to partake in a Constitutional Convention should the Congress not elect to take action on an amendment. For states to take action, 34 of 50 must agree to holding a convention, and so far 19 have agreed to do so. Ohio would be the 20th. Governor Kasich has expressed support for a Balanced Budget Amendment.

Inspector General Finds Department of Taxation Illegally Withheld Millions of Dollars in General Business Tax Money for Years - While conducting an investigation over alleged employee theft in the Department of Taxation, State Inspector General Randall Meyer found that the Department of Taxation for years has been illegally withholding tax refunds due to businesses. In essence, the Department of Taxation officials said that the practice at the agency was not to notify taxpayers of the potential overpayments unless the taxpayers specifically inquired about them. The investigation identified numerous problems in the agency’s procedures as well as identified problems with the "culture” in the agency, one in which many employees referred to the overpayments as "our money” or "Taxation’s money.” According to state procedure, if the overpayment is not claimed in 4 years, it automatically goes to the general revenue fund. Tax Commissioner Joe Testa has advised that he has immediately taken steps to correct all problems and to return $30 million in general business taxes and advised that there are Commercial Activity Tax (CAT) overpayments that must be returned also.

Webinar on Status of Domestic Wood Packaging Material (dWPM)
This is another reminder of a webinar on the Status of Domestic Wood Packaging Material (dWPM) to be held January 24, 2014 at 1:00 pm sponsored by the WVU Appalachian Hardwood Center and the USFS Wood Education and Resource Center (WERC). A description of the purpose of the webinar including speakers featured during the discussion can be found here. The webinar is free but the organizers ask that attendees pre-register as attendance is limited. To register, email jslahor@mail.wvu.edu.
Department of Defense Adopts New, Broader Green Building Policy
Last week, the Department of Defense (DoD) announced that it had adopted a new green building policy which recognizes both Green Globes and LEED building standards. Prior to this policy change, DoD only recognized the LEED standards, which discourages the use of wood in construction.

Family Forest Action Network Grasstops Webinar
Interested in learning about new research on effective advocacy techniques to build relationships with your Congressional representatives? If so, you can participate in the December Grasstops Webinar hosted by the American Forest Foundation on December 11, 2013 at 12:00 noon EST. It’s free but you need to register ahead of time, and can do so at this site.

Green NGOs Go on Attack Against Carbon Neutrality of Biomass
AF&PA is reporting that a coalition of environmental NGOs are challenging the carbon neutrality of biomass power with the SEC (Securities and Exchange Commission) and EPA. The environmental groups are basing their arguments on the results of the Manomet Study in Massachusetts several years ago that concluded biomass is not carbon neutral due to the "time lag” for forests to regrow and capture carbon after they have been harvested for energy. The conclusion is that the time lag is so long in some cases that burning biomass with its level of emissions was worse than burning fossil fuels. The National Council for Air and Stream Improvement (NCASI), an independent non-profit that researches issues important to the forest products industry, studied the issue on break-even time for biomass by which using manufacturing residuals for energy produces lower climate effects than disposal. NCASI found that there is a very short time for manufacturing residuals, approximately 2.4 years which is extremely short and arguably negligible in the overall argument against using the materials for energy production. It is yet to be seen if the NCASI study affects decision making by both the SEC and EPA.

Wood Education and Resource Center (WERC) November Update
You can see the latest Update from WERC on-line. The November update contains information on a Life-Cycle Assessment of Solid Hardwood Flooring, prepared by the Sustainable Resources Institute. There were very interesting results on the positive environmental benefits of hardwood flooring manufacturing contained in the Executive Summary on page 2 of the report. The WERC report also has an Update on the Housing Market by Urs Buehlmann from Virginia Tech and an Update on Wood Markets by Dan Deckard from Minnesota DNR. There is information on the latest with European Timber Regulations. Finally, you can access a number of archived webinars that can be viewed at your leisure.

Happy Thanksgiving!
I wish all the members of the Ohio Forestry Association and their families a happy and enjoyable Thanksgiving holiday. We have much to be thankful for, and I hope all take the time to give thanks to our God who has blessed us in so many ways and to those who mean so much to us.

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