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Timber Talk 1/20/14

Posted By John Dorka, Monday, January 20, 2014

2014 OFA Annual Meeting
You can now register for the OFA Annual Meeting on the OFA Website. We hope many of you can make it as the meeting is stacking up to be an important one. Things are beginning to happen with the Timber Theft Legislative proposal that I shared with you last week. There will be plenty of opportunity to talk about that at the meeting and legislative reception. In addition, I am hearing rumblings about possible legislation affecting the management of county and township roads that could have significant consequence to those who operate commercial trucks or have need to move forest products over local roads. Legislation may be introduced in the next couple weeks on that.

Those wishing to sponsor the event or wishing to exhibit can contact Gayla at OFA or also get information here. We will continue to accept nominations for OFA Award winners for a couple more weeks. The agenda can be found here and hopefully you have received registration information in the mail. As a reminder, those who will be staying at the Columbus Sheraton Hotel on Capitol Square can get the meeting rates by registering before February 12. Also, the Ohio Society of American Foresters has elected to hold a joint meeting with OFA on the first day of our event, March 5. Ohio SAF is interested in the Timber Theft Legislative proposal and is interested in having its members talk with legislators at the OFA reception that evening. Donations are being sought for the Tree Farm SIlent Auction at this time as well.

Statehouse News

  • Timber Theft - At the end of last week, OFA sent comments to Rep. McGregor per his request concerning the timber theft legislative proposal he recently released to interested parties. We are working closely with the proposal and trying to engage many of our members about the proposal and how they think it will affect OFA members all through the wood supply transaction, from landowner to logger to sawmill and manufacturer. A copy of the initial draft was provided in last week’s weekly report. If any member would like to discuss the proposal or provide comments to OFA, I encourage you to do so. It will be very helpful getting as much feedback as possible from the membership.
  • Supreme Court to Hear Constitutional Challenge of In-State Renewable Energy Law - Senator Bill Seitz, Chairman of the Senate Public Utilities Committee has been working to change Ohio’s renewable energy law and has made no bones that he believes elements of the law are unconstitutional. Last fall, he halted hearings on his bill to modify the state’s renewable energy standards and vowed to challenge the constitutionality of the standards in court. One of the issues he questioned was whether the current portion of the law requiring that half of Ohio’s renewable energy must come from in-state sources is constitutional. Before he could file a case, the Union Neighbors United, a group opposed to a proposed 140 MW wind farm in Champaign County, filed suit against the proposal based on the unconstitutionality of Ohio’s energy law. The group argues that the only reason it was approved by the Ohio Power Siting Board is that the energy would come from Ohio and they believe this is a violation of the Commerce Clause, which states that commerce between states may not be unjustifiably burdened, which they think the energy law does.
  • House Considering Overhaul of Oil and Gas Severance Tax Formula - The House Ways and Means Committee is considering an overhaul (HB 375) of the oil and gas severance tax. At the moment, at least one industry group has indicated an interest in changing the formula. The current proposal is considering basing the tax on net proceeds, but State Tax Commissioner Joe Testa is saying that approach would be a problem for the same reasons that the corporate franchise tax was eliminated. The administration has not yet decided if it will introduce its own version of a severance tax overhaul in the Mid-Biennium review process.
  • Legislation Introduced on Notifying Businesses of Tax Overpayments - Last week, HB 402 and SB 263 were introduced to deal with the issue of business tax overpayments and past problems with how the Department of Taxation failed to handle the tax returns. It had been reported in an audit of the Dept. of Taxation that millions of dollars in Commercial Activity Taxes were never returned to businesses and there was a poor system of monitoring in place to follow the issue. The legislation is intended to corrected problems with the procedures. HB 402 is sponsored by Rep. Al Landis (R-Dover) and Rep. Mike Duffey (R-Worthington). SB 263 is sponsored by Sen. Bob Peterson (R-Sabina) and Sen. Bill Beagle (R-Tipp City).

Farm Bill Action on Forest Roads
We have reported in the past that the Silviculture Regulatory Consistency Act has been included in the current version of the Farm Bill. (For a quick review of the issue, you can read a Fact Sheet on the Forest Resource Association website.) This law would make permanent the silvicultural exclusion of forest roads from NPDES permitting under the Clean Water Act. Many in the forest industry would like to make sure that this law stays included in the Farm Bill when it is passed. At the moment, there is some concern that it will not be included. FRA and other national organizations are reaching out and asking members to contact their Democratic Senators on the Farm Bill Conference Committee asking them to make sure the language is include. Sen. Sherrod Brown is not included on the committee, but West Virginia Senator Joe Manchin is one of the Senators targeted for contact. You can contact your Congressman directly at the link provided by FRA.

Some Boiler MACT Rules Ready to Take Effect
One of the Boiler MACT rules soon to take affect is the Generally Achievable Control Technology (GACT) requirements that cover boilers emitting less than 25 tons of hazardous air pollutants per year (boilers burning natural gas do not apply). Notification dates are soon approaching with initial notification taking place by January 20, 2014, and compliance by March 14, 2014, including completion of tune-ups and energy assessments. A Notification of Compliance Status insures you conducted the tune-up and assessment is due July 31, 2014. Mills that operate an existing boiler greater than 10 MMBtu per hour burning coal, or a newly-built boiler burning coal, biomass or oil will have other requirements for notification, planning and compliance. Facilities emitting greater than 25 tons of hazardous air pollutants per year have until January 31, 2016 to meet Boiler MACT deadlines.

Hardwood Leader Notes
The following are notes gleaned from the February 2014 Hardwood Leader, a hardwood forecasting newsletter produced by Hardwood Publishing:

  • The U.S. Hardwood Market twill hold in 2014 and prices will level off, but a retrenchment is not likely. Oak and maple prices are expected to remain high and the export market is expected to set another record. Domestic hardwood demand should continue to recover with improvements to housing construction, employment, and the general economy will increase demand for various hardwood products including cabinets, flooring, furniture, railroad ties, pallets, and wood for energy. Interest rates will probably rise but not so much to affect the housing recovery.
  • Sawmills will cut aggressively this winter and spring and a dry spring will allow supplies to line up with demand;
  • Exports to China should remain very strong and at record levels due to huge growth in the middle class, with rising income and living standards;
  • Domestic hardwood consumption is expected to exceed 2013 levels as US GDP should be above 3% and housing construction is expected to be 20%-30% higher than last year;
  • Good Hickory sales are forecast for months to come for flooring and cabinetry, both for domestic use and export shipments;
  • Red Oak prices are expected to stay strong due to exports to China and Mexico;
  • In November 2013, US hardwood lumber exports set a record for the second consecutive month, with sales of 145 million BF. Shipments to China were the highest month total ever recorded to a single country. Total year-to-date shipments were already at a record level (1.367 billion BF) without factoring in December sales;
  • The European zone is showing an expanding GDP with production increases the most in 3.5 years and an expectation that growth will continue through 2014;
  • From an article in Forbes Magazine, a Wells Fargo Fund Mgmt. forecaster said quantitative easing can’t change inflation and the Fed will gradually taper the stimulus to zero over the next 9 months;
  • U.S. residential furniture factory shipments through Oct./2013 were 4% higher than the same period a year ago;
  • The "Furniture and related products” industry sector rose faster than any other U.S. manufacturing sector in December/2013, with the second-fastest growth in production and employment;
  • Single-family housing starts in November/2013 showed the largest one-month percentage gain in the last 15 years. However, actual starts were only 5% abo e October and below March-August levels;
  • Five forecasts of single-family starts for 2014 averaged 755,000 (low 704,000; high 820,000). Total for 2013 was 576,100;
  • Interest rates will move higher starting in January with decreased bond-buying;
  • Unadjusted December/2013 employment fell by 246,000 jobs; Three times as many working people moved out of the job market as those who moved into it;
  • If employment were to return to pre-recession levels of 76.9%, then 7.5 million people in the 25-64 age bracket would need new jobs right now;
  • Wood component manufacturers for the most part reported double-digit sales gains in 2013 from cabinet and stair manufacturing and some from commercial millwork and institutional furniture; wood component sales are expected to grow at a slower pace in 2014 due to smaller increases from cabinet sales and a slower growth from existing home sales.

Ohio BWC Safety Program News and Updates
are several brief announcements from CareWorks Consultants, Inc. (CCI), the OFA administrator of the Ohio BWC Group Safety Rating Program. The first is simply an announcement of the deadline (February 21, 2014) for filing Group Rating Packets and the obvious opportunity to save premium rates through the group program. The second is about BWC mailing IRS 1099 MISC forms to employers who received rebates in the 2013 "Billion Back” premium rebate program. Finally, the last announcement is from Risk Control 360, CCI’s training partner, about completing and posting OSHA 300 logs at the place employer’s facility. The announcement gives brief information about the logs and injury information that should be included.

Dispelling the Whole Tree Myth
Here is a good article from Forest2Market that describes how the wood supply chain works and what segment of the supply chain ends up in biomass. The article is provided to counterbalance rhetoric coming from the environmental community on claims that wood biomass is not carbon neutral.

Wood Education and Research Center (WERC) January 15, 2014 Newsletter
For those interested you can see a copy of the WERC Newsletter on-line. This issue of the newsletter contains information on coming workshops and webcasts for the wood industry. You can also read the Update on the Housing Market by Urs Buehlmann from Virginia Tech and an Update on Wood Markets by Don Deckard, MN DNR. There are also links to interesting reports a number of subjects including proposed EPA updates on air standards for new woodstoves and heaters, the economic contributions of the forests in the 20 northeastern states, and a report from the National Alliance of Forest Owners on the contributions to the U.S. economy from private forest owners.

APHIS Webinar on Domestic Wood Packing Material (dWPM) Proposed Rule
This is a reminder that there will be a webinar on proposed rules for the treatment of domestic wood packaging material next Friday, January 24, 2014 at 1 pm. If you signed up for it you may have received a reminder already. If you haven’t signed up but would like to, here is a document on the presentation and how to register. The webinar is free but there is limited space so you may not be able to listen in if registration has already hit the limit. You can also take a look at the proposed APHIS Strategy in this document.

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