The Hardwood Federation Newsletter

February 2024

The Hardwood Federation and Hardwood Federation PAC Boards of Directors came together on February 5 in Indianapolis for their annual winter meeting.  The Federation Board provides strategic direction for advocacy priorities and out-reach efforts as well as oversight of our budget and other administrative functions.  The HFPAC Board is instrumental in helping to raise PAC dollars to support our congressional allies and in identifying those we should consider for financial support.  This group is vital to our efforts on behalf of the industry, and we rely heavily on their insight and guidance. 

The Hardwood Federation and HFPAC Boards are comprised of a broad representation of industry leaders from across the country.  The mix of those who have served for multiple years and those who have just begun their time on the Boards elevates our understanding of the issues hardwood companies face and drives our policy and advocacy priorities.  The Board recognized several members who stepped down from their roles in February, including Rick Degan of Bennett Hardwood in Waseau, WI; John Foley, President of BPM Lumber in Lexington, KY; Jon Johnson, General Manager of Timber Products in Munising, MI; and Jordan McIlvain, Vice President of Alan McIlvain Lumber Company in Marcus Hook, PA.  The Federation is grateful for the contributions made by each one of these individuals.

Moving into positions vacated by our past Board members are Ross Forcey, Vice President of Forcey Lumber Company in Woodland, PA; Jesse LaSon, Vice President of Emporium Hardwood in New Holland, PA; Gus Welter, President of Welter Forest Products in New London, WI; and Roy Zangari, owner of Meadow River Hardwood Lumber Co. in Rainell, WV.  Lowery Anderson, owner of Roy Anderson Lumber in Tompkinsville, KY also joined the Board in mid-2023 when the Kentucky Forest Products Association rose to a Board level member in mid-2023.  The Hardwood Federation Board is chaired by Troy Brown, President of Kretz Lumber in Antigo, WI.  Nathan Jeppson, Chairman, President and CEO of NWH Hardwood serves as Vice-Chair with Matthew Smith, Managing Partner & COO of Smith Creek in Borden, IN serving as Immediate Past Chair.

On the HFPAC Board, Jesse Joyce, President of Middle Tennessee Lumber in Burns, TN, was elected as Chair with Peter Connor, President of WD Flooring in Laona, WI as Vice Chair.  Scott Cummings, President of Cummings Lumber in Troy, PA will move to the Past Chair role and continue to offer a PAC veteran’s perspective on fundraising this year.  New Board Members mentioned above will also serve on the HFPAC Board.  Full lists of both Boards may be viewed at HF Board and HFPAC Board on our website.

A key point of discussion during the winter meeting was reviewing the policy survey conducted in January.  Hardwood industry leaders identified top of mind issues for their businesses.  The top issues were no surprise promotion of the environmental benefits of wood products, tax and regulatory policies that support, not harm, business operations, science-based forest management of federal lands, sustaining strong export markets for U.S. hardwood products, and advocating for efficient transportation systems. 

The Hardwood Federation Boards directed Federation staff to continue current efforts around these and other federal legislative and regulatory issues that impact the industry. We report on these issues regularly through this newsletter and our weekly Cheat Sheet.  Board members and staff are committed to maintaining a vigorous presence on Capitol Hill; this includes hosting the annual Fly-In on May 21-23 when members of the industry takes their message directly to legislators on Capitol Hill.  Our elected officials continue to regularly hear from Federation staff about the value of our industry to the U.S. economy and why it is important they make the right decisions on proposals impacting our companies...and why the wrong decisions can devastate our industry. But nothing beats hearing directly from constituents, especially those who provide jobs to their local community. We hope you will join us for the Fly-In…but also consider how you can engage with your representatives when they are in-state. Check out this guide to hosting an official or candidate on your turf!

Don’t hesitate to reach out with your questions and concerns, either to the Hardwood Federation staff or members of either Board.  Working together we can make a difference.


EPA Releases New, Stringent Air Quality Standard, Piles on the Red Tape

On February 7, EPA announced it would tighten the final air quality standard for PM 2.5, also known as “fine particulate matter,” from 12 micrograms (ug) per cubic meter to a more stringent 9 ug, a level which could impose up to $900 million in compliance costs on the wood products sector.  Unfortunately, federal regulators are targeting the wrong source of emissions for PM, shifting a massive burden to industry that could otherwise be addressed by forest management and an accompanying reduction in wildfires, which are the source of 43% of PM emissions.  As a point of reference, the European Union standard is 25 ug, more than twice as high as permitted concentrations in the U.S.  Lowering the standard would place 589 counties in non-attainment and hundreds more on the cusp of non-attainment, exposing industry to new regulations as regulators review additional control measures to achieve the new targets.  To view a map showing potential nonattainment counties in red, and borderline counties in pink, please click here.

As a general matter, compliance with the PM standard currently falls mainly on the backs of “major sources” of pollution under the Clean Air Act such as power plants, chemical refineries and large pulp and paper facilities.  That said, the Federation is concerned that tightening the regulations would capture currently unregulated hardwood mills and manufacturing facilities operating on the cusp of or within newly designated non-attainment areas.  This could trigger costly analysis and monitoring in the event a plant seeks to expand its operations.

On the advocacy front, on October 25, the Federation joined the U.S. Chamber of Commerce and National Association of Manufacturers (NAM) in a meeting with the White House Office of Management and Budget (OMB) to urge the Administration to reject EPA’s proposal to tighten the standard.  During the course of the meeting, the Federation echoed points raised within formal comments submitted in the spring advocating that EPA retain the current standard.  During the OMB meeting, the Federation cited a study conducted by the American Forest & Paper Association and American Wood Council outlining the economic impacts of a more stringent standard.  According to the study, the wood products sector could take on up to $900 million in compliance costs if the agency imposes a standard of 9 ug. Fortunately for industry, both the Federation and U.S. Chamber of Commerce directed their remarks at OMB toward responsible forest management as the common-sense solution to reducing PM levels, which have increased in many regions because of wildfires. 

Although the final outcome marks a setback for industry, behind-the-scenes advocacy helped push release of the new rules two months later than expected, following a tug-of-war between competing voices within the Administration.  According to Administration sources, in late 2023 EPA had been considering a more flexible standard of 10 micrograms per cubic meter, an outcome that industry favored over the more costly alternative while still preferring the current standards set at 12 ug. The Hardwood Federation team joined wood products allies, including the American Wood Council and the American Forest and Paper Association, to urge Democratic senators to weigh in with the Administration and advocate against imposing unreachable standards.

Next steps include options such as litigation and legislative intervention to blunt the impact of the new rule.  While arguing that the new PM standard falls outside the scope of EPA authority in federal court could provide the path of least resistance to regulatory relief, groups such as the U.S. Chamber of Commerce will also look at legislative tools.  These may include an appropriations rider in a Fiscal Year (FY) 2025 spending bill that would defund implementation of the tighter standard.  Although not likely to move anytime soon, Sens. Kyrsten Sinema (D-AZ) and John Cassidy (R-LA) have introduced the “Modernizing Clean Air Act Permitting Act of 2024,” a bill which would preclude naturally occurring PM such as soot generated by wildfires as a factor for designating “non-attainment” areas under various air quality standards.  The Federation will keep you posted on developments as they unfold.

Industry Opposes Proposed Lacey Act Amendments

On February 23, the Federation team spoke to staff with the House Natural Resources Committee, advocating against H.R. 7157, a bill that would significantly compress the timelines necessary to screen wood product imports for violations of the Lacey Act, a statute that the industry supports in order to promote a level playing field in the domestic hardwood market. On February 14, the House Subcommittee on Wildlife and Fisheries reviewed a host of bills, including H.R. 7157.

Although the sponsors assert that the bill, as currently written, would establish regulatory certainty in processing timber imports, the significantly condensed timelines for review and lack of federal resources to fund new processes would weaken the ability to strictly enforce provisions of the Lacey Act. A Senate companion, S. 3143, has also been introduced (co-sponsored by three Republican Senators)  and referred to committee but has no support from the Democrat majority or seen any additional action at this time. According to staff with the House Natural Resources Committee, lawmakers have no plans to advance the bill at this time and are committed to working with interested parties, including the Hardwood Federation.  We will be keeping a close eye on this bill. 

Obstacles to the Farm Bill Continue to Mount

Debates over the price of big-ticket items, such as nutrition assistance, and re-allocating climate funds authorized by the Inflation Reduction Act (IRA) have brought progress on a new farm bill to a standstill. This became clear on Tuesday when the Chair of the Senate Agriculture Committee, Debbie Stabenow (D-MI), stated publicly that she’d rather abandon work on the legislation altogether - keeping the current 2018 law in place - than agree to cuts in nutrition programs while reallocating climate funds.  Because Sen. Stabenow plans to retire this year, many are speculating that she’s attempting to burnish her legacy rather than agree on a package that dilutes her top priorities. 

On the House side, Agriculture Committee Chairman GT Thompson (R-PA) has been working to maintain bipartisanship, focusing on centrist Democrats to support his budget solutions.  These include repurposing left-over funds from the IRA, the Biden Administration’s key climate initiative, toward conservation and other programs, a move now publicly opposed by his senate counterpart. Although industry had hoped to be able to review farm bill text in February, release of a draft bill remains a moving target. 

USFS, Federation and Partners Launch Carbon Data Initiative as USDA Seeks to Standardize Carbon Data

On February 9, the Hardwood Federation participated in a signing ceremony to finalize a Memorandum of Agreement with the United States Forest Service (USFS) and other industry partners, including the American Wood Council and the National Alliance of Forest Owners, among others.  The new partnership is devoted to the development of a digital platform that will estimate the carbon footprint of the wood products and forestry sectors.  The Federation has committed to provide technical assistance and perspectives unique to hardwood sawmills in the development of the project.  The agreement will support industry efforts to gain federal recognition of the environmental benefits of hardwood products, one of the industry’s top issues.

In a related action, USDA released a report on February 27 outlining the agency’s intent to provide technical support services for parties seeking to offer voluntary carbon credits, ostensibly to standardize the process.  USDA states that it will round up existing resources to standardize data available to third-party verification agencies that certify these credits, a logical fit for the digital platform being developed by the USFS/Forestry partnership.  The agency states that it plans to open the report to public comment in the near future.  The Federation will keep you posted on details as they unfold. 

Tax Package Sails into Senate Limbo

Despite the fact that that the Tax Relief Act passed the House on January 31 by an overwhelming, bipartisan majority – 357 to 70 under expedited procedures - the package of business tax breaks and childcare incentives confronts some challenges in the Senate.  The bill includes restoration of business interest deductions, the R&D tax credit and full expensing of equipment. Whereas many GOP senators have expressed concern about the overall cost of the Child Tax Credit (CTC) and its impact on the budget, champions of the provision support the credit, arguing that it focuses on lower income families.  Despite the bill’s relatively speedy progress in the House, a path forward in the Senate is not certain at this time.  The Federation will keep you posted on developments as they unfold.

USFS Study Confirms Wildfire, Disease as Top Threats to Old Growth

In late January, the USFS released a study showing that wildfires and disease top the list of threats for old growth forests.  This adds more to the body of science supporting industry advocacy on a range of regulatory issues, from defining mature and old growth forests to pushing back on tighter air quality standards from EPA. As with previous studies, the report shows that “70 to 80 percent of mature and old growth forests are at high [risk] to wildfire-caused mortality.”  The report goes on to point out that disease and insect infestation wipe out millions of more acres under federal management, including “1.86 million acres of mature and 182,000 acres of old growth.”

EPA Outlines Draft Labelling Program for Low Carbon Construction Materials

On February 27, the Federation participated in a webinar with EPA, which has rolled out a draft labelling program for low carbon construction materials.  Unfortunately, the proposal, as currently written, adopts “an initial focus” on steel, asphalt and concrete, leaving the door open for similar labels for other materials using “a phased approach.”  In response to a question about EPA’s timeline for finalizing low carbon labels for the initial round of materials, regulators stated that there was no formal timetable, although they hoped to have some labels finalized by Fiscal Year (FY) 2026.  Prior to the current rulemaking, the Federation and its wood products allies submitted comments to EPA on a “Request for Information” related to low carbon construction materials, underscoring the fact that wood products are the quintessential low-carbon material.

Hardwood Industry Lays Out Top Policy Priorities for 2024

On February 5, the Hardwood Federation released its survey ranking the top public policy items for the industry.  As in past years, all issues surveyed scored on the upper end of the rankings, demonstrating that each issue has a major impact on the industry.  Coming first this year was promoting the “environmental benefits of hardwood products” followed closely by a concern with federal regulations.  Tax issues scored high as well, with several respondents pointing out that the estate tax and 100% depreciation of equipment were essential to the success of their operations. More than 100 members of the hardwood sector participated. Thanks to all who offered their input for this year’s survey.

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