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Hardwood Federation November 2019 Newsletter

From the Executive Director:  Hardwood Industry Continues Trade Fight as Year End Approaches

Over the last 12 months, the top priority and focus of the Hardwood Federation has been trade.  I am sure this comes as no surprise.  This has been a very tough issue to work, primarily because the impacts of the trade war with China are being felt by almost every U.S. industry sector.  Global markets are showing signs of strain as well.

Despite the multitude of industries making the rounds on Capitol Hill, some with conflicting and competing messages, the hardwood industry has been able to transmit our message to those that are making important decisions.  Last week, upon request from hardwood industry leaders, Congressman David McKinley (WV-1) organized a meeting between himself, Congressman G.T. Thompson (PA-15) and Congressman Bruce Westerman (AR-4) and U.S. Trade Ambassador Robert Lighthizer to discuss the impacts of the trade war on the hardwood industry.  The Hardwood Federation was in communication with all three offices and provided talking points and background to ensure accuracy and consistency of messaging.

Ambassador Robert Lighthizer, the top U.S. trade negotiator, is one of a handful of people weighing in with the President on China and is a key driver of U.S. policy related to these trade discussions.  He indicated to the Members of Congress that hardwood concerns are being heard in his office and that he is including U.S. hardwoods as part of his discussions with the Chinese.  While there can be no promises made during an on-going negotiation, especially sitting across the table with counterparts as tough as the Chinese, there is hope that should a Phase I trade agreement be negotiated in the near future, hardwoods will be included in the deal.  Timing of such a deal is unclear although the upcoming 2020 election cycle in the U.S. and a slowing Chinese economy (and Hong Kong tensions) are almost certainly incentives for both countries to move forward. 

We also continue to push the U.S. Department of Agriculture to respond to the Hardwood Federation Board letter regarding financial relief measures.  Unfortunately, we keep getting the same response from staff...they are working on their response to the letter, although there is no indication of when we can expect a reply.  In light of this delay, the Federation Team has done some brainstorming about possible next steps including potential Congressional meetings with the USDA Secretary and legislative options.

The good news is that all the industry efforts, all the letters, calls and e-mails, and all the visits to the Hill have paid off in terms of delivering a message that is being heard.  (A list of the most recent press coverage is below in the Happening in the Hardwood World section.)  The bad news is that the wars continues to rage. We know the terrible costs the trade situation has extracted from the industry and are working with our allies in Washington to push the Administration to provide relief, both short term and long.  Thank you for your support in this effort…we will stay on target until we get some resolution.

Issues

Secure Rural Schools – Senators Look to Extend the Program with a Bipartisan Longterm Fix

During a hearing of the Senate Energy & Natural Resources Committee last Thursday, legislation reauthorizing a couple of programs that are critical to rural communities located near federal lands was discussed.   The programs in question—Secure Rural  Schools (SRS) and Payment in Lieu of Tax (PILT)—have been allowed to lapse, with SRS expiring at the end of 2018 and PILT on September 30 of this year.    The SRS program compensates counties struggling with lost timber sales and a declining logging and milling industries with annual payments that maybe used for public education and infrastructure.  PILT compensates counties with large blocks of nontaxable federal land.

The two bills that were the focus of the hearing are S. 430 sponsored by Sen. Mike Crapo (R-ID) and S. 2108 sponsored by Sen. Steve Daines (R-MT).   Senator Crapo’s legislation, which is cosponsored by Senators Risch (R-ID), Wyden (D-OR), Merkley (D-OR), Manchin (D-WV) and Murkowski (R-AK) would simply reauthorize the SRS program through 2020.  The Daines bill would modify the payment calculation system in PILT to increase the monetary cap for counties with populations of fewer than 5,000 without affecting payments to other counties.  The Hardwood Federation has been supportive of these two programs over the years and will be closely monitoring their progress and weighing in when appropriate.   

Biomass - BTU Act Makes it into GREEN Tax Package

The Hardwood Federation-supported BTU Act (Biomass Thermal Utilization act of 2019) made it into the House Ways & Means Committee’s energy tax package released last week known as the GREEN ACT--Growing Renewable Energy and Efficiency Now Act.  The proposal is an amalgam of tax credits to support renewable energy technologies in the wind, solar, biogas and biomass areas.  The provision in the GREEN Act that we are excited about would add “biomass heating property” to the list of renewable energy technologies that currently qualify for an investment tax credit worth 30 percent of installed costs.  If enacted, homeowners in New Hampshire for example who heat their homes with fuel oil or propane and decide to convert to a whole home heating system that runs on wood pellets, would be entitled to a credit on their federal tax return worth a third of the cost to make that heating system switch.  The credit would also apply to wood stoves and pellet stoves that are designed for smaller space heating.

The Hardwood Federation has been supporting the BTU Act for the last few years as one measure that may help the residuals issue that had been plaguing mills in certain areas of the country.  

In terms of process, House leadership has indicated its desire to see components of the GREEN Act included in any year end tax package that looks increasingly likely to come together.   The Hardwood Federation team has been engaged in these discussions and we will keep you apprised of developments.  

Stopgap Spending Bill – A Short Term Can Kick Still Leaves a Lot of Work in Dec.

On Thurs. November 21st the President received, and signed, a short term, stopgap spending bill (H.R. 3055) that will keep the government open until Dec. 20th.  The announcement released a huge sigh of relief from federal workers as we head into the holiday season, but the reprieve will be temporary, and angst will continue just before the Christmas holiday with partisan fights still lingering – not to mention and impeachment that will likely be coming to a head in the House of Representatives.  One positive from the announcement is a provision in the Bill that repeals a $7.6 Billion rescission in highway funding that state officials had been highlighting.

Happening in the Hardwood World

A further collection of impactful hardwood articles and media hits from the past month:

https://www.witf.org/2019/11/05/pennsylvania-hardwood-industry-feeling-the-effects-of-trade-war-with-china/

https://thehill.com/business-a-lobbying/business-a-lobbying/469313-hardwood-industry-pleads-for-relief-from-trump-trade

https://www.woodworkingnetwork.com/news/woodworking-industry-news/hardwood-industry-pleads-washington-trade-war-relief

https://www.kentucky.com/news/state/kentucky/article237066259.html

https://www.ajc.com/news/state--regional/georgia-towering-wood-industry-whipsawed-trade-war-with-china/hd5KECU7VrSxdmYD0dP7CM/

https://www.post-gazette.com/news/politics-nation/2019/11/20/Glenn-Thompson-timber-hardwoods-trade-war-China-exports-Trump/stories/201911200097


Happy Thanksgiving from the Hardwood Federation!

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