Gas tax slams truckers, Energy credits turn risky, more

Update on Current Policy News Affecting Forest Business & Timber Supply
by Rex Storm, Forest Policy Manager
Oregon Association of Loggers

Oregon Truckers Brace for Fuel Tax Hikes: Effective Oct. 1, 2010, commercial trucking business across Oregon will begin paying the “phase 2” transportation tax increase, which was passed by the Democrat super-majority 2009 Legislature.  The October tax hike raises the weight-mile tax by 25%, equivalent to about 3.2 cents per mile increase for an 80k GVW truck.  Additionally, the truck flat fees will also jump 25%, equivalent to about $1,192 per year increase for an 80k truck.  Remember that on 1/1/2010, the ”phase 1” truck registration fee rose 104%, equivalent to about $500 per year increase for an 80k truck.  If these two taxes are not enough to make you steam, the “phase 3” fuel taxes add another 25% hike on 1/1/2011, raising both fuel and gas taxes about 7 cents per gallon at the pump.  The cost of hauling wood products from forest to market takes another step higher.

New Biomass Plants Discouraged: Oregon’s Business Energy Tax Credit (BETC) has been degraded from an effective incentive into something risky and uncertain, particularly for building wood-fired biomass power plants.  Oregon Dept. of Energy and the OR Legislature have frequently changed rules and funding, so that investment in renewable energy construction has declined for projects such as wind farms or biomass plants.  When the legislature convenes in 2011, it will consider whether to let the BETC program expire in 2012, or to fund it.

Burning Regulation Jeopardizes Seed Business: Showing how run-away regulation can harm natural resource business, this summer’s new field burning ban for Oregon grass seed growers will drive costs so high that the crop becomes unprofitable for some farmers.  Grass farmers testified against the proposed law last year, saying the ban would drive many grass farmers out of business.  The field burning ban is phased-in through 2013, dropping 2010 burns to 15,000 acres.  And so-called “emergency burn” provisions are so restrictive that no pest outbreak could ever qualify to burn.

Forest Firefighting Purpose Remembered: As the 100th anniversary of the “Great Fire of 1910” is recognized this summer in Coeur d’Alene, ID, the forest sector is reminded of why strong Western forest firefighting and public fire prevention programs were created and strengthened in the 20th century.  The largest fire in recorded US history, the 3 million-acre Great Fire killed 87 people, destroyed 9 towns, and cost countless millions in damages.  That summer of 1910, there were 3,000 forest fires burning in that region before the Great Fire exploded, due to inadequate firefighting.  Following the Great Fire, the forest sector and lawmakers enacted policies and built programs to put-out wildfires quickly, thereby eliminating the tragedy of another Great Burn, and making forestland reforestation investment a viable private enterprise after harvest.  Fire prevention then was the advent of renewable forests and sustainability today.  Long live Smokey Bear!

Court: Logging Roads Need Federal Permit: On Aug. 17th, a 3-judge panel of the US 9th Circuit Court of Appeals overturned a District Court, by ruling that forest roads are a so-called “point source of pollution,” subject to federal permitting under NPDES regulations by the Environmental Protection Agency.  Although this heinous & far-reaching ruling reverses 37 years of legal precedent, the fate of non-federal logging nationwide is uncertain, as the legal proceedings unfold or possibly rise to the US Supreme Court.  Filed years ago by NW Environmental Defense Center, the lawsuit challenged runoff from several Oregon state forest timber sales.  Defendants are Oregon State Forester Brown, OR Board of Forestry, Tillamook County, and four timber sale purchasers.

Dudley Pulls Ahead of Ex-Governor: Republican Oregon governor candidate Chris Dudley is outpacing 2-term former governor John Kitzhaber (D-Portland) in fundraising.  By July 17th, Dudley reported raising $2.9 million for his campaign, compared to Kitzhaber’s $1.8 million.   A July poll of likely voters shows Dudley consistently leading with 47%, ahead of Kitzhaber’s 44%.  Kitzhaber’s job creation rhetoric is disproven by his dismal 8-year record as governor—when OR ranked 40th in job growth, unemployment rose 65% & stayed above the national average, and per capita income fell.

Dem Majority to Raise Taxes: As the political campaigns get underway ahead of November’s general election, Oregon House Speaker Dave Hunt (D-Clackamas) announced that Democrats want to keep their three-fifths super-majority control in the 2011-12 Legislature.  Speaker Hunt says lawmakers will need to raise more revenue (taxes) to close a projected $3 billion budget gap and pay for growing public infrastructure and unfunded federal & state health care mandates.  Oregon business is working to assure that Hunt’s tax & spend majority is rejected by voters on Nov. 2nd.

State Budget Forecast Shortfall: State economist Tom Potiowsky informed Governor Kulongoski in Aug. that Oregon’s current state budget shortfall for the 2009-11 biennium will likely exceed $1 billion—rather than the previous $577 million shortage.  With only 10 months remaining in the biennium, the Governor warned agency directors about the budget hole and suggested that across-the-board budget cuts may be needed.  He also asked Democrat legislative leaders to “come to an agreement” over the shortfall, but made no mention of calling a special legislative session in 2010.

ODF Looks for Budget Priorities: In May, State Forester Marvin Brown created the ‘Forest Funding Workgroup,’ intended to advise the Oregon Dept. of Forestry and Board of Forestry on ways to prioritize spending and revenue.  The 20-person workgroup, including AOL’s Rex Storm, have met monthly to work on a vision of ODF performance, alternative funding, program priorities, and identify reduction options.  The workgroup will complete and report its recommendations in October, offering new ways to reduce costs, sustain funding, and refocus ODF on core activities.

Deschutes Timber Sale Wins in Court: The 9th US Circuit Court of Appeals reversed a lower court ruling that had stopped the Five Buttes Timber Sale project on the Deschutes National Forest.  The appeals court found the project does legally comply with the Northwest Forest Plan.  Building on a 2008 Idaho case, where the court ruled that it should defer to Forest Service expertise, the Five Buttes ruling is a victory for timber industry use of harvest to reduce wildfires and improve forest health—even if larger trees (>21” diameter) are cut in northern spotted owl habitat.

Fire Season Forecast Normal:
Oregon’s forecast for large forest fire potential is “normal,” as reported by National Interagency Fire Center August 2nd.  However, northeast Oregon will see slightly below normal large fire potential.  Oregon forests were unusually cool & dry in July, and normally warm & dry in August—resulting in normal summer fire danger indices.  Warm, dry weather is expected for September, with forest fire conditions rapidly dissipating in October.

Biomass Plant Nears Reality: After years of planning, construction will begin on a new 25-megawatt biomass cogeneration plant in Lakeview, located next to the Collins Co. Freemont Sawmill.  Owner Iberdrola Renewables Inc. will operate the plant as Lakeview Cogeneration LLC, helped by a $1.7 million federal Recovery Act grant and a 15-year property tax abatement.  Electricity generated meets Oregon’s renewable portfolio standard (RPS), which requires 25% of utility power from renewable sources by 2025.  The plant is to employ 20, plus 50 contractors.

Diesel Prices Climb: The average price of Oregon diesel fuel jumped 2 cents per gallon in the last month to $3.10 per gallon, according to AAA’s Fuel Gauge Report (8/17/10).  Nationwide, the fuel price averaged $2.99/gal, ranking Oregon the 8th highest price in the US.  The highest-priced region was the West Coast, where diesel averaged $3.20/gal.  Oregon truckers braced for the huge state fuel tax and weight-mile tax increases, effective Oct. 1st.  Daily fuel & gas prices are reported online at:

Railroad Secures Coquille Line: The Port of Coos Bay announced that it has acquired from Union Pacific a 22-mile rail line between North Bend and Coquille.  Until the railroad was shut in 2007, the 22-miles were leased by Central Oregon & Pacific Railroad to run its 110-mile line between Eugene, Coos Bay and Coquille.  The Port plans to open the entire Coos line by mid-2011, using up to $12.9 million in federal & state stimulus funds to make needed railroad repairs.  The railroad would provide important market access for several forest product plants and other area commercial shippers.

Weyco Leaves Rail Business: Weyerhaeuser Co. is selling six railroads that operate on about 160 miles of track to Patriot Rail Corp. of Boca Raton, FL.  The rail lines are in Mississippi, Oklahoma, Arkansas, and 39 miles in southwest WA.  The six railroads handle about 60,000 carloads of freight annually, and they employ about 120 people.

Judge Rejects Fire Retardant: For the second time in recent years, a federal judge ruled that the US Forest Service use of firefighting retardant dropped from airplanes violates the federal Endangered Species Act.  The red-colored retardant is a mix of water and a mild fertilizer; but the environmental litigants claim that species could somehow be harmed.  The judge refused to enjoin current retardant use, instead requiring the USFS to do even more analysis.

Retardant Bombers Phase-Out: The fleet of US Forest Service “large” retardant airplanes contracted to attack wildfires has dwindled from 44 in 2005 to just 17 nationwide today.  Due for retirement in 2012, the USFS plans to eliminate all 17 bombers due to a $2.5 billion replacement price tag.  Without the large multi-engine bombers, the FS will then use heavy lift helicopters and single-engine airplanes to fight fires.  Some lawmakers and industry folks insist that some bombers must be replaced.

USDA Ducks Poor National Forest Health: Seemingly to distract public attention from the severely deteriorating condition of the nation’s national forests, US Agriculture Secretary Tom Vilsack issued a US Forest Service report that raises the specter of housing development now threatening private forests.  Vilsack said the Obama administration will produce recommendations to make private forest preservation more profitable, reducing pressures to sell it for development.  Reportedly, 57 million private forested acres are threatened by development in the next 20 years.

Lawmakers Frustrated Over Timber Subsidy:
Lawmakers in a US House Resources Committee hearing in July were frustrated with President Barack Obama for breaking his promises to fix the county timber payments program, and increase federal timber sales.  Western congressmen at the hearing asked the US Forest Service and BLM to follow through on promises Obama made in 2008 to improve harvest and federal subsidy payments that end Sept. 2011.  The county timber payment program provides $100 million/year to Oregon federal timber counties.

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