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2015 Policy Priorities
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Forest Landowners Association

2015 Policy Priorities

Following are the 2015 policy priorities approved by the FLA Board of Directors at the Winter Meeting in Washington, DC.  FLA believes these are the issues that will have the greatest impact on forest landowners and their ability to manage and make a profit from their working forests.  Additional, FLA recognizes that private forests landowners can play an important information and education role in creating a greater awareness of these issues among policy makers as their voting constituents.  FLA will work to ensure landowner representation at Congressional Town Hall Meetings and Federal Policy Field Hearings as well as serve as a resource to Congressional staff and federal agencies representatives at the local, regional and national level.

Sustainability

FLA Principle: FLA believes that the maintenance of free and open markets is vital to the preservation of Private Forests. 

 

Area of Concern: Access to Free and Open Markets

 

Discussion:  FLA supports fair trade initiatives with Canada and their full compliance with the Softwood Lumber Agreement.  FLA supports full inclusion of all woody biomass in renewable energy and opposes regulations such as mandatory certification that seek to create a federal forest practices act or exclude certain landowners from fully participating in markets for forest products.

FLA Position Statement on Sustainable Forests: FLA believes that private forests are sustained by the individuals and families that own and manage those forests and they are sustained by open and free access to healthy markets.  Therefore any restriction to market access or increased cost of management threatens the sustainability of private forests by reducing the ability of the landowner to continue forest management as a financially viable option for their land. 

 

Sustainability should be measured by the success of the owner and the heath of the marketplace and not by the volume of trees and the acres they cover.

 

Current Status: A coalition lead by AF&PA and NAFO, where FLA is a member, has developed a policy document to guide us as we work with the administration, white house and congress on how biomass carbon emissions are treated.  The administration has stated that they do not wish to define sustainably derived biomass and will leave that to the individual states to include in their state implementation plans.  EPA will release a model plan for the states this summer and the states will work to develop those plans from there.

 

Background: In 2008 Congress focused on national energy policy, which sparked a national discussion about what defines sustainable forestry in the policy arena.  The resulting definition of qualified biomass in the Renewable Fuels Standard (RFS) was very restrictive to private forest landowners by defining who could participate in the renewable fuels marketplace and who could not.  FLA and the forestry community was successful in advocating for an all inclusive definition of biomass in the Senate version of the 2008 Farm Bill and in the House Waxman-Markey climate bill.  However, since the RFS did not materialize into a viable marketplace for cellulosic biofuels from forests, the restrictive definition did not have much of an impact and a reform of national energy policy never materialized. 

 

The debate on qualified sustainable biomass was rehashed in 2010 when the Manomet Institute was commissioned by the state of Massachusetts to research and report on the use of wood fuels as a means to produce electricity in a lower carbon manner.  The resulting report concluded that the use of biomass was not carbon neutral but the same as the combustion of fossil fuels.  This resulted in states and the EPA questioning the use of wood as a qualified renewable resource in energy production. 

 

In May of 2010, the EPA issued a final statement for a tailoring rule that outlines how the agency will regulate greenhouse gas (GHG) emissions under the Clean Air Act.  The tailoring rule determines which polluters will be required to account for their greenhouse gas emissions, when the EPA begins to formally regulate the gases.

 

In their rule, “EPA will apply a tailored approach to…source thresholds for greenhouse gases under…title V programs of the Clean Air Act.”  The EPA’s final Tailoring Rule defines what stationary sources will be subject to GHG emission controls and regulations during a phase-in process beginning on January 2, 2011.

 

While the EPA said it lacked sufficient basis to exclude carbon dioxide emissions from biogenic sources in determining permitting applicability at that time, it also stated treating biomass combustion differently warrants further exploration which led to the development of a science advisory board to look deeper into the issue. 

 

In December 2014 the EPA announced its path forward on biomass carbon accounting.  The agency released two documents 1) a Memorandum to regional offices outlining how the agency will treat biomass in its proposed Power Plant Rule and in forthcoming revisions to the Tailoring Rule, and 2) a revised draft of the biomass carbon accounting framework.  EPA's announcement delivers a positive signal that the agency intends to recognize the carbon benefits of biomass in its forthcoming rulemakings.

 

The Memorandum reiterates and helps clarify EPA's expectation that many states can and should rely on biomass from sustainable forests to meet carbon reduction targets under the Power Plant Rule.  It also states an assumption that biomass from sustainable forests should be exempted from Best Available Control Technology (BACT) in forthcoming amendments to the Tailoring Rule.   

 

The Framework has been reconstituted in a way that appears to be much less prescriptive and much more flexible to a variety of policy approaches.  EPA makes it clear that the framework is a policy resource that will continue to evolve over time, not a policy driver. 

 

The big question mark is EPA’s unexpected reference in the Memorandum to “sustainable forests” and other variations of this term.  EPA does not define the term, but implies it will be addressed in forthcoming policy.  

 

 

Endangered Species Act

FLA Principle: FLA believes that human society cannot reap the numerous benefits of forests without secure private property rights.

 

Discussion: FLA is an ardent supporter of private property rights.  FLA believes that local, state, federal and non-governmental organizations are increasingly imposing restrictions and regulations that threaten the sustainability of Private Forests.   Any efforts to restrict or encumber private forest lands without fair compensation will be opposed by the FLA.  We believe landowners should be compensated for land use restrictions, partial takings as well as full takings as provided for in the 5th Amendment of the Constitution.  FLA believes excessive and misplaced regulation can jeopardize the sustainability of Private Forests.  FLA supports existing programs such as voluntary Best Management Practices and opposes all regulations whose benefit is not supported by sound science.  FLA advocates for an open, transparent and fair process on all proposed regulation.  Primary stakeholders should be included in the regulatory process and a cost benefit analysis should be included on all proposed regulations. 

 

Area of Concern:  Erosion of Private Property Rights and Excessive Regulation

 

FLA Position Statement on ESA: FLA believes the conservation of species and ecosystems is important to society. However, the current ESA listing process has dramatized the enormous power of the ESA to affect landowners, workers, industry, and regional economies in ways never intended by the statute's authors.  The Act should be amended to recognize the following,

 

• Endangered species live predominantly on private lands. Congress must take steps to incentivize landowner species stewardship. The ESA must place greater emphasis on recovery actions, rather than over bureaucratic listing actions.

• The government should analyze alternative strategies when preparing recovery plans. Peer review of scientific data by independent third parties, particularly of controversial decisions, will improve the decision-making process and minimize controversy.

• Analyze the impacts of recovery strategies and consider which strategies may lessen the more serious impacts of species recovery on society, the economy, and the environment.

• Law should require that agencies talk to the landowners involved and to include them in discussions that concern their property.

• Private landowners who cede control of their lands to society in the name of preserving threatened and/or endangered species should receive just compensation for property lost. A "Market Value

 

Current Status: The House Committee on Natural Resources held several hearings during the 113th Congress focused on the transparency, cost and impact to landowners of the ESA.  FLA President Joe Hopkins testified at two of the hearings.  Several bills were also introduced to streamline the ESA.  Congress passed none and they will likely be reintroduced in the 114th Congress.

 

The USFWS is considering the listing of the Northern Long-Eared and has had several comment periods to gain better insight on the impact such a listing would have in impacted states.  FLA and it’s members have been active in the comment periods.  FLA continues to monitor this process. 

 

Background: Since 1972 the Endangered Species Act has failed to serve as an effective tool to protect and recover at risk plants and animals in our country.  Rather, it has been used as a tool by organizations that seek to implement land use control over private lands.  The use of sue and settle as a tactic has forced uninformed but well funded organizations into the management of the ESA and derailed the act from its original intention.  Specifically,

 

ESA provides federal agencies sweeping powers for removing productive forestlands from economic uses by declaring land essential for the habitat of threatened/endangered species.

• ESA provides no public interest or economic tests for recovery plans and does not require a consensus of scientific opinion to determine the status of species or even a deliberate process for ensuring such an outcome.

• Agency regulation has consistently expanded ESA powers under which federal agencies can "take" private land for habitat conservation. The costs of landowner compliance with the law are significant.

• ESA is ineffective. After 40 years, ESA has removed only 12 of the 1304 species listed.

 

 

Tax Reform

FLA Principle: FLA believes federal tax policies based on equality and certainty are required to encourage the nation’s private forest landowners to make sustained, long-term capital investments in forest management.

 

Discussion:  Rather than distorting market forces, taxation should place private forest landowners on near-equal playing fields with other capital ventures, including agriculture, as this will encourage practices that retain forests as working, contributing assets to the nation. Tax policies must recognize the unique and long-term characteristics associated with timber and forest management investments, including the intergenerational transfer of forest assets, to alleviate uncertainty in tax treatment. Comprehensive tax policy will ensure the sustained environmental and social benefits within a predictable economic framework. 

 

Area of Concern: Tax Policy

 

FLA Position Statement on Tax Reform: FLA believes that timber should be treated as a capitol asset and not as inventory.  The existing tax code as it relates to private forests recognizes the long-term nature of timber investment and should not be amended.

 

Current Status: Congressman Paul Ryan(R-WI) is now the Chairman of the House Ways and Means Committee and will be working on tax reform measures but it is unclear what his proposal will look like or the timing of the proposal.  Senator Orrin Hatch(R-UT) is the Chairman of the Senate Finance Committee which has also pledged to work on tax reform.  Senator Hatch has announced the formation of advisory groups on tax reform similar to the ones Camp formed on the House side in the 113th Congress.  In addition to these efforts Representative Devin Nunes (R-CA), member of the House Ways and Means Committee, has released his draft tax reform legislation that focuses on businesses and corporations and pays for itself by eliminating expenditures including forestry.  The bill is considered “bold” by many.

An industry letter is being sent to both Chairs and ranking members that is similar to a letter sent last year detailing the importance of tax expenditures to the forest industry.

The bottom line is there are a lot of proposals floating around but uncertainty remains on details and timing.

 

Background: In February of 2014 Chairman Dave Camp of the House Ways and Means Committee released his tax reform discussion draft.  The draft sought to reform the tax code by lowering rates and broadening the tax base.  The way to pay for this reform was mainly through the elimination of tax expenditures.  This proposal hit most industry groups hard, including forestry, where all of our 3 most important tax expenditures were repealed.  It also takes away the benefit to timber REIT's.  Although no action was taken to move the draft forward in 2014, the Camp tax proposals laid the foundation for reform in the 114th Congress.

 

The rational behind the elimination of the forestry tax expenditures is the belief that timber is inventory and not real property and therefore should not be treated as a capitol asset.  The Camp proposal:

 

  • Repeals capital gains treatment of timber revenue. Since 1943, the Internal Revenue Code has treated proceeds from timber harvest and the sale of standing trees as capital gains. (IRC Sections 1231(b)(2) and 631(a)&(b)).
  • Restricts the deduction for timber management costs to taxpayers with less than $10 million in annual gross receipts. Current law allows all forest landowners to deduct operating costs in the year that they are incurred, rather than capitalizing these costs. (IRC Sections 162 and 263A(c)(5)).
  • Eliminates the deduction allowing forest owners to deduct up to $10,000 of reforestation costs per stand as they are incurred and amortize remaining costs over 7 years (IRC Section 194); the proposal would require that these costs be capitalized and not claimed until the timber is harvested or sold.
  • Eliminates the treatment of timber as real property for purposes of the real estate investment trust (REIT) rules (IRC Sections 856 through 859). REITs are a common ownership form chosen by many current forest owners and investors.
  • Eliminates timber as qualifying income for publicly traded master limited partnerships.
  • Eliminates the provision excepting payment of interest on deferred payments for installment sales of timber property.
  • Eliminates the like-kind exchange provision allowing an adjustment of basis rather than immediate payment of tax. (“Starker exchanges,” IRC Section 1031) These provisions  help maintain the economic viability of 450 million acres of private forests owned and managed by more than 22 million forest owners, including individuals, families, institutional investors, and businesses.

 

 

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