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Hardwood Federation November 2018 Newsletter

 From the Executive Director:  Looking to Hit 2019 Running

As the smoke clears from the 2018 elections, the Hardwood Federation is starting to look forward to 2019 and how we should navigate the new Congressional reality.  We start by considering who will lead those Committees in the House and the Senate that have the most input and impact on those issues that are most important to the hardwood industry.  Environment, Agriculture and Energy are the key words here.  As you will note in our election recap below, we anticipate that a few chairmen will be named to lead House committees that haven’t been particularly sympathetic to our perspectives on forest management and carbon neutrality issues.  Although we will certainly have friendly faces to turn to on both sides of the aisle once Committees are finally named, they are not going to be in the leadership positions that determine what bills are considered and moved to the House floor for a vote.

But we refuse to see this situation as a lost cause.  First, we keep in mind that there is always SOMETHING people with opposing views can agree upon.  We start there and build up.  Second, because of our D.C. location, we are well positioned to visit with leadership and their staff on a regular basis, to check in, share information, assess the landscape and try to figure out those issues that we can work together on and demonstrate our value as a partner in the process, rather than an adversary.  And finally, we will use our PAC dollars as both a carrot and a stick in terms of advocating for our cause.

Political Action Committee (PAC) dollars are a valuable tool regardless of the Congressional make-up, but it is at times when you have less supportive leadership that it becomes essential in the battle to capture the attention of very busy people.  And it is why 2019 we will be focused on shoring up our PAC power to the highest degree possible.  You will no doubt be hearing from us in the New Year, but don’t feel like you have to wait!  We will be hitting the ground running in January and it would be great to do so with a well-funded PAC.  See the below box for more information about how you can contribute today!

For more information, please visit our website and fill out a Prior Approval Form so that we may contact you directly on our efforts.  Or, to get involved in the Hardwood Federation PAC please contact Cary Moon (202-463-5186 or cary.moon@hardwoodfederation.com) for more information.

Issues

Farm Bill

House and Senate leadership announced last evening that a tentative deal has been reached on a new Farm Bill.  The House and Senate passed versions have been the focus of conference committee negations for several weeks.  The original hold up in reaching a compromise was House-backed work requirements for food stamp recipients.  That obstacle was worked out but was replaced by disagreement over federal forest management reform provisions that were also passed by the House.   The Administration made this issue a priority in the wake of the tragic wildfires in California.  Text of the final bill and conference report has not yet been made available.   We have been told that the deal will include very modest federal forest management provisions, but we hesitate to make any predictions until the text is final.   Leaders had threatened to jettison the entire forestry title over the dispute, which would have included provisions promoting tall wood buildings and other industry priorities.  

As we have noted in earlier communications, we are very optimistic about a favorable outcome on our trade priorities.   Both MAP and FMD funds for export promotion programs were fully funded in both the House and Senate bills and included inoculating provisions that will protect them from future budget elimination threats.  Unless there are major surprises when the final language is released, the deal should include export funding, language promoting CLT in tall buildings as well as more funds and an expanded mission for a Hardwood Federation-supported program that will help address our biomass residuals issue. 

Reaching agreement in the Conference Committee is certainly an important first step, but it by no means the final step.  Both the House and Senate must pass the compromise bill (made a bit simpler as no amendments are allowed) and the President must sign the final legislation.  Initial signals seem to be positive, but we will need to remain vigilant.

The bill is now being “scored” by the Congressional Budget Office and some technical details are being ironed out.   We hope to see text shortly and will provide a complete analysis to you once we obtain it.

China Trade

On November 2 President Trump confirmed plans to meet Chinese President Xi Jinping on the sidelines of this week’s G-20 meeting in Buenos Aires. Latest reporting indicates that the President will host Xi for a dinner and a meeting on Saturday, December 1 that could cover trade and other topics. The two presidents had a telephone conversation on November 1 that touched on trade and security topics.  This led to resumed contact between the two nations, with trade-related discussions between U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He and their working-level counterparts. Although many in the business community, including the Hardwood Federation, hope that these discussions will lead to real breakthroughs related to the current trade dispute, it is unclear what the likely outcomes and next steps following the Trump-Xi meeting will be.

While in Asia for mid-November meetings of the ASEAN and APEC summits, Vice President Mike Pence reiterated U.S. demands that China offer comprehensive solutions to the full array of U.S. concerns (including intellectual property, technology transfer, industrial policy, and state-owned enterprises) before trade negotiations can begin in earnest.  This sets a high bar for meaningful discussions. Further complicating this issue are reports that the Chinese are unwilling to make significant movement towards meeting U.S. demands.  Commerce Secretary Wilbur Ross recently noted that if the meeting is successful it would not be a broader trade deal, but a “framework.”  Statements from various White House advisors, including National Trade Council Director Peter Navarro and National Economic Adviser Larry Kudlow, are inconsistent about which tack the United States will take in preparations for the Trump-Xi meeting as well as who may join President Trump in the discussions.

In anticipation of the upcoming meeting between the two nations, the Hardwood Federation has signed a multi-industry letter encouraging the President and his Administration to work towards resolving the trade dispute with China as quickly as possible.  Nearly 150 associations signed on to the letter which you may view here.

Tax Extenders Package

In the late hours of Mon. November 26th the House Ways and Means Committee released new proposed tax legislation that would address a package of tax extenders (which must be renewed each year).  H.R. 88 “The Retirement, Savings, and Other Tax Relief Act” could also include other items including:

  • Providing special rules allowing access to retirement funds, temporary suspension of limits on deductions for charitable contributions, allowance of deductions for personal casualty disaster losses, special rules for measurement of earned income for purposes of qualification for tax credits;
  • Including special credit for employees to individuals and businesses affected by Hurricanes Florence and Michael, Typhoons Mangkhut and Yutu, California fires, Kilauea volcanic eruptions and earthquakes, and Hawaii severe storms, flooding, landslides, and
  • Making key technical corrections to the Tax Cuts and Jobs Act providing clarifications on qualified improvement property (QIP), net operating losses (NOLs), deductibility of plaintiff’s attorneys’ fees, application of the 20-percent deduction to REIT dividends, and overpayments and deemed repatriation installments

There could be a vote in the House as early as the end of November, but the Bill is not expected to move through the Senate where it would need to garner 60 votes.

Army Hardwood Procurement

The Hardwood Federation has been notified that the U.S. Army is working on moving procurement of hardwood decking for U.S. Department of Defense flatbed trucks from an imported species (Apitong or Keruing) to U.S. grown and milled hardwoods.  This move has be initiated due the listing of numerous Apitong species as extinct, critically endangered or endangered.  The U.S. Army uses approximately one million board feet of hardwood each year.
 
Initial work with the U.S. Department of Agriculture Forest Products Lab and the Michigan Technological University School of Agriculture has identified White Oak to meet all criteria for U.S. DOD flatbed trucks.  The U.S. Army is now conducting outreach to solicit interest from the U.S. forest industry and to identify potential commercial sources for White Oak trailer floorboards.
 
There is some expectation that other species of U.S. hardwoods could be included in future procurement rules if White Oak is successfully integrated.
 
It is essential that the U.S. Army hear from producers and vendors of White Oak so they can assess availability and costs.  If you are a supplier of White Oak, please take the time to fill out the attached survey and return it per the instructions.  If you know of other companies that supply white oak, please share this e-mail or let me know so I can send it out.  Information is due by December 28.

Please click here to access the survey.

Secure Rural Schools

Late on Wednesday November 28th a bipartisan group of senators sent a letter to Senate leadership urging inclusion of a provision in any year-end funding bill legislation that would authorize for one year a program that many rural communities rely on to pay for schools, roads and other critical services.

The Secure Rural Schools (SRS) program, which expired Sept. 30, compensates counties that have endured timber sale losses and related reductions in logging and sawmill jobs.

"Over the last nearly two decades, SRS has been a critical lifeline for over 775 counties in over 40 states across the country by helping fund more than 4,400 schools, road maintenance, law enforcement, and search and rescue operations," said the letter from 25 Republicans and Democrats to Senate leaders.

The March fiscal 2018 omnibus spending deal reauthorized SRS for fiscal 2017 and 2018; lawmakers let it lapse this fall. The last authorized payments will go to communities in calendar year 2019 if Congress doesn't renew the program.

Without congressional action to reauthorize the statute, SRS counties revert to a less lucrative law that entitles them to 25 percent of revenues from national forests.

The announcement and full text of the letter can be read here.

USTR Listening Sessions

The U.S. International Trade Commission (USITC) will hold 13 listening sessions across the United States to gather information for use in its upcoming report to the U.S. Trade Representative concerning trade-related barriers that U.S. small- and medium-sized enterprises (SMEs) experience when exporting to the United Kingdom.

Specifically, the USITC is seeking information from U.S. SMEs on trade-related barriers that they believe disproportionately affect their exports to the United Kingdom, as compared to larger U.S. firms. This particularly interests the Commission, considering the uncertainty caused by the approaching withdrawal of the United Kingdom from the European Union.

Interested small- and medium-sized enterprise exporters are invited to participate in the listening sessions. A schedule of listening sessions is listed below; to register, simply click on the registration link for the event that interests you.

You may find the list of fact-gathering sessions here.

White Nose Syndrome

It seemed fitting to be talking about bats on the day before Halloween, but this instance was about protection and the fight against white-nose syndrome (WNS) and not vampires and other spooky happenings.  On Oct. 30 the National Fish & Wildlife Foundation (NFWF) announced grants exceeding $1.1 million to help fight the devastating affliction that has been confirmed in 33 states and killed millions of the animals.  The latest efforts involve testing two non-toxic anti-fungal agents, ultraviolet light, and polyethylene glycol to remove the fungus that causes WNS and affects the bats ability to hibernate and reproduce.  You may read more here.

Final Elections Recap

The dust has almost completely settled on the wild and historic 2018 Midterm Elections and the narrative for both parties remains a mixed bag.  Democrats claimed the House and maintain a 235 – 200 edge.   Democrat control of the House was an outcome that many political operatives had expected, and whether you call this a “Blue Wave” or not, this will make the landscape look completely different from the All-Republican majorities of the last cycle.    The Senate elections are complete after the Nov. 27th runoff in Mississippi with Cindy Hyde-Smith holding on and Republicans were able to increase their majority – a major advantage heading into 2020 where the map does not break their way quite as well as it did in 2018 – and hold a 53-47 edge. Democratic incumbents, Senators Heidi Heitkamp (ND), Joe Donnelly (IN), Claire McCaskill (MO) and Bill Nelson (FL) were defeated but Democrats picked up a Republican-held open seats in Nevada and Arizona.

So what does all of this mean?  The biggest impact by far will be in the House, where all of the committee chairmanships will change at the beginning of the 116th Congress in 2019.   Below is a snapshot of key committees for the Hardwood Federation and the new leaders—

House Agriculture Committee:   Rep. Collin Peterson (D-MN) will take over this panel next year.   We know Mr. Peterson and his committee staff team well.  They are well-versed in our policy priorities and have been helpful in advancing hardwood-supported provisions in Farm Bill negotiations this year. 

House Energy & Commerce Committee:   Rep. Frank Pallone (D-NJ) takes over for Rep. Greg Walden (R-OR).    Mr. Pallone has not been supportive of some key issues of interest to the hardwood sector over the years, including Boiler MACT relief legislation and measures related to biomass energy and the carbon profile of biomass combustion. 

House Natural Resources Committee:   Rep. Raul Grijalva (D-AZ) will take over for Rep. Rob Bishop (R-UT).  Mr. Grijalva does not share Rep. Bishop’s perspective on issues related to federal forest management and Endangered Species Act reform.   Education efforts around the benefits of forest management with him and his committee staff will be critical.  The Hardwood Federation is well poised to frame this issue as a national one that affects Lake States and Eastern forests and is not just a Western concern. 

House Transportation & Infrastructure:   Rep. Peter DeFazio (D-OR) will chair this panel.   Mr. DeFazio has entertained truck weight reform on our nation’s interstate highways as potentially viable and has vowed to make transportation infrastructure investment a top priority in the next Congress.  Mr. DeFazio has been a supporter of the hardwood industry in the past, particularly on federal forest management reform and we have worked well with him and his team.

House Ways & Means Committee:   Rep. Richie Neal (D-MA) takes over for Rep. Kevin Brady (R-TX).  Mr. Neal comes from a district heavy populated with anti-biomass advocates and so education efforts will be made with him and his staff on the benefits and efficiencies of heating and powering our mills with biomass residuals.  We can expect committee efforts to make changes to the Tax Cuts and Jobs Act as well. 

In the Senate, committee leadership will largely remain the same with the exception of the Senate Finance and Senate Foreign Relations Committees.   Both chairmen—Orrin Hatch (R-UT) and Bob Corker (R-TN) are retiring.    Regarding the Finance Committee, Senator Chuck Grassley has given up his gavel on the Judiciary Committee and will helm the Finance Committee, leaving an opening for Sen. Lindsey Graham (R-SC) to take over Judiciary.   Also notable is that Sen. Maria Cantwell (D-WA) may give up her ranking member post on the Senate Energy and Natural Resources Committee to become ranking member on the Senate Commerce Committee, a post currently held by defeated Sen. Bill Nelson (D-FL).  Next in line for the Energy Committee slot is Sen. Joe Manchin (R-WV).   Sen. Manchin is very familiar with our industry and our policy needs around biomass and markets.   

Looking forward to 2019, the f
irst order of business will be leadership elections.   The focus here is in the House given the change in control.   While there was some saber rattling about a challenge to Nancy Pelosi and her team, that was tempered a bit yesterday with the Democrat caucus voting to nominate her for the top leadership spot.   The slate, which includes Ms. Pelosi, Steny Hoyer and Jim Clyburn as Speaker, Majority Leader and Majority Whip respectively, will come before the full House for a vote on January 3.  The slate needs 218 votes to be official, so defections could jeopardize the Pelosi team, but that is looking less and less likely. 

On the Republican side, Kevin McCarthy and Steve Scalise will be elected Minority Leader and Minority Whip, respectively.

Happening in the Hardwood World

Wood Pellet Charging

On November 14th biomass and energy conscious Senator Susan Collins (R-ME) tweeted out a picture of an electric car being charged on the National Mall in Washington, DC.  This seems like a cool, but innocent enough happening, but what was really interesting was the Tesla Model S charging was actually a showcase for the “Pellematic e-max”, which is a wood pellet boiler that produces both heat and electricity.

https://twitter.com/SenatorCollins/status/1062797561260589056

Soft Wooden Sweatshirts

This headline sounds like an oxymoron, but the European company Blue Ben has created a Kickstarter for their “Blue Sweater” that is made of 100% beech wood fiber.  The sweater is marketed as soft as cashmere and fully biodegradable.

https://www.mirror.co.uk/science/sweatshirt-made-100-wood-its-13613796

A Congressional Visitor at NHLA HQ

Tennessee Rep. David Kustoff attended the Hardwood Federation fly-in reception in September and NHLA Director of Membership, John Hester took the opportunity to invite him to the NHLA Headquarters to visit and hear directly from staff about the hardwood industry and the NHLA Inspector Training School.   “I’ve had the opportunity to meet Rep. Kustoff on a number of occasions, but never in a relaxed environment like the Federation Reception” stated Hester. Rep. Kustoff took John up on his invitation to visit NHLA on November 20th. Staff had the opportunity to discuss topics such as China and the tariff negotiations, the Farm Bill and, of course, education at the Inspector Training School. John echos the Hardwood Federation in encouraging you to invite your representatives to your business. “They are truly interested in what’s important to you, and the jobs you create.”

Rep. David Kustoff (R-TN, 8) and NHLA Director of Membership John Hester at NHLA HQ in Memphis, TN.

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