Governor's Advisory Committee on Chip Mills

Draft Final Report

III. POTENTIAL ACTIONS, POLICIES AND PROGRAMS

 A. INTRODUCTION

The subjects that comprised the Thematic Background form the basis for the potential actions, policies and programs that may be adopted to ameliorate the negative impacts of the chip mills and contribute to the possibility for sustainably managed forests in Missouri. The Governor's Advisory Committee regards these subjects as critical ingredients to the long-term health of Missouri's forests and forest economy and thus meriting particular attention in addressing issues raised by the chip mills. In structuring this section on potential actions, policies and programs, several of the subjects discussed in Section II, Sustainable Forestland Base, Sustainably Managed Forests, and Freedom of Choice, are not addressed separately. Rather, they are considered within the three central thematic subjects towards which committee actions may be directed: Education, Training, and Professional Management; Economic and Social Impacts; and Environmental Sustainability. Moreover, since policy choices are invariably influenced by question of funding and financial viability, a fourth topic, Financial Support, has bee added to the above three. The committee discussed a wide range of action, policy, and program choices under each of these four themes. These are presented in this section with the strength of the Committee's support for various options also indicated.

                           Outline of Section

B. Education, Training and Professional Management
C. Sustainable Economic and Social Impacts
D. Environmental Sustainability
E. Financial Support

B.  EDUCATION, TRAINING AND
PROFESSIONAL MANAGEMENT

The Committee strongly agreed that education, training and professional management is critical to the long-term sustainability of Missouri forests. The Committee would like to have every forest land owner and mill operator educated in sustainable forest management, proper environmental management, all timber harvests conducted in accord with being done based on best management practices (BMPs), and all loggers professionally trained, all of which would contribute to enhanced public understanding of and respect for Missouri's forests and their management.

 1. Logger Training

The committee agreed on the need for a statewide certification training program for loggers such as the existing professional logger training program that has been established by the Missouri Forest Products Association (MFPA) in cooperation with the Missouri Department of Conservation (MDC). Some members of the Committee did want MDC's evaluative role in this program to be made more explicit. Logger participation in the program is, however, voluntary. At the same time, landowners need to be of the benefits of using trained loggers.

Some incentive already exists for loggers to make the commitment to the training program. As of July 1, 2000, a logger will have to have completed the logger training course to harvest timber on MDC lands. Another potential incentive to stimulate the use of professional loggers and BMPs in forest harvest would be to require the chip mills to purchase timber only from harvests that have been done by licensed professional loggers who certify the use of BMPs in the harvest.

Several Committee members suggested that the current content of the MFPA/MDC program, which is divided into forest management and best management practices (BMP's) components, be expanded to insure the inclusion of the following:

  1. A business component that would cover landowner relations.
  2. A safety component that would meet OSHA standards.
  3. A silviculture component.
  4. An ecology and wildlife component.

The Committee strongly supports proceeding with a logger training program and endorses the idea of a statewide process for logger certification. Logger certification could be administered by a government entity and/or an organization such as the Missouri Forestry Products Association. The current MFPA/MDC logger training program does issue a certificate to trainees completing the course. In that regard, consideration should be given to establishing a Board for Professional Loggers in the Division of Professional Registration of Missouri's Department of Economic Development. If such a board were established, representatives of the Missouri Forest Products Association (MFPA) and the Forestry Division of the Missouri Department of Conservation (MDC) should considered for membership on the Board to develop the requirements for certification of applicants. If is logger certification, completion of the MFPA/MDC logger training program would certainly be a requirement.

Two additional options were considered but did not receive extensive discussion or committee support. One potential action is to require that a certified logger be on-site during harvesting. Kentucky is adopting this approach beginning July 15, 2000. A second suggestion centered on investigating the feasibility of forming a coalition of large forest landowners in Missouri that would agree to use only trained loggers and implement sustainable forestry principles should be explored.

2. Professional Foresters

There was general agreement that licensing be established for persons foresters in Missouri. Applicants would be required to have obtained a four-year degree (BSF or higher) from Society of American Foresters (SAF) accredited Universities or Colleges. Furthermore, there was general agreement that the State establish a Professional Registry Board for professional licensed foresters to practice in Missouri. Representatives of the Missouri Society of American Foresters (MOSAF) and the Missouri Consulting Foresters Association (MCFA) should be considered for membership on the Board. Its function would be to delineate areas of professional responsibility, guidelines and establish standards and guidelines for processing applicants. The licensing should be based on a combination of education, experience and/or testing, with a requirement of continuing education.

Although there was general agreement that a system of incentives needs to be put into place to encourage the use of certified and professional foresters and loggers for sustainable forest management, there was considerable disagreement on the kinds of incentives that would be most appropriate. The Committee did strongly agree that voluntary measures are preferred over mandatory approaches but disagreed as to the adequacy of purely voluntary approaches to ensure such things as the use of professional forester, trained loggers, BMP's, etc.

 3. Landowner Education

There Committee agreed that landowner education is critical to sustainable forests, including high quality timber resources, in Missouri. The Committee felt that knowledgeable and well informed forestland owners are essential if the desired goals of sustainable forests and protection of soil, water, and wildlife resources is to be achieved. The content of such an educational program would be developed through the collaborative efforts of the Department of Conservation and Natural Resources,, the U.S. Forest Service, the University of Missouri School of Natural Resources, and the Missouri Forest Products Association. The delivery of the educational program should also involve the above organizations, but with the University of Missouri Outreach and Extension acting as the lead educational agency.

The Committee also agreed that the above group, with additional assistance from the Missouri Departments of Economic Development, and Agriculture, produce an informational campaign on the income potential of managing forests sustainably for traditional products (sawtimber, veneer, posts, pulpwood, firewood, etc.), special forest products (burls, vines, pollen, seed, unique wood, etc.), and recreation such as hunting, group and other forms of forest recreation. The organizations involved should enter into a working agreement (interagency where applicable) that ensures sharing of information on what each organization is doing in their education efforts focused on forestry. The collaborative group would also coordinate existing resources (for example, current Conservation and Extension programs and materials) to accomplish its goal. It would also develop seminars to assist landowners in meeting their objectives for a variety of resources, e.g., maintaining viable wildlife populations, bidding and selling standing timber, etc.

The committee considers it of high priority to target all appropriate educational programs on the area impacted by the chip mills. Thus, this informational campaign would initially be focused on landowners within the 100 mile radius of the two operating chip mills in the state. Existing data from county records in conjunction with information from the University of Missouri GIS system could be used to identify forestland owners. Further, the informational campaign could solicit the Missouri Board of Realtors, the Farm Bureau and state and federal agencies who have contact with rural landowners for assistance in the distribution of information. This would take advantage of the fact that state agencies generally interact with different groups throughout the state to convey information on programs that already exist. Also, the county assessors could be solicited to help distribute information on educational programming.

Other activities could be conducted either in conjunction with or independently of this information campaign. One action with widespread support within the Committee was to conduct a comprehensive evaluation of all existing landowner education programs in Missouri. Many different government agencies, associations, etc. have existing programs on various topics related to land and resource management with a foresty component. The study is needed to avoid duplication of effort and combine programs where possible. Each agency/organization has its own programs which may overlap. The study needs to delineate the various programs, who is being served, and how to increase participation.

Another option suggestion by some Committee members was for the University of Missouri Outreach and Extension, in conjunction with MDC foresters, to offer silviculture courses throughout the state in an intensive educational drive for five years.

Some members also suggested an expansion of the Forest Cropland or Stewardship programs already in place, as well as a more aggressive marketing effort to enroll landowners in the programs.

Finally, some members suggested that an outcomes/impact assessment should be developed to see how this focused education program is actually reflected on harvested lands. It would test the assumption that educated landowners will voluntarily adopt BMP's, hire trained loggers, and so on, because of their interest in sustainable forest management. If it is working, then the programs should be continued. If the program is not working, then the voluntary approach in the above areas will need to be reassessed and reported to the Governor and Legislature.

Overall, the Committee agreed that Missouri will be well-served if sustainable forest management is extensively adopted and if the forestland owner receives full value for wood products, understands all possible uses of the forest, knows how to receive and administer a good contract, and maximizes forestland uses for long term sustainability of all values associated with the forest. Although the ideal would be for this to be true of every landowner, the Committee felt that the audience had to be targeted towards those own a minimum of 40 to 100 acres of forestland. The benefits from incentives would then accrue to those who meet the criteria, owned more than the minimum targeted acres, and agreed to participate in and successfully complete the program.

 C. SUSTAINABLE ECONOMIC AND SOCIAL IMPACT

The Committee would like to see a healthy forest-based economy that would be sustained overtime and support a forest resource that would provide a wide range of amenities and financial returns to both forestland owners and all Missouri citizens. Included in this vision are expanding employment opportunities in the forest products industry, with much of Missouri's forest resources being processed in the State, and a healthy and growing tourist industry in the Missouri Ozarks. It is important that forestland owners have the economic incentives and market opportunities to use sustainable management.

1. Financial Incentive Programs

Financing incentives should be developed and existing incentives used to facilitate the purchase of equipment resulting in greater efficiency, help recycling of waste products and create more and better jobs in industries that add significant value to the product. Several incentive programs currently exist within DED, the Missouri Department of Natural Resources, State Treasurer's Office, the Missouri Department of Agriculture, the U.S. Department of Agriculture and the U.S. Small Business Administration that could help. Missouri companies need to be better informed of these programs. These incentive programs include:

2. Value-Added forest Products: Incentives for Processing and Marketing

The Committee strongly endorses the idea of focusing incentives on those firms and industry segments that through expansion or diversification can provide substantial new jobs (in the aggregate) as well as enhance the value-adding process to primary timber products.

The Departments of Agriculture and Economic Development should enhance the marketing efforts to assist in the development of value-added forest products and export trade. Such marketing efforts include expanding export opportunities for high-value wood products, a buy local campaign, and a grant program for marketing and feasibility studies created by H.B. 888 which could provide assistance for wood product companies to develop value-added products.

The Missouri Value-added Grant Program (MVAGP) provides grants for projects that add value to Missouri Agricultural products and aid the economy of a rural community. Grant applications could be considered for value-added agricultural business concepts that:

Applications could be considered for expenses related to the creation, development and operation of a value-added agricultural business including:

3. Applicants for Discretionary Incentives

When considering applications for discretionary incentives, the Departments of Economic Development, Natural Resources, and Conservation should all forest products companies to endorse obtaining their timber products from certified and trained loggers. Incentive programs could be structured to encourage this end. Lists of trained and certified loggers should be provided to companies receiving incentives. Applicants for state discretionary incentives could be encouraged or required to use the services of a professional forester to supervise timber harvesting and/or procurement activities.

4. Wood Processed by the Chip Mills

One of the more vexing topics discussed by the Committee focused on the timber being processed by the chip mills and, more specifically, whether they are using wood that could better be used for other purposes. There is a need for better data about the wood being processed by the mills. The Committee attempted to obtain such information, but was unsuccessful. Should there be substantial use of wood that has higher value use in the forest products industry, the economic loss is of concern. Some Committee members raised the possibility of instituting some mechanism such as a permit system requiring the chip mills to use a certain percentage of cull, rough and rotten trees. Others did not view this as a realistic possibility. A two-year evaluation of the results of landowner education efforts relative to the wood being processed by the chip mills should be considered.

5. Cooperative marketing of Forest Products

A program should be established to determine the feasibility of developing of forest cooperatives for marketing, management, export development and other business activities. The Departments Conservation, Agriculture and Economic Development could advise private forestland owners on how to form a consortium for enhancing marketing capabilities and gaining better access to markets for a better bargaining advantage to sell their timber and other forest products. Start-up grants could be considered.

6. Wood Use in Waste Recovery

A system involving the permitting of waste recovery facilities coupled with incentives for facilities using a certain percentage of waste wood should be considered. An additional reward or incentive could be the establishment of an award to be given at the annual Governor's Economic Development Conference to a company demonstrating outstanding performance in wood waste recovery.

7. Alternatiave Biomass Sources for Paper

The chip mills provide the wood fiber required for the production of paper, the demand of which has been increasing both domestically and internationally. An opportunity for economic development exists in the area of alternative sources of biomass as a fiber supply for paper production. A research and development program could be created to identify crops with high potential, create high yield varieties, and design processing technologies to build a paper production industry in Missouri with alternative sources of raw materials.

The MVAGP has provided a grant to explore the development of growing and marketing kenaf, an alternative fiber source for paper. Possible funding for an increase in grant monies for this and other programs could be 1% of the payment to be received by the state from the Master Settlement Agreement for Tobacco.

These incentive programs could be used in combination with funds that might be made available from other sources such as the Soil and Water Conservation Funds and the tobacco settlement funds that may be forthcoming to the state. The use of the funds should also be designed to encourage the use of BMPs.

F. Future Chip Mills

The committee discussed a moratorium on the construction of additional high capacity chip mills in Missouri. There was some support and no strong opposition. The Committee recognized that additional information if needed to fully understand the impacts. It was felt it would be better to have the information before addressing the range of issues and impacts that additional chip mills would have on the State.

 D. ENVIRONMENTAL SUSTAINABILITY

The Committee agreed that environmental sustainability is a critical requisite for the health of Missouri forests and is significantly affected by the character of forest management conducted in the State. Environmental sustainability encompasses both the living and non-living elements of forest ecosystems. Maintaining to latter requires minimal soil loss, the integrity of watersheds, and clear streams and springs. The living components of a health forest ecosystem include a diverse and viable wildlife populations, trees of mixed species and ages, and contiguous blocks of forested landscapes.

The Committee supports education and training in sustainable forest management for landowners and all segments of the forest products industry. This inherently involves sustaining the forest ecosystems with reflect Missouri's unique geological underpinning and rich heritage of biodiversity. A corollary of the above is that when managing for timber productivity, all harvests should be conducted in a way that minimizes soil loss and deterioration of water quality. This lends further support to the goal of having loggers trained in best management practices and landowners educated in sustainable forest management.

In the Thematic Background, it was frequently noted that the impacts of high capacity chip mill on the environmental sustainability of Missouri's natural landscape will be manifest in the kinds of harvesting practices forestland owners adopt in supplying timber to the mills. The Committee considered a number of areas in which the outcome of the above would likely have implications for environmental sustainability.

1. Soil Loss and Water Quality Protection

Among the potential impacts of improper timber harvest practices are accelerated soil loss, soil compaction, diminished soil fertility, and degraded water quality. A key to environmental sustainability is the practice of sustainable forest management through the use of best management practices (BMP's). The design of BMPs for the specific soil properties of a given site is often needed to minimize soil loss. A general review of the status and adequacy of BMPs used in the state should be conducted through an interagency task force involving the Departments of Conservation, Natural Resources, and Agriculture, the U.S. Forest Service, the School of Forestry and Natural Resources, University of Missouri, and representatives of the forestry industry.

Proper land management is critical to the health of a watershed, whether practices include timber harvesting, conventional agriculture, or industrial or residential development. Increased runoff and erosion associated with careless or improperly conducted timber harvests can adversely affect a watershed that serves as a public water supply. Maps delineating watersheds and associated acreages that supply public drinking water are available. Any activities in these watersheds, including timber harvesting, use of pesticides, etc., should be conducted in a manner consistent with the use of the watershed for public water consumption.

One possible source of funding for programs addressing watershed protection and prevention of soil loss on forestland is the Soil and Water Conservation Fund. Any funds used would have to fall within the current guidelines of the tax as was passed by the citizens of Missouri.

2. Ensuring BMP's

The Committee discussed several means of ensuring voluntary BMP implementation through the use of various kinds of incentives. One example involves the use of a "conservation bond" as a comprehensive package to address multiple resource related concerns. The bond would be paid by the landowner, and, upon implementing a sale of forest products, a portion of the bond could be refunded should the landowner employ a licensed logger and the use of best management practices was verified by a licensed forester.. The bond would generate a pool of money that could be used to educate landowners in proper timber management and subsequent harvest.

Another means to gain voluntary use of BMPs would be to amend the State Forestry Law to require all timberland owners (exempting, perhaps, those whose lands were enrolled in the Missouri Forest Cropland Program) to pay a 6% timber severance fee based on gross income from the sale of timber products and then provide income tax credits if the following criteria are met:

  1. A certified forester is used to develop a plan for the sustainability and protection of the landowner's forest.
  2. A timber sale contract requiring best management practices is employed to protect the water and soil resources of the owners and adjoining neighbors' properties.
  3. Trained and/or certified loggers are used, with the consequence that best management practices are carried out as a part of harvesting operations.

The income tax credits would be earned upon certification by a state forester or licensed consulting forester with weight given to each of the three above actions were undertaken. The maximum credit would be equal to the severance fee paid less the minimum cost of program administration. Revenues from severance fees would support program administration with surpluses made available to defray the costs of logger and landowner education/training programs as designed and supported by state and federal agencies and designated cooperators.

The recognized that incentives provide considerable potential for gaining landowners voluntary commitment to sustainable forest management and the use of BMPs. Experimentation needs to be carried out to determine what will work. Both the conservation bond and the severance tax would require legislative action.

3. Forest Practices Act

One action briefly discussed was the enactment of a Forest Practices Act which could establish requirements related to the use of BMPs, harvest notification, logger and forester certification, and a harvest plan. California, Kentucky, West Virginia and some New England states have mandatory BMPS. Some states, such as Minnesota, have Forest Practice Acts with substantial voluntary components. There was only limited support on the Committee for a Forest Practices Act.

IV. Inproving the Information Base For Missouri Forests

There is a limited information base about forestland ownership in Missouri. The same kind of quality data needs to be developed about forestland owners as is presently done for agriculture through the Census of Agriculture. An inventory and survey of forest resources is continually being conducted, but a good data base of who owns forest land needs to be created. The possibility of an annual inventory intensive enough to detect resource changes in a short time period should be considered. (This is required in Kentucky.) The Committee recommends that a pilot project be funded for the chip mill sourcing areas using remote sensing to detect resource change on an annual basis. A goal of remote sensing would be to learn if the technology can detect changes in tree size in harvested areas. A second goal would be to see if remote sensing can be used to determine land use changes that result in forest fragmentation.

The Committee proposes a two-year high intensity education effort combined with remote sensing and inspection of the chip mill feedstock and with special attention given to clear cutting in the main sourcing counties for the chip mills. Then, the third year, a full comprehensive evaluation of the results should be conducted with a written public report delivered to the Governor and the Legislature. The funding mechanism for this proposal remains to be determined.

Information is lacking on where harvests are taking place in the state. One suggestion discussed by the Committee was that a process of permitting or pre-notification of cutting could be developed. Those participating in the Forest Cropland Program have this requirement now and inclusion of all forestland owners could be considered. It was suggested that if pre-harvest notification is not required in all cases, consideration should be give to limiting notification to when a minimum amount of acreage will be harvested, or when harvesting will take place within a specified distance from a stream. Support for this idea among the Committee was mixed.

5. Forest Resources Council

Consideration should be given to establishing a statewide Forest Resources Council board similar to that instituted in Minnesota. The council could serve several roles.

Help develop and aid in application of Forest management guidelines (e.g. BMP's).

Assist in the development of broad statewide public education activities.

Coordinate the priority forestry research efforts in the state.

Advise the governor and various levels of government on sustainable forest resource policies, practices and issues.

The council would also work with landowners, forest managers and loggers to facilitate collaboration across large forested landscapes with diverse ownership patterns. Members on the Council would represent the entire spectrum of participants in the State's forestry community, including environmental interests, the tourism industry, State and Federal resource management agencies, forest industry, and academic and research professional.

6. Other

All forest products firms should be encouraged to adhere to the Sustainable Forest Initiative on all forestlands and continue to improve the verification process.

E. FINANCIAL

The financing of the educational programs, incentives, and support of landowners who use sustainable management and BMPs received considerable attention from the Committee.

1. Check-off Program

The Committee strongly supports the development of a statewide check-off program on timber sales. The revenue generated could be used to support a variety of programs, including research, marketing initiatives, value-added wood products and landowner and public education. The program, modeled after the check-off program of other agricultural commodities, could be developed and voted upon by eligible landowners.

2. Soil and Water Conservation Fund and Conservation Sales Tax

There is support by the Committee to use revenues derived from the soil portion of DNR's Missouri's Parks and Soils Sales Tax. MDC's Conservation Sales Tax is also a potential source of funding. The legislature may wish to address the need for funding.

3. Other Potential Financing Sources

There was considerable discussion of a severance tax to be assessed on timber harvests. Another possibility considered was to require a Conservation Bond by timberland owners while harvesting.

Four ideas involving a tax credit for private timberland owners were advanced. One would provide a tax credit if BMPs were used with a licensed forest consultant and certified loggers. Another suggested a tax credit on a standing timber sale if the harvest was at least 15% cull, rough, rotten and/or trash wood. The third possibility was a reforestation tax credit with a yearly limit to landowners who replant idle or cut-over timberland. The fourth would be to give a tax credit for those who are certified as using BMPs. Not only did these receive little support within the Committee, but the Committee was advised that there was limited opportunity to grant tax credits and certification of completing BMP's would have to be voluntary

There were other ideas for reducing tax liability. One would have a percentage of the timber income excluded from income tax. Another suggestion was to create a sliding scale on capital gains tax on the sale of timberland. It was suggested that the inheritance tax liability on timberland be reduced. Finally, the suggestion was made to make it possible to expense management costs the exists under current tax law for farmland owners.

Another suggestion to encourage the use of trained workers was to have a discount in workman compensation costs if loggers, sawyers and millers are licensed and or trained to ensure quality of the work site and BMPs. The State Board and insurance companies set workman's compensation. The hope is that quality logger training and certification will result in fewer accidents and lower severity of accidents and, consequently, the workman compensation will be lower.

All of the ideas in this section received very limited Committee support.

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