Advisory Committee on Chip Mills-Meeting Minutes 09/14/99

Governor's Advisory Committee on Chip Mills

Governor's Advisory Committee on Chip Mills
Department of Natural Resources
Regional Office 210 Hoover Drive
Jefferson City, Missouri
September 14, 1999

Committee Members Present

Senator Wayne Goode, St. Louis
Jerry Conley, Director, Department of Conservation
Stephen Mahfood, Director, Department of Natural Resources
David Bedan, Citizen environmental conservation group, Columbia
David Day, Private property owner organization representative, Dixon
Earl Cannon, Deputy Director, Business Expansion and Attraction, Department of Economic Development
Emily R. Firebaugh, forest landowner, Farmington
Jay R. Law, Conservation Federation of Missouri, St. James
Mark Garnett, Forest Products Representative, Brandsville
Representative Bill Foster, Poplar Bluff
Sarah Tyree, Special Assistant, Department of Agriculture
Senator Doyle Childers, Reeds Spring
Jon D. Smith, Forest Products Representative, Mountain View

Interested Parties Present

Becky Denney, Mo. Coalition for Environment, Kirkwood
Bill Bryan, Attorney General's Office, Jefferson City
Bill Moore, Canal Chip Corporation, Conway, SC
Carolyn Pufalt, Sierra Club, St. Louis
Charles Hirt, Canal Wood, Jackson
Cory Ridenhour, Missouri Forest Products Assn.
Dan Schuette, Department of Natural Resources, Jefferson City
Dr. Jerry Wade, Facilitator, University of Missouri, Columbia
Jack Slusher, UMC, Columbia
Jay Wunderlich, Harness-Gallagher, Jefferson City
Jess Garnett, Garnett Wood, Bransville
JoAnn Petty, Department of Economic Development, Jefferson City
John Dunn, US EPA, Kansas City, KS
John McCammon, TNC, St. Louis
John Wood, Westvaco, Wickliffe, KY
Louise McKeel, Village Image, St. Louis
Robert Riesenmy, Wood Woman, Hartsburg
Roy C. Hengerson, Missouri Coalition for the Environment, Jefferson City
Scott Brundage, Missouri Consulting Foresters Association, Columbia
Steve Bratkovich, US Forest Service, St. Paul, MN
Steve Galliher, Willamette Industries, Piedmont
Terry Finger, House of Representatives
Dr. Bernie Lewis, Dept. of Forestry, University of MO, Columbia
Tom Kruzen, Missouri Coalition for the Environment, Mountain View
Tom Lange, Department of Natural Resources, Jefferson City
Vince Henry, Missouri Pacific Lumber Co., Fayette

Call to Order

Steve Mahfood, Director of the Department of Natural Resources, and the committee Co-Chair called the meeting to order at 9:20 a.m. There was no public comment, so the committee proceeded to the presentation by John Dunn.

Presentation by John Dunn, US Environmental Protection Agency

John Dunn: The forestry assessment, water quality assessment, and national assessment are trying to pick small clear cut sites. They're going out for a second round of meetings for that part of the study in the next few months. They are supposed to be meeting in a few months and are saying that in terms of their process, they are about six months into it now. They are about another year or year and a half away from completion. There is something I could mention, that I encourage Missouri to take part, and to show interest, and I hope very much we would can be a part. I encourage staff here to provide a request and to be a part of the study. It is an overwhelming task to them. There were quite a few federal agencies to get together and there was really a question on borders.

Most of the states we are dealing with have a large number of chip mills. There were 15 to 20 per state. Being outside of their region and having two chip mills, we were not seen as being a key player in their group. From my point of view, I tried to talk to Fish and Wildlife Services and EPA organizations that I was in contact with. I was trying a little bit to see if we could be a part of that in some way. I felt that Missouri was an important state, because in Southeast, we are working with softwood, but if we go up into the upper Midwest here, we are seeing development of the hardwood plant. I think that is a unique development in the chip mills questions, and the chip mills issues. The other thing, of course, that is going to be important, is development of the Chinese market. So I was hoping that in some way we would be able to represent that hardwood portion of the chip mill question. Right now what I am seeing though is that they are focusing on possibly continuing the study. In terms of how Missouri and southern states interact, I also believe that Missouri could be a leader to them. This particular group, I think, probably moves faster than any of the other state groups that are looking at chip mills.

In reading the minutes, and I have read the minutes of groups like this throughout the nation, this group is probably moving faster and more directionally than any other group. In terms of work related to private property issues, other groups bog down for nine months just talking about it. In terms of finding sites on the ground, I realize that going out and doing a field survey, this group was able to actually go out into the field very quickly and see a number of sites. This group has put forth a remarkable effort and has a remarkable dialogue.

Steve Mahfood: Any other questions?

David Bedan: I guess we are formally excluded from this. Is there someway we can work cooperatively without these studies?

John Dunn: I suspect it may go the other way. One of the things looked at was using Missouri as a site that had not been cut heavily since many of the areas they are studying have not had a lot of cutting going on. They were going to try to use us, I guess, as a control state. There was kind of a unique twist to it, but they also could use the Ozarks as being a unique hardwood example. I think that is where fish and wildlife is the one to see us as being part of it. They want to locate hardwood sites and look at the hardwood market. In terms of methodology, I think you would be surprised to the extent to which this group is being watched. I have been shipping off some of your meeting notes now and then and folks are reading them, so to some extent I think folks are eagerly awaiting your findings. The next three-month period is going to be pretty busy for you folks but I think you'd be surprised how many folks are watching this important stake. Recently, I briefed Chuck Fox on this and know that folks at EPA headquarters are interested in this. Perhaps I got the impression that they are showing an interest in this.

Steve Mahfood: Anything else - any comments? One thing I failed to do, and I apologize, was to recognize our new Co-Chair, which is Director Jerry Conley from the Department of Conservation. It is not very often that we get to delegate up to a director.

Jerry Conley: Thank you very much. My background is in Fisheries and Marvin Brown's was in Forestry, so I will try to catch up, but I appreciate the opportunity to serve on this Board.

Dan Schuette: In answer to one question, we finished our course management plan with the EPA about three weeks ago. EPA has not approved it yet; they are still reviewing it. Luckily we did work with a number of agencies to kind of get through the information, and we took it out to public meetings a few times and we have presented it before the Clean Water Commission. Formally twice ---- three or four updates other than that. We finished that whole process, EPA is still reviewing it, and the program is going to make some copies of the introductory portion of it which explains the overall objective of it and then we will get it up to you this afternoon before you leave.

Approval of Minutes

Steve Mahfood: We'll get on to the approval of the minutes. One more thing, we did not get any other sign-in cards for the public comment period. We will have another comment period at the end of the meeting. So if you would like to make any comments, you will find the cards on the table right outside the door. Let's go ahead and move on to the minutes. Please go ahead with any comments or corrections.

David Day: Under "Committee Members Present," I was there but my name is not listed.

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Jay Law: I have found some corrections and I think most of those are probably because they have to deal with tapes and mumbling of people. There is one on page 3 that I think is in error, it is five paragraphs down, regarding the sentence, "As far as conservation, Missouri has a little over 3,000 acres." I'm not sure what that refers to, and I'm not sure who made that comment. Also on page 4, the last paragraph, the sentence, "The only problem about that is it's really not a picture, it's just data from funds." I'm not sure what that means. On page 5, I'm not sure, and here again in Item D., "How can cumulative impacts on a watershed be predicted? If you are going to do any sort of watershed base normally you have to know where the forest cover is, where the smokes are, where the screens are to become a watershed." I don't know what the smokes are, and there is one up in Item C where the, "People are worried about the traveling of population." Maybe there is Urban Sprawl or something? We do have a traveling population but I just thought Urban Sprawl was the movement of our population. Then on Page 15 again another wonderful thing that I would have loved to have said, down under Jay Law, "There are bad actors out there." I don't think I said that, but this is what I found in there.

Steve Mahfood: As you know, at each meeting each agency takes responsibility for the minutes, which involves equipment issues.

Jay Law: Oh, I know and I'm not saying that anybody misquoted anybody, I'm just saying that they did the best they could with the tapes and I appreciate it.

David Bedan: There is a small correction on Page 8 at the bottom. First line there should be Southeast not Southwest.

Jay Law: This is probably not the proper time but I did want to say that Krissy's material was good and I think we got the things here on what we asked her for on different states and what they have. She did a nice summary on that, I don't see her here today but I would like say my thanks as a member of the committee for her follow up work. That was real helpful.

Steve Mahfood: This may come up in the future also. I'm not quite sure how to handle these things; we could probably spend half an hour trying to word-smith the minutes. Regarding the subject of audibility, what do you think if we put parenthesis around the questionable parts of the minutes, and then a question mark? Leave that statement in and just put a note that there is a question about it. I don't think it is going to have a relevant impact on the deliberations of the committee. If that's all right we will go back and note what you noted Jay, and if anyone else has a question other than David's request as a correction, then we will note so everybody knows that there was some question about the meeting. Any further comments?

Representative Foster: I would like to mention that Tim Dugan, Assistant Attorney General attended as an interested party.

Steve Mahfood: Thanks, Bill.

(Unknown person from audience): I would like to comment that for some reason the minutes have not been sent out with the notices to interested parties like they previously had been. You sent notice that the minutes would be available today, and they are still not available. In the future I would recommend they continue to send those out beforehand.

Steve Mahfood: I appreciate that. I don't know why they weren't sent out. Any further comments, questions about the minutes? I entertain a motion to approve the minutes.

(Unknown) So moved, with a second. (Unknown)

Steve Mahfood: All those in favor of approving the minutes as corrected, signify by saying "aye". The minutes stand approved. Let's go right into Dr. Wade's facilitation process.

Facilitation of Discussion on Proposals

Dr. Wade: I am most pleased at being here. Just a few comments regarding how I would see the day going. First of all I noticed on the agenda, there is not a time for adjournment. That is not a good way to commence a meeting. My question is, "what time do you want adjournment today?" Will everybody be able to stay and work until 4:00 o'clock if we need that time?

Steve Mahfood: Can I give you a more realistic target? The more realistic target, I think, may be 3:00 o'clock. I know there are people that have to leave earlier, but 3:00 o'clock at the latest, I would say should be our target and if there is any way of shooting for 2:00 o'clock, great. But, I think 3:00 o'clock would be my recommendation.

Dr. Wade: Maybe a half hour for public comment?

Steve Mahfood: No more.

Dr. Wade: Then 2:30 p.m. is what we will aim for.

Senator Goode: I have three meetings at the Capitol starting at 1:00 o'clock, so I will be leaving before then.

Dr. Wade: Okay, we will try to get as far as we can get by 2:30. I want to compliment the group on the work that they have done and I appreciate the hard copy discussion on the draft of recommendations for this meeting. What I am going to propose is that we begin working through those recommendations. I think some have been passed on. Bernie is sitting at the table because he wants to be sure and get the discussion on these as soon as possible. What I will do is hand out recommendations, we will discuss and I will facilitate the general discussion. What we are looking for is to get some general ideas of what people think about that recommendation. Bernie and I will then take down each motion for a rewrite to again have a recommendation on that point that we think captures the intent from the committee on that issue. Hopefully, we will have as many of those as possible; we will have either general agreement or into areas where there are considerable differences of opinion.

There is one area I don't think is going to surprise anyone, in which the group had substantial differences and that is in the area of finance. I think that was probably to be expected. What I want to have is a good open discussion on finance while Senator Goode is still here, so that this committee can begin to give that working group as many ideas and suggestions as to where it should go; as they try to put some recommendations on the issue of finance. The last thing we will do today before the public comment is look at the other areas that we do not have recommendations for, and the group will indicate which of those they consider the most important that we move on. Those will form the basis for the work assignments between now and the October meeting. By the October meeting we should begin to have the skeleton of a report, so those of you that have concern that we are just getting bits and pieces. By the October meeting we will be able to see the skeleton of the report and hopefully we will get to have a pretty good draft to work on at the November meeting. So that is what I hope we can do today.

What I am going to focus on initially, is there were five of the recommendations that generally dealt around the general area of education and training. I am going to begin with those and one of the things that we may find is that when we start putting these recommendations together, is that some of those categories may in fact begin to blend with each other. Let's start with the recommendation of education and training for landowners and loggers in the general category. Why don't we let them do an introduction to their recommendation and then we'll let the committee discuss. Let's spend a few minutes and let everyone read it. Okay, why don't we let Dave and Bill have an opportunity to talk about their recommendation and then we'll throw it open to the committee for discussion.

Education and Training/Funding For Landowners and Loggers

Representative Foster: This is a difficult issue to try and come up with planning unless we come up with a correct pool of money, there is no way to offer an incentive program. What we tried to take a look at is trying to bring those funds from three different locations. We feel society has an obligation to supply part of the funds. We feel the timber industry has an obligation and we feel the landowner has an obligation. The way we have it split up there, of course we know we are 1% short, but basically one-third each would supply the funds necessary to offer the incentives. We took a look at the possibly of forcing society involvement to take a look at the soil and water conservation. We had a discussion at the Capitol a couple of years ago, and I served on a committee to take a look at this. The Conservation Department has done an absolutely wonderful job in the State of Missouri in bringing us from about the 40^th in the United States to number 3 in the United States in terms of losing soil to erosion. But, the discussion at the Capitol was trying to take part of that money and to use it in the St. Louis and Kansas City areas, if you remember. They were having erosion problems in the city and they wanted to pass a bill that would take part of that money. We were able to defeat that recommendation but we had a heck of a discussion on it for a few days. A lot of people feel that if there are funds available that this organization has to use it themselves, and because of that we have some funds today that we really don't have to use in areas. I feel very strongly that as we begin to cut the timber, that this money for soil erosion could be used and logically should be used in the area of cutting timber and taking care of the problem of cutting timber.

Then we have some kind of tax on the wood industry, saw mills, chipping mills, some in terms of charging a tax on the product that they can sell. I call it a sales tax and that is not a very good term but it is on the product. We can measure easily what their sales are. And we can measure what their sales are and have to turn those figures in, and then we could tax based on their sales, based on their quantity. Obviously, it needs to be based on quantity because we want to tax the larger industry a lot more than we do the very small sawmills. So what we're really talking about doing is taxing the wood industry based on their volume. And of course the landowner should have a part because they are the ones that really are going to benefit from selling their timber, and again we think they should make a contribution in the pool money. We have to decide what we are going to do with the money once we have created that pool of money. What we talked about is to have three stages of involvement. Phase one, the training, phase two was the planning stage, and phase three was a (inaudible), and that is where you really got the bulk of money back and that was 15% and that is for implementation to make sure that you act and carry out what you committed to carry out. We felt that you would want to commit to the best practices in that stage.

If we begin to have in-depth management practices for people to bring in a professional forester; (and I think that is the best part of the practice that they bring in a forester), and that they are licensed and certified by the state. Then I think we have some controls built in without us going out and doing inspection. What we have to be concerned about is if somebody agrees to best practices, how do we make sure that really happens. How do they open the roads, and close the roads. If they bring in a professional forester, that is licensed and certified by the state, and that person continually doesn't do a forester's job, we can pull their license without costing the state a lot of money. These are some general ideas, and David, you may want to talk about some of the other elements that I didn't talk about.

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David Bedan: Bill, I agree with you on the funding sources. The sales tax may not be the best concept on the wood industry because if they have sales tax on their products then you will be hurting the more value added product type of smaller millers and your chip mills may not get their fair share. So, I would suggest instead of sales tax, a volume tax really could be the same calculations that you use for the landowner. Such a volume of timber products that people pay out and the landowner pays out. I think the sales tax, would buy us in the wrong direction. On number 5 of the incentives, those percentages 5, 10, and 15 percent, we just thought out and we wanted to be talking significance that would be a real incentive. Basically, what we wanted to do is get the concept out and we can work with these percentages, we are not attached to these. Someone would have to do some calculations and surveys to find out what amount of incentives would be attractive to landowners. We also realize that there is a gap here because this mainly would appeal to the landowner that intends to hold the land for a long period of time. It would not help that these situations where speculators come in and buy the land and cut it quick and then resell it. So there is something, some sort of minimal BMP regulation. We didn't address that in here because we wanted to talk about education and training.

On the content itself there should be a broad-based committee of agencies and organizations. We suggest five, and include the Forest Service, USDA, and Natural Resources, Conservation Service, Conservation Soil and Water Programs, and Water Pollution Control programs along with Conservation Extension and Forest Products and we would get a pretty broad-based concept there. As far as teaching, we talked about the Missouri Extension being the chief organizer, and deliver the services, but really all the agencies involved can actually be involved in teaching. I don't believe we meant the Extension to do it by themselves because of the Extension's skill of organizing the logistics and they are in every county. We hope that this will provide a long-range vision in forest management for landowners. We would like to target anybody with forty acres or more of forest. Of course, training is required for incentives, benefits for anyone that owns forty acres or more, and also there are public benefits too.

General discussion followed.

Mark Garnett: What triggers the landowner to ask for education? What's the trigger? For example, how does the landowner find out that education is available and what triggers him to ask for it?

Representative Foster: I really think as a volunteer, we can get the information out to every landowner. After that we put the incentives out, and hopefully if they are motivated they will be asking if they can participate. Unless we accomplish that we really haven't accomplished our objective. They must really want to do this.

Mark Garnett: That's what I am trying to get at here-how do we get landowners to ask if they can be educated. How do we do that, do we send that information out and he knows if he harvests timber, if he goes with BMP, he gets a certain amount off of the severance package?

Representative Foster: If we can build these incentives and we can agree on how to get a pool of money and build the incentives correctly, these percentages that we are putting in there 5, 15, are too low, maybe they should be much higher than that. So if you begin to give people 25 to 50% rebate, on their property taxes, believe me they will be coming to you, begging you to allow them in the program. Because they are more concerned about that property tax than they are anything else.

Mark Garnett: Will that be every year, or will it be one time, or how does that work?

Representative Foster: I think we have to do that on a yearly basis, whatever percentage we come up with.

Senator Childers: It looks to me like the most important things are to get them started. Once they understand the value, if you can get them started, it looks to me like you may want it high for that first step, then it could even drop off, year by year for a period of time. It may not be as high in the future years.

Mark Garnett: That was my concern, Senator, how do you get them to take that training?

Jay Law: When we look at the current State Forestry Law, we pretty much have this already. We have 160 thousand acres, to tell you the truth, but it isn't very much. That has been around for a long time. I don't want to hit at the Forestry Division because I have many good friends there. The division has been trying to reach this group for years. The other thing is it appears that it is the same old agency group involved in land owner education. I think that we have to go beyond this. I think that we need to get into some real outreach. I know that Farm Bureau is not included, and I think it should be. Also I think there are other citizen organizations that need to be involved. What has happened to a consideration for granting a tax credit, which is not going to take any money out of the budget? That would seem to be a real stimulant, if you could get a tax credit that you could take at the bottom of your state tax form.

Representative Foster: On the (inaudible) Law, that is a long commitment for us. It is not based on the percentage of your property tax; it is based on like $2 or $3 per acre. After ten years into the program, if you drop out of the program you get penalized. I think those are some elements that we discussed last year when Jerry McBride introduced the bill and we never were able to correct those. Those are elements that are really giving us a problem with that program and the reason it is not being used. What we are doing here is absolutely a tax credit you are talking about. This is a tax credit based on your property tax. What you're going to do is just like a circuit breaker with your senior citizen where you pay your property tax and you get a tax credit reimbursement from the state. We don't have a fund in the state to issue a tax credit. We have to have a pool of money created and from the pool of money is exactly what we're going to do. They're going to fill out a form for a tax credit based on your property tax. So you will end up with a twenty-five percent tax credit if you participate in all three levels of the program. As a landowner, if you take the training, you have a plan and you implement the plan, you'll get a twenty-five percent tax credit on your property tax.

Emily Firebaugh: The Forest Cropland Program that we have in place now in the State of Missouri provides all of these incentives for education and silviculture. I own twenty seven hundred acres, more or less; I pay less than nine thousand dollars a year in taxes. I'm not going to get much more of a tax break. If we leave that program in place and enforce it with education, one on one, in the district, I think it would benefit everyone. The program that you have introduced seems as though we are going to educate them more in taxes than we are in forestry. Extension is the mechanism that has always reached out in rural areas and in the urban areas for educating people on forestry education. I have been to speak to Rotary and several other organizations in the Madison, St. Francosis County, one on one, to groups of twenty to thirty people. Of all the farmers that I know, they are all the people that own timberland, not one ever raised their hand when I said, "when was the last time a paid forester came to talk to you?" In all of these groups not one said that they had been there. The forest cropland program is really a good program. The thing is the Department is not directed intensely enough to send people into the field anymore to work with new landowners. I've been in the program for nearly twenty years and I don't have a forester that comes to visit with me. So I think the state has the program in place, it is just that we need to redirect them more into education than into acquisition and maintenance. So the major thing that I have a question with is your education and training for the landowners. The funding is there through forest croplands. For the loggers, I think if we refunnel some of the monies that the Departments have, we would have some funding. My major conflict is I think we are teaching tax advantages more than we are forestry. I am dead set against taxing the landowner; I now pay almost fifty-two percent on every part of it I do. I pay 6 percent in yield tax, I pay ten percent to my consulting forester, and by the time I pay consultants and the IRS, and the state income tax gets hold of me, I've had it. So what more taxation is going to do is to double up on my cuttings to get any amount of money off of it, I'm going to sell the stuff. Fifty-two percent is a heavy burden on a harvesting already. You put any more on me guys, and I am out of business.

Representative Foster: So you feel the program that we have in place has enough funding to take care of the training of all landowners?

Emily Firebaugh: If the Department of Conservation and the Department of Natural Resources, etc, etc. take their money out of acquisition and out of maintenance and place some emphasis on education and outreach, even if we just put a moratorium on acquisition for a couple of years. Now I know, that would be the most controversial because the Departments are so channeled for that. You can talk to Farm Bureau, you can talk to private landowners, and there is barely a county out there that isn't aggravated with the money the Department of Conservation has spent on acquisition.

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Representative Foster: I agree with you on that, and I have talked to the Department of Conservation and their plans already include cutting back almost completely on acquisition. They may already include that now. I'm sure that they can cut much more than what their plans are. What you're suggesting is take part of their budget and create more of staff for training. Obviously, we're not getting the training done currently. The landowners are not being trained.

Emily Firebaugh: We have no outreach from the Department to fund the State Forestry.

Representative Foster: What we are being charged with are the training. In my area there is a group of people that have worked together as a community and have asked for a grant, which was turned down.

Emily Firebaugh: I just got that on my e-mail.

Representative Foster: But our position relies on a lot of groups working with whomever we put in charge. There are a lot of groups that are going to work with people to educate them. There are a lot of people that want to be involved. I think we have to have more funding to do a good job in education. We have to have incentives to get the people who want to be educated, there has to be a reason to be educated and there has to be qualified people in funding for that education.

Emily Firebaugh: These groups that I have talked to, civic groups and organizations in those two counties for instance, Madison County is mainly based on rural timberland. These people don't even know the tax advantages before cropland. I can't tell you how few people even know the name of the state foresters that are in our area. There are constantly people, (and these aren't people who are coming in and out every three to four years. They've been there for twenty years.) They don't know the names of our state foresters. Within the urban areas we have a lot of absentee owners, out of Kansas City and St. Louis, we need to have Extensions, DNR, Conservation have outreach programs with them. In my county you can go to the record center of the Assessor's Office, or to the Collector's Office, you can get the names of the people who own that land. Write a letter - we are talking fifty to seventy letters for people who own forty acres or above. That is not difficult to do, we just are not channeling the energy in the right direction to outreach for education.

Representative Foster: There are three things we want to accomplish, and we want the landowners to be educated.

Emily Firebaugh: We can't really educate them. We just want to let them know it is available.

Representative Foster: We really need to somehow, and we really want to educate them. I don't know how we're going to pull it off. We would like them to have a plan, that when they do harvest the farm, to do it correctly.

Emily Firebaugh: That is what forest cropland programs do, it is already in place.

Senator Childers: But it's not working, that is the whole point.

Emily Firebaugh: That is because the energies and the monies from these state departments are not being channeled in the correct manner. Anyone who is out there will tell you that they have never seen their state forester come around. We'll see extension people come around. We'll see soil conservation people come around, and they are more readily available. What we need to have is this Department of our state government says to their state foresters, "quit working with an Emily Firebaugh, get out there and work with people in general. Don't just work with the people that have called you."

Senator Childers: Emily, just until very recently I was a landowner in your area. I found out that my neighbors there had no problem at all getting them, all they had to do is ask. So the problem is getting that landowner to go the max. The foresters are there to help.

Emily Firebaugh: We need to have the Department go out and say to people who don't know that this is available, "look we have this available to you, just one year, two years, three year max." How is the Department doing in outreach?

Representative Foster: What is the successful way to get these people who ask for help? Look and see what is working and see how we can improve. It is obviously there for some people and they ask about it, so how do you get those people to know to come back to the point they make. How do we get these people to know that?

Emily Firebaugh: The tree farmer course which I mentioned in the last one, reached all the way from absentee owners in Festus, Missouri to the St. Louis outreach area. All the way down to Sikeston, Missouri. It brought people to Jackson, now that is quite a bit of area but they sent out notices through extension, they sent out notices through newspapers, lots of coverage in the newspaper. I can't think of a last time our state forester put a letter in and said, "we're having a meeting".

Representative Foster: Emily, what in your program encourages or gives an incentive to people to use best forestry practices, which includes bringing in a professional forester?

Emily Firebaugh: What does it for me, and what would do it for others, is that if we just get the news out to them on the property tax break.

Representative Foster: That would do it, like best forest practices, like open roads, closed roads.

Emily Firebaugh: Yes, you cannot get that tax break unless you do BMP, (Best Management Practices). Now the catch twenty-two that you mentioned that is very very liable to the landowners in the long term.

Representative Foster: Who monitors BMP?

Emily Firebaugh: The forester, and that is the reason why I have to pay a 6 percent yield tax is because I cut with my consulting forester. I do not wait for the state forester to come out and mark my trees. I cut on a faster rotation and then I have to pay about 6 percent yield. The only thing you have to do to get in that program is to make the commitment for so many years and have your boundaries marked.

Representative Foster: Currently, to get in the program and be successful, you have to hire a professional forester.

Emily Firebaugh: No, no, you can use a state forester

Representative Foster: You use a professional forester that is educated and trained in forestry and he has to sign off saying you did complete best management practices before you get the tax break. Somebody has to check it to make sure it happened.

Emily Firebaugh: Technically, you can get around that by doing wrongly and you would be penalized with either being kicked out of the program and having to pay back taxes or by paying a higher yield tax. I don't know what the penalty is but I know the yield tax would come into that. But yes, the state forester now is required to go out and tell you what trees to cut and then they supervise the cut. It's all in place. They have a terrific program; we just don't reach out. You have 30,000 landowners in the State of Missouri that have 40 acres or more, less than 10 percent have been contacted and are in this program.

Sarah Tyree: In reference to marketing and getting this information out - maybe if the Judge from the committee could be from that 100 mile radius from these chip mills. Just have an action plan in a targeted specific area. (several sentences inaudible)

Emily Firebaugh: We have the problem, the educators are there, and we just need to redirect them. The tax advantages are there; we just need to bring some of them back in place. We need a sliding scale on capital gains tax. That would bring people into it. We need to institute or reinforce tax credits. We need to revise timber income exclusion cost. We need to be able to expend annual forest management cost. We need to review income tax on timber. You tell people that, you'll get people to sign up, you tell them about income tax, inheritance tax, burdens reducing that, you'll get them in there. We don't need to create new taxes; we just need to put into place things that have always been there for us. They kicked out that expense for forest management. Well, I'm not going to sharpen the blade on my chain saw if I'm not going to get tax expense for it.

David Day: On the plan you have here on your 5, 5 and 15 percent, I didn't understand how or when that is paid and how often. Is it paid on the year of the harvest or how does that work?

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Representative Foster: What I intended was as long as you're in the program - every year. You'll get a total of 25 percent tax rebate on your property tax. So the more land you have, the more the rebate is going to be, because it is percentage.

David Day: Has any thought been given to the desire to educate the landowner? It's going to be a big undertaking to get to the level you want it to be. To me it is more important to educate the people who are doing the work, the loggers, the people who use trained foresters and that sort of thing. Has any thought been given to the tax credits if they use, let's say a professional forester, a trained logger, and worry more about educating the people doing the work rather the interest being on the landowners.

Representative Foster: A big part of that 15 percent was used for best management practices which I feel includes a professional forester of some nature. Whether it is through the Department of Conservation or private, by using a professional forester, that is where it really came in at.

David Day: What I'm looking at is if you just gave a tax credit on harvest itself. It will probably cost; it would probably mean less money out of the budget. Make it a substantial amount and then these loggers that went through the proper training; the foresters could use this as a marketing tool. Go out to the landowner and say if you employ us to do your harvesting you'll get this much of a tax credit.

Representative Foster: One of the things I want to do in terms of education, as David said a few minutes ago, you really don't want to just reward people who cut trees. We really want some of those trees saved on a permanent basis. Regarding the education part of it, we really want to teach the meaning aspects that they can use their forest for. Not only cutting, but to keep them.

David Day: I agree with that. Don't get me wrong, I guess I am just saying I think you ought to have something like that. I guess to me more emphasis ought to be put on training and educating the people that are actually doing the work. The other is good but I think the real focus ought to be on the people who fire up the skidders and start up the chain saws.

Mark Garnett: I think we should look at the economics of this as it affects Emily. That is where the rubber meets the road. You look at what 40-acre of timber are worth and how they intend to work in there and whether we can dementer this or what we would all like to see. If we can't we are wasting our time. That is what the problem is now and in many cases there are no incentives for a landowner to do it right. Economics will affect 90 percent of the others and the other 10 percent is going to do it right regardless. But the other 90 percent, that is the people that we need to be talking about, and if we don't we haven't accomplished anything.

Representative Foster: I had the idea that sometimes when you enter a program, most people I talk to anyway, it is sort of an unknown. But when you're simple and say if you participate, we're going to give up a 25 percent tax credit on your income tax, they will take notice. The land for example, (I'll just use round numbers here), the timber on it is worth let's say $20,000. What will my taxes be? They are going to be in the high area, $60 a year, more or less.

Mark Garnett: Representative Foster, it won't work. That's the problem, we have to help people like Emily, to do it right. The problem is for Emily and the landowners to sell that timber and practice BMP, to employ Jay Law. Jay Law gets 10 percent. He's worth it to do what we want to accomplish. But, how do we get Emily enough money to get interested enough to do that?

Jon Smith: It will almost have to be on the actual crop itself.

Senator Goode: Emily is saying, if I heard it right, this is what she and the landowners like her need to know about. Also Mark is saying that property tax, even in its entirety, doesn't provide enough incentives. For someone in the business as crop land, crops that works, but for the casual landowner, if you want to use that term, whether it is someone that lives in the urban area and owns 40 or 100 acres out there, or someone living on 40 or 100 acres - it doesn't provide very much. So, it looks like you have two different target areas and as far as crop land programs, adequately addresses the one but not the other. I assume what you're trying to do is put in place some program that's going to touch the very small landowner and try to get people who aren't really in the business, but occasionally for whatever reason, they need the money at the time or probably changing hands or whatever, they will harvest the land to do it right. It is not that the Conversation Department with their present program can't do a better job there but it will probably take more money and effort. I think like Mark, if we are probably going after or tying it to property tax it is not adequate, because I think in most all cases you are paying less than a dollar an acre in property tax on forest crop land. If you don't employ 60 or 100 acres, 10 percent of it, or as Jon said, even a 100 percent of it may not be enough. I think one of the things you have here probably makes a lot of sense. In the yellow portion of your graph you are talking about the current sum of property tax. You captured the argument that occurred there as far as losing that in some urban areas. There has also been some argument the last year or two, the north of the river - south of the river argument that those of us in the legislature and all of the others that are familiar with it. Most of this money for soil conservation goes to north Missouri where you have the farm land runoff problem. We also have a big runoff problem in the southern part of the state but it is not so closely tied to agriculture that you have in the northern part of the state. You have a lack of money going to the southern part of the state. Trying to utilize some of that source of revenue is probably a good place to go to get money to fund whatever we decide we want to do. It is certainly directed and connected to soil conservation. On your other part of the tax that you propose there, it doesn't seem to me that a harvest tax or severance tax or anything like that is going to work or have any kind of support. If you're going to do a tax, there will be a portion of it from the public side of it. I think the way most states do it, as I understand, is a tax on the first sale of the timber.

Representative Foster: I don't have any problem with that. We just want to get the discussion started. I had to get something out there to do that. Apparently it has worked.

Emily Firebaugh: Well put! In following this discussion that has been going on, if you are not large enough that the tax advantage would help you on the assessed valuation of your land, I find that my neighbors, as you did Senator, are interested in holding on to this land because it has been in the family. So inheritance tax would really benefit as to keeping good forestry banks there naturally. The other thing is they either just love having a piece of their land so much that they drive out of Arnold after having worked in the Chrysler plant and coming down there. So this is where we need to get the state forester, etc., to come out and educate them that not only can you do that for better forestry practices, but you can do it for the enhancement of those woods, the wildlife, the birds, the wild flowers. Soil conservation can come out and educate on this thing. When I do hunt leasing, I always contact the lessors who are from St. Louis to come down, they get in touch with soil conservation to improve seed plots, and then they get in touch with the water division to put in watering ponds for wildlife. All of these agencies are there-we just need to get people educated. You have the person who wants to hold on to the land, so the inheritance tax thing will be a benefit. For the love of the land, for the hunting leases, after that gentlemen, you're going to lose them.

Representative Foster: We can deal with property tax or tax credits, we can deal with state income tax, but the inheritance tax is a federal thing.

Emily Firebaugh: I know, but the National Forest Products group is always lobbying for this. We could write them a letter and tell them to lobby for it harder.

Senator Goode: The state does get money from the inheritance tax but it is fully driven by the federal law. Besides, less than one percent of the estates pay any inheritance tax to anybody. It's not something that is a personal problem for you and others, but as far as doing anything to drive this, it is not an issue.

Mark Garnett: How can we do something as a result of what we do here? How could we have done something a year ago to make anything better or eliminated something?

Representative Foster: We didn't address that Mark. You're talking about education and training, and we didn't think education and training was going to do any good in that situation. That is why I feel there needs to be Best Management Practices regulations.

David Bedan: Let's go a bit further with that. I mean we need to be motivated instead of regulated.

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Senator Goode: In the last couple of years, last three years, the legislature has cut taxes very severely and has given only tax credits right and left. We are now down below the Hancock lid and I don't think you are going to see this continuing. In fact the state is getting itself in a position where it is not going to be able to take care of its obligations because of the tax cuts that they made over the last three years in the tax credits. I don't think you're going to see any big tax credits coming along. I think if we're going to do it, do it with a meaningful incentive. I think you are going to need a source of revenue to do it. The soil conservation tax may be able to supply part of that. That is a tax that is already in place. I don't think you are going to get it from general revenue.

Mark Garnett: What I am saying is, we need to decide what we're trying to accomplish and how much it's going to cost and then what's available afterwards.

Senator Goode: Well, you touched upon the point that taxes, any kind of land taxes, are so low that there is probably not enough incentive there to do it. Maybe that is why the current program isn't working any better than it is. I don't know, additional tax credits may not enter into it at all. If you take this money in soil conservation or whatever you can raise and use it for the education side of it, don't tie it to tax. I don't know if there is one that is going to be meaningful.

Jay Law: We were just talking about education again. I agree with Emily. Certainly with the Department of Conservation their foresters in the field do a really fine job. They are very much over worked right now and a lot of it is because of the type business of that they get. I have a little trouble with public funds being spent to mark timber sales that somebody is going to make a profit from. The Conservation Department and the Soil Conservation Districts people are in contact with folks out there, they have a great deal of credibility, but they are completely overburdened. I think we have to get away from free forestry for everybody. Good forestry - like good cattle management - pays for itself.

Earl Cannon: Bill and David - in your proposal here, I think I understand the soil conservation part of it. On the sales tax would that go into a sales tax revenue fund, where would the money go?

Representative Foster: What we're looking for is to put it in the budget committee and a revenue source before we propose any idea. What we are trying to do here is not put this in some isolated account. We are trying to build a fund and give a location so we can give incentives, that's all we're trying to do.

Earl Cannon: Who would oversee that fund?

Representative Foster: We really didn't get into who would oversee it.

Senator Childers: We have to bring those funds into a general location but that is all a revenue source. Would it work to have a tax package with a credit that eliminated the tax with Best Management Practices? Would that be a way to make it work?

Senator Goode: Were you there when John Powell made his presentation?

Senator Childers: No I talked to him afterwards, but I caught part of it and talked to him afterwards about it.

Senator Goode: I think that basically what he was suggesting, was a tax on the first sale of the timber that would be eliminated or a very high percentage of it if you practiced what is called the Best Management Practices. I kind of thought that was a good idea.

Senator Goode: Put a tax on it the first time it changes hands.

Senator Childers: Okay, you are not talking about changing ownership.

Senator Goode: No, when you take it through the first processing mill. If the landowner is a certified part of that program; when he takes the lumber to the mill, he doesn't pay tax so that is 3 to 5 percent of the sale. You save that money and you might not have to pay that part. That is pretty direct.

Emily Firebaugh: You're missing the issue on the tax. When I put my timber out for sale, the minute that logger takes that contract, I know longer have any liability. Nor do I have the tax consequences after that because I did my income then and so a tax advantage on a sale technically cannot come back to me with the way income tax is set up now. We probably need a reading from an accountant on this, but by right I lose all responsibility on that timber as soon as I put out a cutting contact. I have no liability and that is a major part of it. Consider that when you're considering how you're going to work this tax.

Mark Garnett: The main concern I've got is that we don't have that landowner in that program brought in voluntarily, we'll spend more money checking up on everyone than we will ever get for education. Now I understand the pool of money, but the problem we have right now is that the landowner does not make any money on their timber and that is why we have this situation. I don't see a tax situation changing that one bit. I think it may make it worse.

Emily Firebaugh: That is exactly what I've learned since November on this committee as a landowner. Out of 3,000 acres, but even if I owned 80 acres, I have learned two things. What we are working on with these consulting foresters, is that they are in their district and we're going to get to talk with consulting foresters in the region controlling the market. The other thing is it still rolls down hill, guys, and I am talking about logs, that if the chip mills and the larger mills that control our market, the way it is working right now if we don't regulate on that area, then I am going to get regulated by the entire middle man instead of the money and I will be out of business again. So what we are going to have to do is to make sure the legislature protects from strong harvesting regulations. The other thing is the only reason why people do bad cutting is because of the mill that asks them to. Other than that it has been ignorance, and I said you can't fix "dumb." But the only reason why people are clear cutting now is because we have chip mills in the area that are saying "clear cut." The reason why we're having people clear cut now is because there are people who are out there that have owned 100 or 300 acres and they know now is the time to get the price for that standing timber. Of course, it is flooded now, so nobody is cutting and making any money. What I'm telling you is as a landowner out there, I'm screaming, don't let anybody shut me down and you are about ready to run me out of the market place. You're about ready to run me out of ownership.

Senator Childers: Here is another question to throw out. I think everyone will conclude that there is public good involved in every forest. That forest recovery will benefit everyone later on. If we have a program, and I'm just throwing out some thoughts here, if you have timber and you are handling it right, there is a public funding advantage to it. It could be through the soil conservation tax or whatever. Whenever that funding comes in, that may be a direction for us to look at. If you have timber that for 15 years, 20 years, 30 years, whatever the time might be, you can receive a certain advantage if you carry that out.

Emily Firebaugh: Senator Childers, I receive all of the advantages and I have never gotten a thing from the Sierra Club.

Senator Childers: That's the point I am trying to make. You say you are taking the advantages, but you say you are right in selling your timber and cutting it off. So you obviously are not getting much of an advantage. Now you say you got an advantage but you're telling me in the same breath that you don't have an advantage.

Emily Firebaugh: Well, I'm using every advantage that is out there.

Senator Childers: That's what I'm saying, it has to be improved if we are going to get those 40 acre tracts, I suspect that if we get down to it, there are even 20 acre tracts.

Emily Firebaugh: You're talking about saving those 40 acres for the beauty of the State of Missouri. For a person who is out there working and making an income off of timber land, it doesn't help me. Now, I agree with you helping the people with 40 and 80-we'll do that.

Senator Childers: You're going right over what I'm saying. What I'm saying is that you have 3,000 acres or 27 acres, they should treat you the same, if you're following Best Management Practices.

Emily Firebaugh: It does not.

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Senator Childers: What I'm saying is, it should. I didn't say it did or didn't, I'm just saying it should. The thing is that when you do that the point is what is going to be the net result of trying to maintain, not maintain, but improve the quality of our forest land. It may be reforestation, it may be upgrading the quality of low-grade timberland that we have, and it may be a lot of different things. How do we accomplish the goals? That is where we really started off and I'm not sure we moved far beyond that because of the tax laws, you are going to drive that landowner out, as you say. If you don't have a source of revenue, you are not going to have the funds to operate. So it really looks like somehow we have to find a way that rewards that landowner more so than being rewarded now to do the Best Management Practices.

Emily Firebaugh: That is why we are here. After someone has done a cut like that guy from St. Louis. (inaudible)

Senator Childers: That might be the way to do it, but it is a matter of saying if you have 10 acres, whatever the amount may be, if you have a certain amount of acreage and you had that in timber, that the citizens in the State of Missouri say that is beneficial to the state.

Emily Firebaugh: You are keeping them, the Missouri forest, working good, etc. you know you could just have some kind of regulation that you can't cut on those slopes with more than a 33 percent slope. There could be regulations out there that if you're going to cut a site, you have to take at least five percent of the culls that are standing there. But, there are no regulations out there, and we can't get out there fast enough to educate. Like I said this program on forest cropland has been in there since the 40s, they are the most funded state agency that we have and we have gotten 10 percent of the landowners-there is something wrong with this picture.

David Bedan: I would like to ask Emily that when talking about using soil and water conservation tax money, would it be of interest to you if we did the same way we do with farmers. It would involve cost sharing program. In this case, cost sharing with people managing with Best Management Practices. There would be no tax involved, you would have the same paper work and application process that you have with soil-water conservation. Would that work for forest owners?

David Day: I have to be real honest Dave, and I have said this before. Most of the folks that you are talking about that never used the government program would not be able to use it. I think if they have to sit down and fill out a bunch of forms for cost sharing, for things in South Missouri they would qualify for, those people just don't want to mess with it. That's why I think if you could do a tax credit on the amount of sale, it might be more effective. I have used cost sharing and I don't think they would be very receptive.

David Bedan: I would like to ask Steve, if soil and water conservation funds are used, it would seem to me it would be easier to use the same mechanism the landowners use. If you have to move that money into some other fund to get credit, that is going to stir things up because of the way things are currently done. Then you would have to start giving credit to the northern Missouri farms.

Steve Mahfood: Frankly, we don't have all the funds we need to do that. If you put another item in, that means the competition then starts and you have one part of the community fighting against another rural community for the same funds.

Senator Goode: Best Practices is the approach now and (inaudible)

Steve Mahfood: It would still be difficult, yes it will, but it is something that, you haven't heard me chime in and say, this is not good. I think this is a good approach to take an existing fund and an existing approach and build this program on something existing. Is it easy, no, but I think it is important that we do it.

David Bedan: Steve, I think it is just one element in the picture.

Steve Mahfood: I agree a lot of landowners are not going to want to mess with it, but I think they have to use a whole bundle of things.

David Day: I'm not saying it's a terrible idea, don't get me wrong. I just think participation would be pretty low.

Mark Garnett: What would it cost for a professional forester to be called in on every timber harvest in Missouri? I don't think we know, and that is one problem I've got. Unless we know what these things will cost, we don't know what pool of money, what it would cost to educate the landowners. If we knew how much money we were talking about we could talk much more intelligently about how to get it in there.

Jay Law: I have to be careful that I don't get into a conflict of interest, but what I would like to say is regarding the stewardship program. It started out as a federal program with the whole system supported by federal money. When MDC had funds available, and I know for a period it was difficult; they funded a consultant and transferred their finances to develop a plan. I have been personally involved and I have not run into anyone, who, once they had a plan, didn't want to go ahead. Most of them found out that they had more opportunities to manage their funds than they knew. This is a very positive program. If we could do more in that area, that would be wonderful. I just wanted to credit MDC for what they have done for landowners through the Forest Stewardship Program.

Sarah Tyree: I just want to make a comment about a program, professional grazing.

They put in things like water sources for cattle. They would have to get into a one or two day school, get educated and after they do that, they would be able to get into cost share. If someone wanted the cost share for forestry practices, hypothetically go to a one or two day school and then they would be able to get the type of thing that Steve had mentioned. Maybe not a lot of people would take the time to do that.

Emily Firebaugh: In soil conservation, they are into cost sharing on soil conservation, by keeping cattle out of timberland. Steve, in answer to your question that you directed to David and myself on landowners with soil erosion and water pollution, one of the most disappointing discussions we had out at Funk Branch was with water and soil, what will this do downstream? I though the answer was very, very weak - well, we don't know, we don't have a site testing and blah, blah. One of my draft things down here, should regulations be used to prevent soil erosion and water pollution. I did not like the natural stream. I fought against it, but I do think if there is someone who is retired out there in the woods, those people should be penalized for damaging soil and water downstream wherever. I don't know that as a landowner now that I would do anything positive to take part in something like that. To go out there and do that on my own, I don't believe that I would do that. But I do believe the Department should give a slap on the back of the hand to someone who tears a branch into shambles.

David Bedan: Was that mandatory in Best Practices?

Emily Firebaugh: For instance, I can hire a consulting forester, I can hire a trained, educated, qualified certified logger, and I can still tell him to go out there to do a Funk Branch and take proceeds and its not going to hurt me. It isn't going to hurt me. You're always going to have a St. Louis guy come down and do it for me if we don't straighten these things up.

Steve Mahfood: The key issue that we talked about afterwards, the key issue they were trying to bring out, it is hard to make those assessments after the fact. Because of everything that goes on and the legality of the role that takes place, one of the issues that we've talked about might get at what you're discussing. When does that kind of oversight come into play? Should that kind of oversight come into play as a tract of land is being cut, should they be asked, should it be a requirement that somebody that has that responsibility be checked in with? Maybe there should be no regulation, we need to be informed that this cut is going to take place here, and somebody here goes out and sees it beforehand and knows what's going to happen and understands what's going to happen. That's the extreme end of that discussion.

Regarding stream slopes. We need to take a look at what's going to happen. We need to have some indication before the cut takes place because it is impossible for the law to come in and take action. Immediately after the fact, before you have been able to assess the situation beforehand in the objectiveness that is suppose to be required in what we do, is it almost impossible to make assessments after the fact unless you have direct impact data on a classified stream. Then you can take the kind of action that you need to take. But if you're up a creek that's not a creek and up another creek in a water shack and you have a losing stream and you don't see a direct impact and there is nothing on that site beforehand, it is very difficult in a court of law in Missouri to make these things stick. Apparently, there has been a lot of practice, not only on timber sites but other sites in how the court looks at this. But again, one of the solutions is that we become more involved in what's involved on the front end.

Emily Firebaugh: Now I will have to pay on my wood cut.

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Mark Garnett: Director, what would make a landowner want to tell DNR about a timber harvest?

Steve Mahfood: That's my point, that's the tough part of the situation. Maybe that is what we need as a part of this package of looking at incentives. Maybe we could get that kind of involvement and that kind of oversight. Maybe just somebody showing up and knowing somebody is there, often times causes people to do a lot of things that follow state law and state regulations. But no hammers applied and nobody coming after anybody. The state will look into this with great detail and I can't tell you, I don't know what resource will be needed, maybe additional people. I just don't know.

Jon Smith: If you waiver that hat of bad actor, it would really require a lot of pre-notification and all that sort of thing.

Steve Mahfood: Jon, I am probably going to be stepping off into the area that I could give us some more information on. I don't, if we intend to do a lot things from our regional offices. Somebody calls one day and is there the next day; I don't know how much we really need as far as pre-notification. I don't know if it is just a matter of enough resources to respond. I can't really give you an answer, but I think we do a lot of these kinds of things in other areas. Everything from a Brownfield site in urban areas to looking at what may happen with the sawdust products on the ground. Somebody asks us questions or wants advice, we can respond fairly quickly. I am concerned about over regulation and I understand Missouri, but how can we be helpful? How can we partner with the forestry professionals to push forward with BMP's to make sure that Funk branches don't take place. I am really not very favorable to slapping people around after something has happened. What is getting people into these situations in the first place? If it means we have to change how we do business and how we act in the Department in this arena, I am more than willing to listen to that and see what it is that we partner.

Jon Smith: I know we have talked about this before, and I'm still not sure I understand, but what is the Clean Water Act? What authority do you have now to do as a Department?

Steve Mahfood: In detail, Jon, I am not the one to ask, we can ask Dan when he comes back. He will be back here after lunch, but there are a lot of different pieces of this that haven't been dealt with that come under the Clean Water Act. I can tell you that in the future, the change is taking place at the federal law in assessing the planning of steams in Missouri. They will be coming up with plans for streams and water protection. It is now coming under the Safe Drinking Water Act. When we combine the new emphasis on protecting current streams that are out there, and the emphasis on cleaning up streams that are impaired, what we are seeing is that there is a tremendously great awareness and there is a lot more that is being required by DNR and will be a lot more required in the next few years. Point being, are we going to have to be more involved at some level if we don't do something? And I say yes. It is coming down the road, we already see it now.

Emily Firebaugh: I think we are all in agreement what the process is, the problem is just how we are going to finance it. We also want to remember that this has to be in reverse on the education. For instance, there are people like myself that a clear cut process is not a bad process if it is done correctly. I have seen clear cuts that we have done purposely according to law and practices. Now the environmentalist or the neighbors next door may not like it, but as far as a clear cut, it was done perfectly well. There are people that we are trying to educate and that's what we can focus on when we come to educate.

David Day: I don't think education can fix that. They are always going to be bad people in this world, there's always going to be a bad cut. I just don't think education can do a thing for that.

Senator Goode: Listening to your discussion Emily, I don't know that I agree with your last statement. I think I have come to the conclusion that a tax incentive won't work for a number of reasons. Property taxes are low and there is not much incentive there and there is no way you'll be able to give enough dollars to have people replant their land that is basically their responsibility. So maybe a tax incentive won't work. A tax incentive to get people to do things the right way just may not be the way. There is a great deal of disagreement on the revenue, so maybe that is something we should throw off of the table and not spend a whole lot of time working and arguing about it.

Jerry Conley: I don't know how many property owners there are in the state who own a large piece of land that we should be concerned about, if that is a piece over 20 acres or what. That is probably not a whole lot. How many property owners are there in the state that will own a piece of forestry property, fifty thousand, one hundred thousand? I don't know where the cut-off is, but if we're not contacting a great deal of those landowners they don't have any idea of good forest management or what programs are available, or what programs are through Conservation, or what programs might be available through DNR, through the Soil Conservation. Maybe a program paid for out of those existing fund sources to do nothing more than clip the right number of those people whether it is a hundred thousand or whatever on a quarterly newsletter and tell them what is available out there. Something you can do probably out of existing funds to try and bring people in to and make them more knowledgeable and bring them in to an existing program and make them aware. That might be more cost effective than trying to put out incentives.

David Day: Could a list be put together, and make those names available to potential customers?

Senator Goode: It would take a little bit of effort but yes, I would think that is doable.

Senator Childers: I have written down two or three things. One of them is that we keep thinking about some regulations on size of clear cuts that we have talked about here before. Someone mentioned earlier about a farmers land does not get a clear cut beyond a certain size. Or you have an approval for the advantage of a private consultant. Do you go in ahead of time and say here is what we're going to be doing if you put together the plans. The other one is cost share we talked about which could be used and put out as a lot of resource. The third program is something we might want to look at, and I'm not sure if it would be funded through existing funds or something else, I am not sure. Those three things seem to address the education, the damages, and the long-term planning.

Senator Goode: Well, just let me ask you this. With the strong rates in Missouri, it boils down to high property and that has really been great. On a hundred acres or more you would have to have basically a pool. If you're talking about bonding arrangement like that you are talking about some kind of a pool process or paying a penalty. In other words it is going to cost. You would have to require it by law I don't think we stand a prayer. (Some of these statements were inaudible so Senator Goode may want to revise).

David Day: I agree Senator, Jay and I were sitting here saying a whole lot of 250 acre cuts.

Jay Law: If history serves me right, I remember as we talked about severance tax that when Mississippi wanted to keep the carpet baggers from buying up all of their land, they put a severance tax on the out-of-state companies.

Emily Firebaugh: Here's another attitude that you could take on letting the private landowners regulate themselves and establish funding for themselves. The Forestry Cooperative drew up a grant to get a jump start with a statewide agency money and offer a matching grant policy that does benefit private landowners. That would put the owners on top. Also, it would leave us in private landowner regulations. It would also give us the opportunity to increase the chips for our standing timber when we sell. I will say that University Extension is one of the best agencies I've seen that steps in, jump starts something, organizes, and then leaves it alone. They really do an excellent job. So I can say that we could use an agency like that to start a private land ownership that we regulate ourselves.

Jon Smith: We've gotten down to incentives that won't work, regulations that won't work, severance taxes that won't work. (Inaudible comments followed, so Jon Smith may want to review and revise).

Senator Goode: Let me throw out something that a few of us talked about a little bit. Looking back at a letter that was written, and it was dated a long time ago. It dealt with future chip mills. The letter put limits on what they could chip. Jerry, do you remember when we went down to a plant a year and a half ago when they first started out? Basically what they told us was they were going to chip tops, culls, and stuff that wasn't good wood. That is one of the first dealings we had here, then someone brought in a list of the wood they would take and it was almost the opposite. That was printed on their letterhead and was just the opposite of what we were told. If we treated a chip mill like a recovery process, and a waste processor and license them as such and allowed them to chip what basically most of us would think they ought to chip, the waste, the tops, culls and all of that and not chip good wood. That would solve a good deal of the problem, if they could no longer go out and have a logger go out and clear cut and make a repeat off of that property again because it would be below standard. I think there is perhaps some question whether or not he is going to apply that to the existing mill which would certainly pass the inspection of any future mills. You might even be able to do it on the existing mill because county land fills and county dumps into what you have now as a very regulated solid waste process. (Several words in the previous two sentences were inaudible). You eventually apply that to meet the state requirements and that is basically what a chip mill does now to take into the plant. I think that is a workable approach. Maybe you're going to have to have more volume, while you get this in place. But, if you pass the proper statutory division, cut limits, you don't touch the landowner, you don't have to get into property rights, or anything else. You just deal with what chip mills will take and you rule out what this saw mill is chipping, and I guess they all do that. You just deal with any chip mill operation.

Jay Law: I feel that John Powell's presentation got us involved with the Extension, got us involved in public finance.

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Emily Firebaugh: Getting away from what we started out with, the education and funding and getting into the regulations, once again I'm going to take you back to chip mills and the logs rolling down hill. Perhaps we need to educate/regulate workmen's compensation, get into your pocket book kind of thing with companies. Say to them, "if you don't do BMP with your industry from the sawmill on down, your workmen's comp will be raised." Something like that, so we can regulate the chip millers and their logger. Remember that this is the important part that is not the chip mill necessarily that goes out and does the cutting. They do like I do, they hire out contractors. And as you had mentioned, we need to have it so that waste dumps that you wouldn't regulate waste/landfill kind of cuts, why can't we regulate that we have them clear out our culls, our rough and rotting trash at a five percent rate. I brought this thing up as a joke, because we have 33 percent filtering standing in our forest. We went down to the chip mill site and you looked at that beautiful stack of straight logs lying there, I don't think I could count more than 1 percent of culls in that stack. So we could at least emphasize that we have them cut and utilize at least five percent. Also require that if you do a clear cut you do a total clear cut. Don't leave that hickory standing there, don't leave the culls. (Several words in the last half of the comments were inaudible and thus Emily may want to revise).

Senator Goode: How do you do this by law?

Emily Firebaugh: Education, I take you back to that. And we'll cut by regulation by saying if you don't do it that way, perhaps the workmen's comp won't be an advantage for you. I don't want to attack anybody and I don't want to give them government money to reward them for doing something. Let's figure out some way we can regulate ourselves within our own industry, with landowners, loggers and foresters.

Earl Cannon: Listening to this discussion, it seems like I hear some discussion on regulations, on education, on severance taxes or other kinds of taxes, and on incentives. It seems we need to start arriving at some consensus on these things.

Mark Garnett: Emily, if XYZ Chip Mill wants your timber, and they want to pay you three times what your timber is worth, how are you going to deal with that? That is my problem with regulating the size of wood that goes through a chip mill. My future is based on the timber that I can use. To me that is a major concern of this committee. That is what we are talking about.

Senator Goode: You're looking for an answer to developing wood products; clear cutting and taking it to a chip mill. I don't think it is going to be that long. Chip mills chip basically waste, stuff you don't use. You did fine without chip mills for a long time.

Mark Garnett: No we didn't Senator.

Senator Goode: Well you had a wood industry for a while. Most people did all right.

Mark Garnett: Forestry in Missouri has been in practice for the last 15 years, that is the Chip Mills. I don't think we are going to help by telling Emily she can sell one part, to me that is a mistake. (Some of these comments were inaudible, so Mark may want to review and revise).

Senator Goode: Selling is one part, you just can't chip it. They would have to separate it out and use quality wood for higher usage.

Mark Garnett: We can start on pallet mill, or whatever.

Emily Firebaugh: Chipping is not a bad thing, I've talked to Earl and if we could get the Department of Economic Development to help fund a small chip mill, they could say, "look we are going to fund putting in a chip mill and you have a guy at minimum wage that can take the culls, the top or whatever, and chip those and take them to the Willamette site. When we were down there, there was one gentleman that had already invested his own money into a chipper and he brought it to the site. There is nothing wrong with chips and there is nothing wrong with chip mills. It is just that we have an attitude that we are only helping the big guys. But you bring it down to the small or medium size guy, and I know a mill in one county that would love to be able to have Economic Development funding to put in a small chipper on site, and he will take care of trash, and then take it to Willamette. You know we are just thinking that there is the big guy and nobody else. We need to disburse this around as Mark has said. This industry is tough and isn't a money making proposition. The only reason why I am still in it is because I have no debt on that land. If I had debt on that land I would be out of this trade. We have a lot of mills, and we have statistics on how fast they are going out of business in the State of Missouri. It is because we haven't done anything to help their size.

Senator Childers: Are you saying that the only way a small chip operation could exist would to be to subsidize, and they couldn't operate otherwise? I'm just asking.

Emily Firebaugh: The company that Willamette is receiving the chips from already. The gentleman did have his own $100,000 to go and buy that.

Senator Childers: Are you saying that because of cash flow, you could never get needed capital together, or are you saying to subsidize because the capital cost is too great?

Emily Firebaugh: The capital investment needed, and then depending on the federal level, it is hard to invest in a large seed machinery. But like Earl's department - the Department of Economic Development - can give a multi million dollar corporation $300,000, why can't we help our small businesses?

David Bedan: That is what I'm asking you. What does it take to subsidize you, whoever it's going to be, big, small or whatever. Do you give grants to help subsidize?

Emily Firebaugh: I don't know if I would call it subsidizing, I would call it enhancing, and I don't know how to run the numbers on that but I can't see why we can't handle taking care of the Mom and Pop operations.

David Bedan: Emily, I don't understand how that type of program would do anything about chip mills, because they are responsible for international marketing.

Emily Firebaugh: I agree with that, but it is just like cotton. You know our cotton goes internationally, our chips could be thrown into this pot and go internationally. Kind of like a consortium that we would be able to get into it at that time. I would probably do a heavy cutting of nothing but culls, if I knew there was a locally owned mill that would chip and carry it down to the Willamette plant. I could do a lot of improvements if I had some place to put it. I can't do it with a large corporation, I wouldn't have enough volume for them. I could do it with the guy next door.

David Bedan: I think it goes back to what Jay was saying. I think we have to operate on both the chip mills and the overall forestry products.

Emily Firebaugh: And that is my point. Chip mill companies are here, the door has been opened. Now why can't we as Missourians take advantage of this industry and take advantage of the wood product marketing which I'm in, Mark's in, Jon's in and let a small landowners like us take advantage of the chip mill being here, and get rid of this cull stuff. I can't do it on a global or international market level but, as you know, in the State of Missouri the medium size to the small size guy should be able to funnel material into the chip mill company.

Steve Mahfood: Let's go back to the Executive Order. We do have an Executive Order, and it does refer to our charge, that we shall initiate a study to identify the impact of chip mills and associated forest impacts. So it kind of ties back into the two funds and asks us: One of the issues here along with the practices that we have been looking at, there are defunct cities that is also referred to the environmental impact tax which is soil erosion, waterfall and watershed protection, habitat costs, biological diversity, outdoor recreation included. Issues have to be addressed in this discussion which is in addition to the practices, financial side of this process. How we deal with those added other issues and how we balance the practices and incentives and also the ideas that are again floating around nationally right now. I know some of you know this and there have been silviculture activities that have exempted from the regulations. There is a move to take that exemption off. Good, better and indifferent I know people are looking at what we're doing here, I'm serious, in this state and will be a part of that view of how we change regulations. There are changes because we are not addressing some of these issues. My fear is that we are going to wind up with regulations that are going to be almost impossible for us. (Several words were inaudible in the previous statements, so Steve may want to review and revise).

Mark Garnett: I'm confused by that. What does that mean to us?

Jay Law: I would like to talk about the education part. I have just received a study that all deals with one person, Shelby Jones. He is retired from the Department. Shelby was a forest product specialist. For years he went out and visited mills. Every corner in Missouri, Shelby visited. He sent out a newsletter and he told them how to do something more efficient in their mills. He had credibility, they believed in him, he did a wonderful job, and he still does a wonderful job even in his retirement. He went out on a one on one basis. I think that is what we're talking about. We have to be able to convey knowledge, and empower them. You work on a one on one basis with landowners the same way. The other is the economics. When I first came here 26 years ago, Shelby was there and I watched him help produce a lot of really good logs. But I think that educationally you have to hire people that say this is important.

Earl Cannon: Not to change the subject but the food has arrived.

Dr. Wade: Before we break, a lot of discussion has centered on funding. We are going to focus our discussions on the funding task force. There is further discussion around the issue of that funding and we would like to have committee input.

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Senator Goode: I think it has been covered. I think the consensus is that there is still (inaudible) which I though was a fairly decent idea. Basically a tax that you could get back if you had the funds. It is just about the mildest tax you could come up with. There doesn't seem to be support for that, I don't think there is support for any other type of tax. I don't think there is even any consensus that you could, if you had the money, that you could put together any kind of incentive to use. I guess you probably had a good discussion but I think the answer is fairly clear.

Dr. Wade: Senator, are you also talking about use of the tax like the soil and water?

Senator Goode: No, I think you are using the soil and water tax to the extent that it can be used. If you utilize it there, obviously Conservation has their resources and their agency has the primary responsibility in this area. I think we probably need to look at whether or not the soil funding could be used for education.

Dr. Wade: Does the committee generally agree?

Mark Garnett: I agree with most of it. I was just wondering if the legislature would have any thought they would entertain. We right now don't know what is the cost. Is it $10 million a year, $5 million, what is it? No one knows. It is a difficult thing for us to make any kind of a decision as to whether it will or won't work.

Senator Goode: I don't think the legislature, and this is my opinion, the legislature is not going to do anything on the chip mill issue unless there is strong consensus from this group to do something. It will need almost unanimous support and aside from that, I don't see the legislature doing anything on it.

Senator Childers: I think I agree with that. Is there any chance at all that if we have a strong Christmas, with large sales, and if we show a Hancock Refund for this next year, is there a possibility of that?

Senator Goode: I think probably not, and there has not been a final interpretation on the Conservation Federation lawsuit handed down but you could read it two ways. I wouldn't go beyond the exempt credits.

Representative Foster: I would like to see the figures.

Emily Firebaugh: I think the state agencies have plenty of funding to help us out. For instance the Department of Agriculture. Out of all the agricultural products from the State of Missouri reportedly 20 percent is in forest products. Do you have any funding in that Department that goes to educating foresters?

Sarah Tyree: We have an International Marketing Department. We work with marketing as such, but as far as going out and working with land, such as wood, we work more with water retention and such.

Senator Goode: I would like to see a loan that DNR, Agriculture, Conservation, more than Economic Development has funded. USDA basically knows every name of every farmer in America. They have a number on the farm that is readily known. How difficult would it be to come out with a name of everyone with 20 acres, or whatever it be, who owns all those parcels of land and what it would cost to start directing a program through that. A lot of people have no idea what's available.

Sarah Tyree: That access unfortunately is confidential information. So we don't have access to that.

Senator Goode: But how difficult is that, if you can go to the courthouse and look at the aerial identifications and so forth and know where the trees are, then I don't know if it is that hard to figure out. In this day and age it is easy to know who owns what.

Emily Firebaugh: I think that sitting down and developing a list is something that we could do with a cooperative effort.

Jay Law: The University Extension Forestry had a lot of information there. Maybe that office needs to be getting that information to Agriculture.

Mark Garnett: That is another thing for these barrel staves to have an international market, wouldn't we want to supply that?

Emily Firebaugh: I would not be in the database of the United States Department of Agriculture.

Dr. Wade: Why don't we break for lunch and come back at 12:45?

The meeting recessed for lunch and reconvened at 1:00 p.m.

Dr. Wade: Let's go ahead and get started. During the break several people wanted to get a little more clarification of the storm water issue. Our person from EPA has volunteered to give a little further clarification of that whole area.

Regarding the Clean Water Act, there are several exemptions built into it. There is a silviculture exemption and agriculture. In either case you are not required to get a NPDE permit that discharges from the agriculture and you are not required to have a NPDE permit for land disturbance associated with silviculture. You can be required to have a permit for a staging area and that is something we don't see a lot of in this state. If you were in the Northeast for instance, and you were logging a large area and you created a path in which you were staging, that could be permitted. That is not often permitted even in the Northwest. These are some questions at times involving environmental versus local on whether permits should exist. There can also be permits associated with crossing of streams. Those would be issues by the Corps of Engineers and there are several issues of logging in the state. So that is pretty much the story on permits. In terms of permit requirements, the state is allowed to have more stringent requirements than by other states. Clean Water Act clearly allows the state to be more stringent.

Emily Firebaugh: What are those initials again and what do the mean?

John Dunn: National Pollution Discharge Elimination. That is a system permit, anybody can discharge in the water, whether it be Heavy Bob's Trailer Park, on up to a large industry or city. They have discharge permits for that water. There are also permits for the type of thing we are talking about - the land disturbance permit. For instance, if you were to go down and clear more than 5 acres in order to build a parking lot or store, you would have to get a land disturbance permit and have Best Management Practices in place associated with the plan, reseeding, etc. etc. I guess that if you were to make a conversion I suspect you would be required to get a disturbance permit. The two are general permits. When you get a general permit, I call them permits by Xerox, everybody gets the same permit. You apply for it with an application and this permit is rather generic and refers to all operations in the state, all clearing more than 5 acres disturbances. It does have the ability to issue a specific permit and that is often done to very large, let's say graveling operations, and small graveling operations. That often happens where you are having compliance problems you have for very large operators and an industry kind of thing.

Emily Firebaugh: If we were going to take this to the chip mills level, does it have to go through the legislature or jurisdiction?

John Dunn: There is quite a bit on that. General permits versus specific permits.

Emily Firebaugh: For instance, if we got into the silviculture level of permit and we were going to say you cut more than 5 acres out in the rural area, who puts that into place the legislature or the agencies?

John Dunn: That would clearly be an extension of state authority coming under your state clean water laws.

Emily Firebaugh: Do you know if this affects chip mills operations?

John Dunn: No, some of the similar states, maybe Minnesota, Wisconsin do have some requirements on BMP and so forth. The Clean Water Act requirements, I think those are state requirements. I don't know exactly how they are enforced, but basically through a permitting system, but I don't think it is under Clear Water of any source.

David Bedan: How would these new guidelines relate to what we were talking about this morning?

John Dunn: Referring to training?

David Bedan: No, the non-point management for silviculture. How does that relate? These are still guidelines, so they do not require permits?

John Dunn: That is correct. Under the Clean Water Act, the way Congress constructed the Act, there is a permitting system stating that if you have a BMP permit that is something that is very easy to manage. It is very well regulated. Non-point source has not been heavily regulated and it has been historically done through voluntary and demonstration programs. So there are grants that come down through the state from the feds and through other sources. Outreach, Soil Conservation Service, and our CS, I guess. Those types of programs have been a way through which non-source efforts have been covered. We are seeing a little more of regulations from the historical industry and this has become somewhat industrialized and now we are seeing heavier level of regulations. In many ways sorting them out and moving from an exempted activity to one that is coming under closer scrutiny.

(Note, someone asked a question here about 319 grant money.)

John Dunn: That is federal money for specific outgoing programs.

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Jay Law: We're really talking about the money coming out of Forest Management. I realize it may get applied to logging in general or something like that. But, I do know guidelines that are developed here in Missouri are being used a lot by foresters, from the Department of Conservation, DNR, US Forest Service, Soil and Water, people that put those in and this is how foresters and those people look at that. In those other silviculture practices, participants are cutting all of the timber off their land, so when we see that and we talk about this 5 to 7 percent with some sort of professional management involved on their land but the other 80 to 75 percent of the land have no silviculture practices as far as we know.

Steve Mahfood: That is the thing, it is also a matter in the interpretation of the law. The practices in the US, for instance the National Guard, there has been a strong tendency to avoid regulations for forestry grants. Streams are a very hard thing to reinforce. Dave did you get your question answered? (Some of this statement was inaudible, so Steve may want to review and revise).

David Bedan: No, does that mean if a landowner wants to cut his timber, does DNR give him his 319 grant to assist in using and constructing BMP?

Steve Mahfood: Yes he does if that is what it's for, 319 funds for BMP. In most cases those tend to go through your land grant university or established resource organizations. Come in and get a grant, come in on time, write the grant and go into the file with the rest of them.

Sarah Tyree: Why do you want this?

David Bedan: We aren't talking about a large program, we are talking about a pilot project demonstration. But it could be used in conjunction with soil water conservation grants.

Steve Mahfood: Let me give you some examples. For instance, dead chicken composting demonstrations, stuff like that. It has been done on smaller levels. But generally you know more successful grantees that have a history of doing research.

Mark Garnett: If there were NOV's written, what is their cost?

Steve Mahfood: You would probably be cutting some new path here I would suspect just because it has not been done. If you were to do it and I am guessing here, it would be bringing a case under Clean Water Act as a kind of enforcement case seeking "deny or fix it" of some sort. It might be some Burden of Proof before a bunch of lawyers.

In Missouri we are delegated to implement the Clean Water Act through our state Clean Water Law. Because of the exemptions for silviculture activity or forest management activity, the only way we would be able to issue a NOV is to take some kind of enforcement action as if we were able to find and document the problems with the streams. We would have to document water quality impact from a certain activity. In this case we would have to be able to prove it for forest management or silviculture practice or something associated with that. Therefore, it would be kind of after the fact type deal. We would have to do a lot of sedimentation analysis on all kinds of other debris or whatever downstream.

Mark Garnett: Supplying a Burden of Proof, might be pretty hefty.

Steve Mahfood: That is what I was talking about earlier regarding Emily's question. With the Burden of Proof being the issue, we have a lot of background on what it takes to prove something. So if we are not out there in the beginning but coming in after the fact, it makes it legally difficult. It makes it even more difficult, in non-point sources. We have a lot of public experience with this on the burden of proof issues. From the point source charge where you have a known pipe or discharging system, I think it is very easy to prove, it is much easier to prove than the ones that have numerous contributions. For example, there are numerous contributions in sedimentation problems, and that type of thing. It is still possible but it is much more difficult to prove.

Dr. Wade: This morning you the committee had a wide range of discussion. You wanted education, but you didn't want education, you wanted funding, but you didn't want funding, you wanted regulations, but you didn't want regulations. As near as I could tell that is the closest thing of an accurate summary of the discussion.

David Day: Is there any incentives for the loggers to go through this training?

Jon Smith: The only incentives are that we hope that this program would give us more credibility to the profession and they would simplify management.

Jay Law: They had a board, a board within this Division. They had representatives from their group to serve. What we put in there was where it would be, again it w

Governor's Advisory Committee on Chip Mills

Governor's Advisory Committee on Chip Mills Department of Natural Resources Regional Office 210 Hoover Drive Jefferson City, Missouri September 14, 1999

Governor's Advisory Committee on Chip Mills
Department of Natural Resources
Regional Office 210 Hoover Drive
Jefferson City, Missouri
September 14, 1999