Happy New Year from the Hardwood Federation!

Happy New Year from the Hardwood Federation! Off and Running In 2022

By DANA COLE, Executive Director Hardwood Federation

The Hardwood Federation has fought for you, your companies, and your employees for almost 20 years. We remain steadfast in our mission to strongly advocate on behalf of U.S. hardwood businesses and their employees to federally elected officials regardless of party. We are on the political front line for you, fighting every day so you can have a successful tomorrow.

The Hardwood Federation leverages the voices of NHLA leaders to make sure the Biden White House, Administration Officials, and Congressional Leaders clearly understand the valuable contributions the production of hardwood timber and products can make on multiple levels of the U.S. economy.

2021 was a busy year for the Federation. Although we have actively engaged on many issues impacting the hardwood industry, our messaging to the Administration and Congress on four primary issue areas has remained consistent:

• Forest products are part of the climate solution, not just forests.

• Maintain favorable tax treatment for hardwood industry businesses.

• Support efforts to build and maintain hardwood company workforces.

• Advocate for infrastructure improvements that benefit the industry – Including the Ocean Shipping Reform Act of 2021. over to the new year. Still, we are always alert to new challenges and opportunities, and this list could grow or shrink depending on the political winds. We will adjust and move forward as is best for the industry and the thousands of men and women it employs. Future articles will have more information about our 2022 priorities and how we will communicate them to federal policymakers.

Looking forward to 2022, we expect another busy year, although the November midterm elections may slow the pace somewhat as Members calibrate how their actions will translate in the voting booth. Several key issues will consume our attention, at least during the first quarter of the year:

BUILD BACK BETTER: In November, Build Back Better passed the House along party lines, with a single Democrat, Jared Golden of Maine, casting a vote against the bill along with all House Republicans. It then moved to the Senate for debate and voting. On December 19, Sen. Joe Manchin (D-WV) derailed the package in its current form by stating that after much consideration, he could not support the bill. Mr. Manchin had consistently raised concerns about the cost of the bill and its possible impacts on surging inflation.

Support efforts to build and maintain hardwood company workforces.

Funding for initiatives through the U.S. Department of Agriculture that protect older and more mature forests in the National Forest System.

At press time, there is no apparent path forward for BBB as written in 2021. The Hardwood Federation will closely track provisions in BBB that could reemerge this year. These include:

• Research funding for the U.S. Department of Agriculture related to sustainable forestry methods, maximizing carbon sequestration on federal lands, and life cycle analysis of wood products.

• Funding for initiatives through the U.S. Department of Agriculture that protect older and more mature forests in the National Forest System.

• Grant programs that support private landowners entering voluntary carbon market programs.

As with any legislation of this size and scope, the original bill had positives and negatives. For the hardwood industry, the potential of additional dollars to research and document the carbon storage benefits of wood products was

WE TAKE OUR ROLE AS YOUR REPRESENTATIVES AND ADVOCATES ON CAPITOL HILL SERIOUSLY. WE ARE READY FOR ACTION AND LOOKING FORWARD TO THE CHALLENGES TO COME!

a positive. However, there were concerns that many of the forestry provisions are focused on the growing and maintenance of trees with little reference or attention to the value of harvesting or the benefits of the forest products markets to forest health or carbon sequestration goals.

To fund this multi-trillion-dollar proposal, the authors identified several tax increases that would have impacted hardwood businesses. The bill’s so-called “book-tax,” for example, posed a significant challenge for many small, medium, and family-owned businesses by imposing a tax based on “financial statement income.” This accounting gimmick would undermine the long-standing accounting flexibility that the hardwood industry relies on, including accelerated depreciation of equipment and net operating losses.

We also had concerns with other revenue raisers in the package and have communicated opposition to them with Members of Congress. Our focus was and will remain on provisions raising tax rates on small and medium-sized businesses that are organized as S-Corporations or other pass-through structures.

2022 Outlook: Although the original bill has stalled, select forestry and tax provisions could coalesce in a new package or other legislation in 2022. The Federation will closely track developments and engage with our champions on Capitol Hill to advance our interests.

Ocean Shipping: On December 8, the House passed the “Ocean Shipping Reform

Ocean Shipping Reform Act of 2021

Act of 2021” (HR 4996) by a vote of 364-60. This important bill would update the federal “Shipping Act” and institute remedies for unfair shipping practices that exacerbate global supply chain disruptions caused by the pandemic. Specifically, the bill would empower the Federal Maritime Commission (FMC) to prevent ocean carriers from declining export cargo if the containers can be loaded safely and within a reasonable time frame.

2022 Outlook: We anticipate that the Senate will introduce a companion version of H.R. 4996 in 2022. The House bill attracted nearly 100 Democratic and Republican co-sponsors split evenly along party lines, virtually reflecting the party composition of the people’s House. The Federation team will work closely with Senators to ensure that they know the importance of addressing ocean shipping to the industry and strongly encourage them to pass legislation as quickly as possible.

Farm Bill: Although the current farm bill, the “Agriculture Policy Act of 2018,” does not expire until 2023, when a new Congress and possibly new leadership may convene, members of the House and Senate Agriculture Committees will kick off stakeholder meetings in 2022. The Hardwood Federation has already talked to the committee chairs in each chamber, underscoring the need to quantify the critical role of forest products in capturing and storing carbon within the context of federal climate policies. H.F. will continue to make that pitch going into 2022, underscoring, for example, the role that USDA’s Forest Products Laboratory can play to conduct research that will ground industry policy priorities in science.

2022 Outlook: In 2022, Congress will begin to reach out to stakeholders to receive input on 2023 Farm Bill priorities. H.F. will continue to fight for meaningful forest management provisions, recognition of the carbon storage capacity of wood products, and full funding of the MAP and FMD within the context of the upcoming legislation.

As the legislative days begin to go by this year, the prospects for significant legislation moving through Congress will diminish as we approach the mid-term elections. That said, lawmakers will try to coalesce around consensus issues, such as transportation bottlenecks and broad outlines for the 2023 farm bill and spending bill for FY2023. The Hardwood Federation team will be engaged with dozens of industry champions on the Hill this year. We take our role as your representatives and advocates on Capitol Hill seriously. We are ready for action and looking forward to the challenges to come!