from private forests on private forests of fresh water comes of at-risk wildlife depends for habitat of wood products come from private forests
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- Harold Jennings
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1 of fresh water comes from private forests of at-risk wildlife depends on private forests for habitat of wood products come from private forests We grow stewardship every day. From clean air and water, to wildlife habitat, to carbon storage, to wood products and recreation, America s private forests give abundantly.that s why the American Forest Foundation works on the ground with family forest owners to give them the tools they need to maintain healthy and productive forests.
2 Families own more forests than the federal government or private industry. These 22 million private forest owners provide essential public benefits that all Americans rely on. And today, the forests they steward are under siege. From development pressures, extreme weather, drought and wildfires, and invasive species, millions of acres are at risk. Congressional leaders can step forward to help protect America s forest legacy and: FOREST OWNERSHIP IN THE UNITED STATES Enact policies that strengthen markets for Made-in-America wood, including wood certified by the American Tree Farm System. Support policies that give woodland owners tools to improve forest health and reduce the threat of devastating invasive pests and pathogens. Improve opportunities for forest conservation in the Farm Bill. Public Forest Family Forest Corporate Forest other Private Forest Establish tax policy solutions that help keep family forests healthy and intact. Family forest owners are doing their part to conserve forest resources, but they can t do it alone. Nancy Livingston, Wisconsin The American Forest Foundation works on the ground with families to promote forest stewardship. Through a number of programs, including the American Tree Farm System, we give families the tools they need to maintain healthy and productive forests.
3 Tax Policy Can Make or Forest Conservation Break Tax policy can serve as either an incentive or a deterrent to family forest owners who wish to keep their land in the family and manage their forests sustainably from generation to generation. This is especially true when development pressures and land values escalate, putting forest land owners in a situation where they may be forced to sell in order to pay property, estate or other taxes. Without the proper tax policies in place, we could see pre-mature timber harvesting, low reforestation rates, reducedd investment in the needed ongoingg management of forestland, and conversion of forests to non-forest uses. Congresss should consider the following recommendations in tax reform proposals: Help family forest owners conserve their woodlands for present and future generations by fix timber harvesting penalties in the federal estate tax special use valuation (IRC 2032A). Maintain provisions that allow forest owners to deduct the expenses from growingg timber, treat their revenue as a capital gain, and deduct their reforestation expenses. Make the enhanced conservation easement tax incentives permanent (S. 526). Ensure family forest owners can continue to claim a casualty losss deduction following a catastrophic event and revise the current casualty loss provisions to ensure family forest owners can recover more of their losses from events like wildfire, hurricanes, tornadoes, and ice.
4 Timber Tax Provisions Help Sustain Forests for the Long-term The threee parts of the tax code commonly referred to as the timber tax provisions help to ensure that forest owners can sustainably manage their woodlands and that the growing, harvesting, and replanting cycle continues. The provisions allow forest owners to: Deduct the costs of forest management, including prevention measures (fire, pest and disease), thinning, fertilization, interest, taxes, protection of wetlands and endangered species, and forestry activities. (Sections 162 and 263A(c) (5)) Receive capital gains treatment for the harvest of timber or sales of standing trees. (Sections 1231(b)(2) and 631(a)&(b)) Deduct up to $10,000 of reforestation costs per stand, with the remainder amortized over 7 years. (Section 194). Without these tax provisions, it will be difficult for forest owners to cover the upfront capital expenses needed to ensure a healthy forest and sustain this long-term resource. Congress should maintain the timber tax provisions in the tax code to ensure families and individuals who own forestland can continue to keep their forests healthy and intact.
5 Ensure Family Forest Owners Can Recover from Fire, Hurricanes, Tornadoes, and Ice Sudden catastrophic events can wreak havoc on forestland. Often, the loss is devastating, and families experience both financial and personal loss. The loss is not only in the monetary value of the timber but also in the blood, sweat and tears of long-term woodland management. Most forest owners cannot afford insurance for their forests, because insurance companies treat forests as a very risky investment. Family forest owners may claim a casualty loss deduction to have capital for cleanup and reforestation following a catastrophic event, but under the current casualty loss provisions, forest owners may see a severely low deduction or no deduction at all. Current casualty loss provisions allow family forest owners to deduct the lesser of two options: the basis of their timber or the loss they experienced. Most often, the forest owner can only deduct the timber basis from a casualty loss because the basiss is significantly lower than the loss. Example: A family may purchase land for a relatively small amount and spend $265 per acre planting trees. After thirty years of responsible management, property taxes, and patience, those trees may be worth $6000 to $7000 an acre. The family has spent decades growing the trees, and likely has planned their future around that income. If they suffer a devastating loss, a deduction of simply the basis will not account for the financial loss, and if the family has the means to clean up and reforest, it will be another 30+ years before they are able to grow new trees to the same value. Many families need to see real possibilities and incentives for continuing to manage their forestland after a catastrophic event in order to continue to keep their land in the family and keep it healthy. Congress should ensure family forest owners can continue to claim a casualty loss deduction following a catastrophic event and revisee the current casualty loss provisions to ensure family forest owners can recover more of their losses from events like wildfire, hurricanes, tornadoes, and ice.
6 Keep the Forest and the Farm in the Family When a loved one passes and the family is left with forests as part of the estate, the family may be forced to sell part or all of the property or pre-maturely or unsustainably harvest their timber, to cover the estate tax. Special use valuation (2032A) allows forest owners, farmers, and ranchers to pay the estate tax on the value their land and timber at current use value (the value if it continues as forest or farm) instead of fair market value (e. g. the value for development). This can help to reduce the estate tax burden on family forest owners and can help to ensure they keep their land forested. Congresss should maintain special use valuation and fix problems for forest owners in the code. Forest owners are penalized for harvesting timber within the first ten years under special use valuation. Timber harvesting is important for income to landowners, but it also keeps forests healthy by reducing wildfire, insect and disease risks, and creating habitat for wildlife. The Keep the Forest and the Farm in the Family Act of 2012 (H.R. 6439, 112 th Congress) would allow forest owners using special use valuation to continue to harvest timber with a forest management plan. While preliminary USDA Forest Service research data shows thatt many family forest owners will not have to face an estate tax at the current exemption levels made permanent by Congress earlierr this year, estimatess show thatt a significant acreage of family-owned forestland could still be at risk at the current levels. Special use valuation can help conserve forestland and keep it a working forest when a family is faced with an estate tax bill. Congress should ensure special use valuation works for forest owners. Clean water, rural jobs, and wildlife habitat are at stake.
7 Make Tax Incentive for Conservation Easements Permanent Since 2006, an enhanced income tax deduction has allowed family forest owners, farmers and ranchers to get a significant tax benefit for donating a conservation easement on their land. Family forest owners face numerous threats to keeping their forest healthy and intact, including increasing pressure to sell their land. Conservation easements are one of the policy tools that can help landowners conserve their forest and continue to provide public benefits like habitat for wildlife and clean water. The enhanced conservation easement tax incentive set to expire at the end of 2013 helps landowners of modest means choose conservation by: Raising the maximum deduction a donor can take for donating a conservation easement from 30% of their adjusted gross income (AGI) in any year to 50%; Allowing qualified farmers and ranchers to deduct up to 100% of their AGI; and Increasing the number of years over which a donor can take deductions from 6 to 16 years. Example: Without the enhanced easement incentive, an forest owner earning $50,000 a year who donated a conservation easement worth $1 million could take a total of no more than $90,000 in tax deductions. Under the enhanced incentive, that landowner can take as much as $800,000 in tax deductions still less than the full value of their donation, but a significant increase. Congress should pass S. 526, Rural Heritage Conservation Extension Act introduced by Senators Max Baucus (D-MT) and Orrin Hatch (R- UT), and H.R. 2807, Conservation Easement Incentive Act introduced by Representatives Jim Gerlach (R-PA) and Mike Thompson (D-CA) to support an important conservation tool for family forest owners. Both the Senate and House bills have earned tremendous bipartisan support in the current Congress and in previous Congresses.
8 The Honorable Frank Lucas 2311 Rayburn House Office Building The Honorable Steve King 2210 Rayburn House Office Building The Honorable Randy Neugabauer 1424 Longworth House Office Building The Honorable Mike Rogers 3243 Cannon House Office Building The Honorable Michael Conaway 2430 Rayburn House Office Building The Honorable Glenn Thompson 124 Cannon House Building The Honorable Austin Scott 516 Cannon House Office Building The Honorable Rick Crawford 1711 Longworth House Office Building The Honorable Martha Roby 428 Cannon House Office Building The Honorable Kristi Noem 1323 Longworth House Office Building The Honorable Collin Peterson 2109 Rayburn House Office Building The Honorable Mike McIntyre 2428 Rayburn House Office Building The Honorable Jim Costa 1314 Longworth House Office Building The Honorable Tim Walz 1034 Longworth House Office Building The Honorable Kurt Schrader 108 Cannon House Office Building The Honorable Jim McGovern 438 Cannon House Office Building The Honorable Suzan DelBene 318 Cannon House Office Building The Honorable Gloria Negrete McLeod 1641 Longworth House Office Building The Honorable Filemon Vela 437 Cannon House Office Building The Honorable Marcia Fudge 2344 Rayburn House Office Building
9 The Honorable Jeff Denham 1730 Longworth House Office Building The Honorable Rodney Davis 1740 Longworth House Office Building The Honorable Eliot Engel 2161 Rayburn House Office Building The Honorable Sandy Levin 1236 Longworth House Office Building The Honorable Steve Southerland 1229 Longworth House Office Building The Honorable Ed Royce 2185 Rayburn House Office Building The Honorable Tom Marino 410 Cannon House Office Building The Honorable Dave Camp 341 Cannon House Office Building The Honorable Sam Johnson 1211 Longworth House Office Building October 14, 2013 Dear Conferees, Representing the millions of forest owners, hunters, anglers, forest product manufacturers, and natural resource professionals, we are writing to commend you for your leadership and for including forest priorities in this important legislation. While this year s Farm Bill reauthorization process may not be ideal, we are firmly in favor of passing comprehensive Farm Bill legislation. We urge that any final bill include either a mechanism to revisit forest provisions periodically to ensure relevancy and improvements or provide the assurance of permanent reauthorizations. We strongly believe that moving forward and passing a Farm Bill will help sustain America s rural economy.
10 The nation s forests, some 750 million acres, and the associated forest industry employ over 900,000 people and generate more than $175 billion in products every year. That being said, the forest products industry has lost over 320,000 jobs since Meanwhile, forests are facing a perfect storm of threats: insects, disease, wildfire, development pressures, and loss of markets for forest products. If forest priorities are addressed in the Farm Bill, it will go a long way toward ensuring America s rural communities can combat these economic, ecological and social threats, protecting good-paying rural jobs along the way. We applaud both the House and Senate for incorporating many forest priorities in their respective versions and improving upon these throughout the amendment process. The following are specific recommendations that we urge you to include in final legislation, based on the above key areas. We look forward to working with you to pass a comprehensive Farm Bill that includes these recommendations. Title II: Conservation Provide sufficient resources for conservation programs that provide tools and resources for forest owners to implement conservation on the ground. Retain changes to the Conservation Stewardship Program that allow full access to forest owners by removing the 10% cap on forested acres. Maintain at least 5% of Environmental Quality Incentives Program resources for wildlife activities. Ensure, through the new consolidated easement program, the continued conservation of bottomland hardwood ecosystems. Include provisions in the Conservation Reserve Program for mid-contract management, especially thinning of forest stands. Include the new Regional Conservation Partnership Program, with the Healthy Forest Reserve Program as a covered program. Senate Title VII/House Title VI: Research Reauthorize the Renewable Resources Extension Act. Provide sufficient resources for the Beginning Farmer and Rancher program and ensure the eligibility of forest owners and forest management activities. Senate Title VIII/House Title VII: Forestry Reauthorize and make permanent the Stewardship Contracting authorities. Reauthorize the Healthy Forests Reserve Program. Retain strategic direction for implementation of the Forest Inventory and Analysis Program. Reauthorize the State Forest Resource Assessments, and encourage the cooperation with military facilities. Retain existing authorities for Cooperative Forestry Programs, such as Forest Legacy Program and Community Forest Open Space Program, to ensure full implementation of the programs can be sustained. Expand the Good Neighbor Authority in states with National Forest System and BLM lands. Include provision that clarifies wildland fire response by providing states access to resources and mobilization infrastructure. Direct the USFS Forest Product Laboratory to continue green building research that evaluates the lifecycle and environmental benefits of building with forest products. Include provisions which strengthen the Forest Service s ability to respond to insect outbreaks and mortality on the National Forests.
11 Senate Title IX/House Title VIII: Energy Include all forest products in the Biobased Markets Program. Senate Title X/House Title IX: Horticulture Reauthorize and fund the Plant Pest and Disease Management and Disaster Prevention Program to maintain the intent of the program. Direct the Secretary to submit an annual report on invasive species in the U.S. Clarify that Clean Water Act permits are not needed for the application of pesticides, provided the application is carried out in compliance with FIFRA. Senate Title XII/House Title XI: Miscellaneous Codify EPA s longstanding silviculture rule that stormwater discharges from forestry activities are most effectively managed by state-adopted best management practices and should not be regulated as point sources. Thank you for your consideration. Sincerely, American Forest & Paper Association American Forest Foundation American Loggers Council American Wood Council Arkansas Forestry Association Associated California Loggers Associated Oregon Loggers, Inc. Associated Logging Contractors, Inc. Idaho Association of Equipment Manufacturers California Forestry Association Deltic Timber Corporation Empire State Forest Products Association Florida Forestry Association Forest and Woodland Association of Missouri Forest Landowners Association Forest Resources Association Georgia Forestry Association Graphic Packaging Inc Green Diamond Hardwood Federation Hardwood Plywood and Veneer Association Hancock Timber Resource Group Idaho Forest Group KapStone Paper and Packaging Corporation Kentucky Forest Industries Association Louisiana Forestry Association Louisiana-Pacific Corporation MeadWestvaco
12 Michigan-California Timber Company Michigan Forest Association Mississippi Forestry Association Mississippi Loggers Association Molpus Timberland Investment Montana Wood Products Association Murray Pacific Corporation National Alliance of Forest Owners National Association of State Foresters National Association of University Forest Resources Programs National Lumber and Building Material Dealers Association National Network of Forest Practitioners National Wild Turkey Federation National Wood Flooring Association National Woodland Owners Association New York Forest Owners Association North Carolina Forestry Association Northern Forest Center Oregon Small Woodland Association Oregon Women In Timber Regions Timberland Group Ruffed Grouse Society SC Timber Producers Association Simpson Lumber Company, LLC Small Woodland Owners Association of Maine Society of American Foresters South Carolina Forestry Association Southern Lumber Manufacturers Association Starker Forests, Inc. Tennessee Forestry Association Texas Forestry Association Timber Products Company Treated Wood Council Vermont Woodlands Association Virginia Forestry Association Virginia Loggers Association Washington Forest Protection Association West Fork Timber Co, LLC Weyerhaeuser Wisconsin Woodland Owners Association
13 Forest Management Dollars Up In Smoke As of August 2013, with one month left in the fiscal year, the USFS spent nearly $1 billion fighting wildfires, but Congress only provided them $809 million. To compensate for these shortfalls, the USFS had to transfer $600 million from non-wildfire accounts to supplement wildland firefighting funds. What s the impact of these funding transfers? Work to stop threat of invasive species halted. Programs to reduce the threat of forests pests like sudden oak death, western bark beetle, and thousand cankers disease were halted. Fewer forest owners received assistance to practice good stewardship. Technical assistance delivery, through the Forest Stewardship Program, was cut back meaning less boots-on-the-ground expertise. And National Forest restoration activities were hampered jeopardizing both public and neighboring private forests. And what s worse, the USFS predicts that the still raging fires in the West could result in the transfer of at least $150 million more, for a total of $750 million of borrowed funds in FY America s 22 million family forest owners rely on the Forest Service for cutting edge research on invasive species threats, technical assistance for improved forest stewardship, and the assurance that their well-managed forests will be safe from future catastrophic fire threats. These budget shortfalls and funding transfers are hindering delivery of the USFS overall mission. Congress can help by: Immediately approving an Emergency Funding to reimburse funds to non-fire accounts that were transferred to fund ongoing firefighting efforts. o The current House CR repays the FY13 transfers ($600M for USFS and $36 for DOI) from the FY14 budget Ensuring that the FY 2014 budget includes adequate funding for wildfire fighting to avoid another transfer of funds from non-fire accounts next year. Providing the USFS and DOI with a permanent solution by creating an emergency wildland fire funding structure that will enable them to meet their fire protection responsibilities and still achieve their mission of managing our Nation s forests to sustain their health, diversity, and productivity.
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