[House Hearing, 117 Congress] [From the U.S. Government Publishing Office] SUSTAINABLE FORESTRY'S ROLE IN CLIMATE SOLUTIONS ======================================================================= HEARING BEFORE THE SUBCOMMITTEE ON UNDERSERVED, AGRICULTURAL, AND RURAL BUSINESS DEVELOPMENT OF THE COMMITTEE ON SMALL BUSINESS UNITED STATES HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTEENTH CONGRESS FIRST SESSION __________ HEARING HELD SEPTEMBER 29, 2021 __________ [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Small Business Committee Document Number 117-033 Available via the GPO Website: www.govinfo.gov __________ U.S. GOVERNMENT PUBLISHING OFFICE 45-582 WASHINGTON : 2021 ----------------------------------------------------------------------------------- HOUSE COMMITTEE ON SMALL BUSINESS NYDIA VELAZQUEZ, New York, Chairwoman JARED GOLDEN, Maine JASON CROW, Colorado SHARICE DAVIDS, Kansas KWEISI MFUME, Maryland DEAN PHILLIPS, Minnesota MARIE NEWMAN, Illinois CAROLYN BOURDEAUX, Georgia TROY CARTER, Louisiana JUDY CHU, California DWIGHT EVANS, Pennsylvania ANTONIO DELGADO, New York CHRISSY HOULAHAN, Pennsylvania ANDY KIM, New Jersey ANGIE CRAIG, Minnesota BLAINE LUETKEMEYER, Missouri, Ranking Member ROGER WILLIAMS, Texas JIM HAGEDORN, Minnesota PETE STAUBER, Minnesota DAN MEUSER, Pennsylvania CLAUDIA TENNEY, New York ANDREW GARBARINO, New York YOUNG KIM, California BETH VAN DUYNE, Texas BYRON DONALDS, Florida MARIA SALAZAR, Florida SCOTT FITZGERALD, Wisconsin Melissa Jung, Majority Staff Director Ellen Harrington, Majority Deputy Staff Director David Planning, Staff Director C O N T E N T S OPENING STATEMENTS Page Hon. Jared Golden................................................ 1 Hon. Jim Hagedorn................................................ 3 WITNESSES Mr. Dana Doran, Executive Director, Professional Logging Contractors of Maine, Augusta, ME.............................. 7 Dr. Adam Daigneault, Associate Professor of Forest Policy and Economics, University of Maine, Orono, ME...................... 9 Mr. Mark Thibodeau, Regional Manager, ReEnergy Stratton LLC, Carrabassett Valley, ME........................................ 11 Mr. Scott Dane, Executive Director, American Logger Council, Gilbert, MN.................................................... 13 APPENDIX Prepared Statements: Mr. Dana Doran, Executive Director, Professional Logging Contractors of Maine, Augusta, ME.......................... 31 Dr. Adam Daigneault, Associate Professor of Forest Policy and Economics, University of Maine, Orono, ME.................. 35 Mr. Mark Thibodeau, Regional Manager, ReEnergy Stratton LLC, Carrabassett Valley, ME.................................... 41 Mr. Scott Dane, Executive Director, American Logger Council, Gilbert, MN................................................ 46 Questions for the Record: None. Answers for the Record: None. Additional Material for the Record: American Loggers Council..................................... 52 Biomass and Carbon Neutrality................................ 58 Future Logging Careers Act................................... 62 Grandfathering Roads Being Transferred to the Interstate System..................................................... 65 Interstate Route Corridor Legislation........................ 67 Mill Closure Due to Federal Timber Supply.................... 68 National Policy of Forest Management and Wildlife Press Release.................................................... 71 Outdoor Recreation Roundtable (ORR).......................... 73 RFS Congressional and EPA letters............................ 75 Safe Routes Act.............................................. 79 Sustainable Forestry Initiative Statement.................... 83 SUSTAINABLE FORESTRY'S ROLE IN CLIMATE SOLUTIONS ---------- WEDNESDAY, SEPTEMBER 29, 2021 House of Representatives, Committee on Small Business, Subcommittee on Underserved, Agricultural, and Rural Business Development, Washington, DC. The Subcommittee met, pursuant to call, at 10:04 a.m., in Room 2360, Rayburn House Office Building, Hon. Jared Golden [chairman of the Subcommittee] presiding. Present: Representatives Golden, Carter, Delgado, Williams, Hagedorn, Stauber, and Salazar. Chairman GOLDEN. Good morning, everyone. I call this hearing to order. And, without objection, the Chair is authorized to declare a recess at any time. I am going to begin in noting some important requirements. Let me first say that standing House and Committee rules and practice continue to apply during hybrid proceedings. All Members are reminded that they are expected to adhere to standing rules, including the rules of decorum. House regulations require Members to be visible through a video connection throughout the proceedings, so keep your cameras on. Also, please remember to remain muted until you are recognized, in order to minimize background noise. If you have to participate in another proceeding, exit this one and log back in later. In the event a Member encounters technical issues that prevent them from being recognized for their questioning, I will move to the next available Member of the same party, and I will recognize that Member at the next appropriate time slot, provided they have returned to the proceeding. For Members and staff physically present in the Committee room today, in accordance with the attending physician's most recent guidance, Members and staff who attend this hybrid hearing in person will be required to wear a mask in the hearing room. Furthermore, all Members and staff who have not been fully vaccinated must maintain 6-foot social distancing. With that said, Members will be allowed to briefly remove their masks if they have been recognized to speak. That includes those who are here with us testifying today, as well Mr. Dane. I will now do a quick brief opening statement, kind of brief; we will see. In the State of Maine, we are home to a strong logging and forest products industry, and it has been that way throughout our history. Thousands of Mainers make their living in the woods or in mills, making things out of wood fiber. The industry has faced tough times in recent decades for a variety of reasons, from trade policies, outsourcing of jobs, demand slumps, and more. The loggers and other forest products workers, many of them small businesses, love what they do, and they have kept at it as a way of making a good living and as a way of life. That is important because small businesses in the forest products industry and the sustainable forestry they practice in Maine are primed to play an important role in the growth of renewable energy in combatting climate change in the years to come. It is a great opportunity for small businesses in rural heavily forested States like Maine and for the communities that they call home. America's forests and woodlands are vast. These natural resources cover about a third of the country and nearly 90 percent of my State. These forests house diverse wildlife, improve air and water quality, sequester carbon dioxide, and provide critical resources for the U.S. and countries worldwide. Sustainable forestry seeks to manage forests to support the natural forest resources and ecosystem services we need now and in the future. These practices include protecting forests from wildfire, pests, and diseases, and preserving forests. I am proud to say my home State of Maine has many landowners and businesses that use these practices. We have a healthy forest as a result. Sustainable forestry can also help combat the impact of climate change, which has already begun to hurt forest health across the country. Unpredictable temperature changes, drought, fire, and invasive pests pose a fundamental threat to our beloved woodlands. Fortunately, sustainable forestry can maintain and restore carbon sequestration in forests, helping to fight climate change and keep our forests intact. The people doing this sustainable forestry are often small businesses. As I said, they are logging operators, forest products companies, biomass facilities, and many more. These are folks who create jobs and keep their local economies moving, while keeping our forests healthy and contributing to efforts to mitigate climate change. And as we are seeing, the market for the products that sustainable forestry produces is full of potential. Woody biomass, such as waste from logging and milling, can be used in industrial applications to produce steam and electricity, reducing the use of fossil fuels. Cross-laminated timber is being used in buildings in the U.S. and across the world. And innovative new forest products hit the market every year. Keeping our forests healthy helps to promote sustainability, address climate change, and ensure that small businesses and workers in rural areas share in the economic benefits. As Congress looks to address and mitigate the negative sides of climate change and bolster American small businesses with the bipartisan infrastructure bill and other legislation, we should support industries that help on both fronts. I look forward to hearing from our witnesses about how policies can be put together here in Congress that will help them to be successful businesses, as businessowners, that will help them to continue to make a living the way that they choose and enjoy while also taking part in good sustainable forestry that makes for a healthy forest. I would now like to yield to Mr. Stauber who is--I am sorry, I am not yielding to Mr. Stauber for opening statements; rather, recognizing Ranking Member Hagedorn for his opening statement. And it is a real pleasure to be here with you today. Thanks for joining us. And I was very glad to find out you would be attending this morning. Mr. HAGEDORN. I thank you, Chairman. Appreciate you holding this hearing. And I look forward to the witnesses' accounts. You could have yield to Mr. Stauber. He is quite an expert on these issues, and I look forward to hearing some of his comments in just a little bit. Minnesota, like many places around the country, home to some beautiful forests and provide us incredible scenery, but also some awesome products that we use every day and we rely on every day. And this hearing is a lot about how we can help small businesses to continue to provide those types of products to the American people. And let's face it, there are distinct similarities in the economic challenges facing small businesses in any rural economy, whether it be agriculture, forestry, mining, or whatever sector. All rural economies are vital and important to the health of our country, and forest product sector is no different. Forest products make up about 1.5 percent of the total U.S. economy and contribute about 5 percent of America's total manufacturing output. That is quite large when you think about it. And for many rural States, timber is the economic cornerstone contributing a substantial amount of employment income. The timber provides higher than average wages, a variety of opportunities for employment, manufacturing sales, and a host of other economic opportunities, all contributing to a robust and dynamic rural forest economy. Rural forest economies depend on the tireless efforts of small businesses executing forest management practices day in and day out. Historically, the timber industry has--primarily consists of small, multigenerational, family-owned businesses with less than 20 employees. People would think they are actually probably big companies. Not so. The margins generated by these businesses are slim. Just 1 to 3 percent on average. And they assume millions of dollars in bank loans for expensive logging equipment on top of daily operating needs. So, you know, there is a lot at risk, a lot at play. Our small businesses are on the hook, and still those margins are very small. We have to do what we can to help. This places significant financial pressure on small businesses to harvest timber year-round. Unfortunately, current events have exacerbated the economic challenges these small businesses are already facing in this industry. The COVID-19 pandemic shuttered schools, offices, and other industries reliant on paper. Pandemic-related closures of essential links and forestry supply chain, such as mills and other wood consumers, have placed timber harvesters and haulers in a vise, threatening their incomes. Compounding the problem are recent increases in operational expenses due to skyrocketing inflation, such as the rising cost of fuel, which has culminated in a 10 to 40 percent loss in revenue for many small businesses compared to the same timeframe in 2019. Small businesses in the timber industry are also grappling with significant, longer-term economic consequences stemming from the recent heavy wildfire activity. Small businesses lost valuable logging equipment, suffered from idle operations, and saw their incomes go up literally in smoke as millions of acres of revenue-generating timber were badly burned or damaged. These losses will be felt for generations, as it takes decades for lands to be rehabilitated and new growth to mature for harvest. Congress must work in bipartisan fashion to help better serve the forestry industry. One bill out there, H.R. 2612, the RESTORE Act, introduced by my friend, Congressman Doug LaMalfa of California, would allow for landscape sale of management projects to give foresters a more reliable access to federal timber, which often gets tied up with unnecessary litigation. This is especially important to the countless number of foresters who depend on a reliable source of federal timber and serve as partners in the Forest Service efforts to properly manage our forestlands to prevent fires. Congressman LaMalfa offered the RESTORE ACT as an amendment to the agriculture bill. I was there and voted for it, but unfortunately it was blocked by the majority. To close, I would like to highlight just one more challenge facing small businesses in the American forestry industry, namely, its aging and declining workforce. The Bureau of Labor Statistics projects that over 7,000 openings for logging workers, on average for each year over the next decade--so 7,000 jobs open each year for--during this next decade. This logging has been characterized as difficult, dirty, dangerous, and even declining. However, the adoption of modern technology is attempting to disrupt this perception, creating a more high- tech working environment from qualified and skilled tradesmen to mechanical engineers. I hope from the testimony of our esteemed panel we will learn more about how we can reignite interest in this noble profession, grasp a better understanding of the economic realities, and try to have some good government policies in order to further their businesses. With that, I yield back. Chairman GOLDEN. Thank you. I would like to take a moment to explain how the hearing will now proceed. Each witness has 5 minutes to provide a statement, and each Committee Member will have 5 minutes for questions. Please ensure that your microphone is on when you begin speaking and that you return to mute when finished. We will now quickly introduce our witnesses. Our first witness is Mr. Dana Doran, executive director of the Professional Logging Contractors of Maine. Prior to representing Maine's independent logging contractors, he served with both public and private organizations, including the U.S. Department of Labor, the Maine Department of Labor, Central Maine Power Company, and Kennebec Valley Community College. Thank you for joining us today, Dana. Our second witness is Dr. Adam Daigneault--you will have to forgive me if I mispronounce this, sir--associate professor of Forest Policy and Economics at the University of Maine. He is the head of the UMaine Forest Policy and Economics Lab. His research focuses on a wide range of issues, including freshwater management, climate change mitigation and adaptation, and assessing the socioeconomic impacts of environmental policy on the natural resource sectors. Thank you for joining us today. And I can tell you they do amazing work, the University of Maine, and they are great partners with folks like the logging contractors and the forest products industry in the State. Our third witness is Mr. Mark Thibodeau, regional manager for ReEnergy Biomass Operations in Maine. ReEnergy's bioenergy facilities transform sustainably sourced woody biomass, other wood waste, and other organic residues into renewable clean energy that provides power to thousands of homes and businesses in Maine. Mr. Thibodeau is a lifelong Mainer and a graduate of the Maine Maritime Academy. Thanks for joining us today. And Mr. Stauber will now introduce the minority witness. Mr. STAUBER. Well, thank you, Chairman Golden and Ranking Member Hagedorn, for your leadership on this Committee. It has been wonderful to work with you. You know, northern Minnesota is blessed to have a rich forest landscape and a robust logging and milling industry, acting as a keystone of our State's economic engine. Therefore, I look forward to the discussion ahead of us today on the role of small business and forest management and carbon sequestration. First of all, forest management, and especially logging, means solutions. Forest management is a solution to preventing and mitigating wildfires. Forest management is a solution to ensuring sustainable public lands. Forest management is a solution in facilitating recreation. Forest management is a solution for economic development and job creation. And forest management is a solution to sequestration of carbon. And all of these solutions through forest management is driven by the small business community. In my district and nationwide, tens of thousands of loggers work in private, county, State, and federally owned forests, creating jobs and finding solutions. So let's be clear, so-called climate solutions are impossible without logging and forest management. For example, in Minnesota and throughout the nation, our loggers plant three trees for every one harvested. As we all know, these living trees sequester carbon and, towards the end of their lifecycle, create more jobs. On the other hand, a dead tree that falls into the woods isn't just a proverb; it emits carbon into the atmosphere and provides fuel for wildfires, multiplying its carbon intensity. Our forests sequester 15 percent of American's carbon each year. But this is impossible without the proactive management and reforestation efforts of small logging companies throughout our nation. However, our logging businesses are discouraged due to this administration's mounting crisis and poor policymaking. And here are several examples. Transportation fuel costs are up exponentially. Why? This administration opted to ban domestic oil and gas development and instead rely on OPEC to provide the fuels our small business truckers need to move the product to market. Skyrocketing energy prices and economic shutdowns endanger mills, meaning fewer markets for logs and timber products. Passage of big land bills and amendments that take federal lands completely offline mean our loggers can't proactively manage our forests, they can't clear dead trees, and they can't help to prevent wildfires. Furthermore, older loggers are aging out of this profession. And because there is more land offline and fewer markets than ever before, the younger generation doesn't see the promise of those future logging jobs. Burdensome regulations for public land management, coupled with lawsuit after lawsuit from activist groups, complicate project permitting and tie up projects in legal costs. Moreover, this administration's nominee to lead the Bureau of Land Management endangers the lives of loggers. In Idaho, with tree spiking, a form of eco-terrorism, illustrating further hostility to these small business loggers. I don't know of a way to discourage logging more than to nominate someone who willfully put lives of loggers at stake as a leader of one of our largest land management agencies. So in order for responsible forest management to continue, we need to support policies that encourage instead of discourage logging. We need cheap, reliable energy for transportation and the powering of our mills. We need to expedite the process for compliance. We need to reform our broken NEPA process and keep loggers in the woods, not in the courtroom. We need to pass my own bill, the Healthy Forests for Hunters Act, which streamlines environmental reviews for timber projects on federal land that benefit wildlife habitat, simultaneously supporting forest management and boosting hunting opportunities nationwide. And we need to vote against land packages and amendments that halt responsible management. We need to encourage loggers to grow into the profession with robust workforce--with a robust workforce, pipelines, and administrators of land management agencies that aren't a threat to our small business and our logging community. If we do these things, we will empower our small business loggers and truckers to do what they do best, which is manage our forests, find solutions, including climate solutions. With all that said, I am pleased to introduce a constituent of mine as the Republican witness today. Scott Dane currently serves as the executive director of the American Loggers Council, which represents nearly 10,000 small businesses and 50,000 employees and spans 30 States. Prior to this role, Scott served as executive director of the Minnesota Associated Contract Loggers and Truckers, our State's association representing the small businesses that play a key role in northern Minnesota's economy. There are few who can speak with more authority than Scott on timber and transportation. As he tells us in his opening remark, our loggers are key to forest health and a thriving economy. As a once-in-a-half-a-century wildfire raged across northern Minnesota, the loggers Scott represents played a key role in creating fire breaks and working to mitigate the damage. Scott, thank you for your advocacy, and thank you to the loggers for their hard work, and their families. I look forward to your testimony. Mr. Chair, and I yield back. Chairman GOLDEN. Thank you very much. I am now going to go to our witness testimony. And we will begin with Mr. Doran, who is recognized for 5 minutes. STATEMENTS OF MR. DANA DORAN, EXECUTIVE DIRECTOR, PROFESSIONAL LOGGING CONTRACTORS OF MAINE, AUGUSTA, ME; DR. ADAM DAIGNEAULT, ASSOCIATE PROFESSOR OF FOREST POLICY AND ECONOMICS, UNIVERSITY OF MAINE, ORONO, ME; MR. MARK THIBODEAU, REGIONAL MANAGER, REENERGY STRATTON LLC, CARRABASSETT VALLEY, ME; AND MR. SCOTT DANE, EXECUTIVE DIRECTOR, AMERICAN LOGGER COUNCIL, GILBERT, MN STATEMENT OF DANA DORAN Mr. DORAN. Good morning, Chairman Golden, Ranking Member Hagedorn, and Members of the Committee on Small Business, Subcommittee on Underserved, Agricultural, and Rural Development. My name is Dana Doran, and I am the executive director of the Professional Logging Contractors of Maine. The PLC of Maine is the voice of independent logging and associated trucking contractors throughout the State of Maine. Our organization was formed in 1995 to provide contractors with a voice in a rapidly changing forest industry. I appreciate the opportunity to speak before you today. As of 2017, logging and trucking contractors in Maine employed over 3,900 people directly and were indirectly responsible for the creation of an additional 5,400 jobs. This employment and the investments that contractors make contribute more than $620 million to our State's economy each year. Our membership, which includes about 210 contractor Members, employs over 2,500 people and is responsible for 80 percent of Maine's annual timber harvest. Thank you very much again for providing me the opportunity to testify on behalf of our membership in the state regarding sustainable forestry's role in climate solutions. Thanks as well for recognizing the work of our national partner with the American Loggers Council and having Mr. Dane before you today. Whether it is here in Maine or across the United States, the timber harvesting community is a vital part of the responsible management of our nation's forests, as well as a vital partner in creating solutions for preservation of our climate. Many on this Committee might find it odd for a trade association that represents loggers and truckers in the state, typically a conservative group, to stand before you today to discuss how timber harvesting can be part of the solution and not part of the problem as it relates to climate change. With that in mind, I can say with great honesty that this perception is not reality when it comes to Maine's logging and trucking community. Over the last 20 years, we have learned to recognize and prepare for our role in climate mitigation through our work on the ground. We have been accustomed to wildly changing weather patterns, mud seasons that extend not just weeks but months, and the influence of invasive species and pests in the forest. As a result, the timber harvesting community has been required to adapt quickly. Two decades ago, our Members could work between 46 and 52 weeks a year. Mud season was restricted to the months of April and May, but now, our members are limited to work between 38 and 44 weeks per year. It is clear to Maine's legacy industry that climate and weather patterns have indeed changed, and this change is adding cost and lowering profitability. During the same time, there has been an ad hoc approach to both technology and public policy. While well intended public policy changes for the respective mandates have brought about positive change on one side, I can tell you that they have had a negative impact upon our industry. One primary example of this is the use of tier 4 engines, which has been mandated by both Congress and the federal government. While the technology has been positive in terms of curbing emissions, and we have fully adopted it, it has also added cost in terms of 25 to 50 percent to every piece of equipment used in this industry over the last 10 years. Loggers and truckers are price takers and have no ability to charge more for the work that they do. And so it is our opinion that changes like this can have a positive impact, but you have got to take into consideration the negative impacts at the same time. Loggers and truckers were never included in the discussions that took place in Congress related to this policy change, and, therefore, we just ask that going forward we are included for any future changes that take place. From a state perspective, I would like to touch upon what Maine has done in terms of a leadership role. Our current Governor, Governor Janet Mills, has created a climate council as well as a forest carbon task force. I have been a Member of both the climate council as well as the forest carbon task force over the last two years. In terms of the Mills administration climate action plan, it has been very obvious that forests are part of a carbon storage and climate mitigation strategy, especially timber harvesting contractors. But, there must be incentives to promote high-quality, on-the-ground performance by loggers and investment in low-impact harvesting equipment. To achieve both goals, contractors must work to reduce emissions and minimize impacts, but there must be financial incentives to do so. Here in Maine, we have something called the Direct Link Loan Program, which has been funded by U.S. EPA water quality funding. It has been a help to lower the cost of harvesting equipment, but at the same time we don't have enough funding. And I would ask this Committee to consider including more funding for that program and making it a statewide--excuse me, a nationwide program. Lastly, our Master Logger Program, which we created here in the State of Maine back in the year 2000, which is the world's only third-party certification program for logging contractors, has now been adopted in 19 other States and has been adopted in three other foreign countries and is on target to expand to an additional three other foreign countries in the future. It is similar to the Forest Stewardship Council as well as in addition to the Sustainable Forestry Initiative. And I would ask that Congress take a hard, fast look at this and try to adopt it for federal agencies, federal forests. We would like to see the federal government actually adopt it as a requirement for working on federal forests, not just forest management standards with SFI and FSC, but also look at third-party certification for timber harvesting contractors at the same time. In my written testimony today, you will see the benefits of the Master Logger Program, where it has been adopted, why it is so important, and why third-party certification of logging companies and not just training for loggers is more important in the long run. So, with that, I think I have come to the end of my testimony. I am happy to answer any questions at the end of the hearing by any Members. And, again, I would like to thank Congressman Golden and Ranking Member Hagedorn for inviting me today and participating before the Committee. Thanks very much. Appreciate your time. Chairman GOLDEN. Thank you. Dana, you got to see if you can screen-share some photos of me on some of the equipment up there for the Members down here, driving around, you know, learning a thing or two. But it is a great program he was talking about. We will have more time to talk about it later. Next up--I am not going to do you the disservice of butchering your last name. Adam, you are up. And you can call me Jared anytime. You are still on mute. STATEMENT OF ADAM DAIGNEAULT Mr. DAIGNEAULT. My apologies. All right. Thank you, Chairman Jared Golden, Ranking Member Hagedorn, and Members of this Subcommittee, for holding this hearing today and the opportunity to testify on this important topic. My name is Dr. Adam Daigneault, or Daigneault--as our namesake comes from your hometown of Lewiston, Jared--and I am an associate professor of Forest Policy and Economics here at University of Maine. I have been working on issues related to forest management economics and policy for nearly two decades. Forests across the globe are highly valued for their diverse ecosystem services, including timber, fiber, and fuel resources, carbon sequestration, freshwater habitat, recreation, and cultural values. As noted by Member Hagedorn's opening remarks, across the U.S., forest-related businesses support at least 3 million jobs and generate around 5 percent of total manufacturing GDP. However, forest resources across the country face increasing pressures from shifting markets, land use change, policy, and climate change. U.S. forest systems, ecosystems, and the wood they produce are a large carbon sink. Our forest sector removes more than 12 percent of annual greenhouse gas emissions. And while forest carbon stocks are increasing in this country, it is uncertain if this trend will persist with changing socioeconomic and climatic conditions. Thus, forests have an immense potential to help mitigate climate change if landowners are provided adequate incentives and technical assistance. Forest carbon is a low-cost climate solution, and nationwide sequester rates could double with the proper incentives. For example, Maine's forest and wood products already remove about 70 percent of the State's annual greenhouse gas emissions, expect to be a huge contributor to achieving their net-zero emissions target by 2045. Sustainable forest management and harvests are key to enhancing forest carbon sinks. Without this, forests grow slower, are less resilient to climate change, and sequester carbon at lower rates. And a wide range of sustainable forest management practices should be used to promote climate solutions while maintaining timber supply. These include quickly regenerating sites with climate change resistant species, reducing the risk of loss to natural disturbance, conducting treatments to increase growth, and using efficient, climate-friendly harvesting practices. Markets are really key to maintaining the health and sustainability of our forests. Finding new uses for wood and supporting rural communities to ensure vibrant workforce can improve forest health. Robust and stable timber markets enable to carefully plan harvest of trees that allow forests to have appropriate stocking levels, balanced age classes, and species diversity. Continued research and development into new and more efficient uses of wood are critical to supporting our rural economies. These include wood bioenergy, biofuels, mass timber, nanocellulose-based products, and bioplastics. The University of Maine is researching many of these innovations thanks to grants from the USDA, DOE, NSF, and more. As noted, markets play a key role also in keeping forests as forests. Land is a commodity, and low-value land risks being converted to alternative uses. We need to promote markets for all grades of wood and forest uses that will help maintain or increase its value, incentivize management, and reduce deforestation. Timber harvesting is necessary to meet both societal needs and mitigate climate change. Nearly 20 percent of our forest carbon is in harvested wood products, which can be substituted for emissions-intensive materials like steel and concrete. Incentivizing practices that maintain our increased harvest and carbon will be a win-win for society and the climate. Wood-based bioenergy is part of the climate solution. Bioenergy markets increase forest value and incentivize removal of wood that otherwise dies and releases carbon. Putting this to use can reduce fossil fuel emissions. A federal renewable energy standard for sustainably harvested biomass would improve low-grade wood markets. Several federal programs could be utilized to incentivize forest management and enhance carbon sinks. These include the USDA's Natural Resources Conservation Service programs like EQIP and CSP, and the U.S. Forest Service's Forest Stewardship, Forest Legacy, and Forest Inventory Analysis programs, to name a few. Enhancing these programs can improve forest conditions and wood utilization, thereby increasing both carbon stocks and the flow of timber products. Additional funding must be devoted to reducing the risk of wildfire and other natural disturbances. Maintaining or increasing federal tax incentives, like the management and reforestation deductions, will incentivize landowners to actively manage their land for timber, carbon, and other co- benefits. We must continue to support research and economic development in the forest products and land management sectors through federal grants from the USDA, DOE, NSF, EDA, and others. The opportunities and challenges for sustainably managing our forests for timber, carbon, and other ecosystem services are notably complex. Given the recent changes to our forest ecosystems in the wood products sector, there is more need than ever to employ the very best science to inform decision-making. We must continue to research and promote opportunities that simultaneously improve the resilience of our forests and the rural economies and people who depend on this key natural resource. Thank you again for the opportunity to speak on this topic. I invite you all to visit Maine and see all the great things that are going on at our universities and working forests to implement sustainable forest management and grow our forest economy. And, Representative Golden, I look forward to seeing you again in December at the Millinocket Marathon. Thank you. Chairman GOLDEN. Thank you, Professor Daigneault. Did I get that one better? Getting closer? So, actually, growing up, I always wondered why my great- grandmother called me ``Jerod''. And they came down out of like Chicoutimi, to the Lewiston area. But the French-speaking tradition stopped with my mother's generation, at least with me, but it sounded familiar, Lewiston area. Mr. DAIGNEAULT. Yeah, it is the same for me as well, but-- -- Chairman GOLDEN. Absolutely. By the way, I am not sure that I have a half marathon in me. That was a brutal race. That was a cold day. And I had a good time, and it was for a great cause. And you want to talk about an old mill town, very, very much related to this. Mr. DAIGNEAULT. Yeah. And it is an excellent way to--you know, innovative ways that people are trying to, you know, prop up the rural communities. Chairman GOLDEN. Yeah, that is right. Absolutely. Thanks, Professor. Next, we will hear from Mr. Thibodeau. STATEMENT OF MARK THIBODEAU Mr. THIBODEAU. All right. Good morning, Chairman Jared Golden, Ranking Member Jim Hagedorn, and Members of the Subcommittee. Thank you for the opportunity to appear before you to discuss sustainable forestry's role as a climate solution. I will be speaking specifically to wood energy as a climate solution this morning. My name is Mark Thibodeau. I am a lifelong Mainer, and I am a graduate of Maine Maritime Academy with a degree in marine systems engineering. I live in Maine's Second Congressional District, and I serve as regional manager for the energy biomass operations. I have managed five biomass power plants in Maine in the course of my career as well as five in California. In Maine, ReEnergy operates two biomass power facilities, both in the Second Congressional District. We operate a 39- megawatt facility in Livermore Falls and a 48-megawatt facility in Stratton. We use sustainably harvested forest and mill residue as fuel to generate baseloaded renewable electricity. I like to stress the baseloaded portion of that. The Stratton facility supplies--also supplies and provides electricity directly to the adjacent lumber mill. Our wood ash from the Stratton facility is also used by more than a hundred Maine farms as a soil amendment for balancing soil pH and enhancing nutrient levels, and has also been approved as an organic fertilizer. ReEnergy also operates a 60-megawatt biomass power facility in New York, the ReEnergy Black River facility, which is located inside the fence at the U.S. Army installation of Fort Drum. That plant provides all the post's electricity from behind the meter, creating inner security and resiliency. And, lastly, we operate a 50-megawatt Albany Green Energy facility that is a 50-megawatt biomass heat-and-power facility located in Albany, Georgia. This facility supplies electricity to Georgia Power and steam to Proctor & Gamble and a nearby Marine Corps Logistics Base. I would like to discuss how biomass energy supports sustainable forestry. Sustainable forestry is an important contributor to mitigating climate change and reducing the risk of wildfire. When forested lands are maintained and harvested in a sustainable way, the forest continues to grow and consume atmospheric carbon. Wood markets and wood utilization are essential to forest maintenance. Without an outlet for owners to sell their harvested wood, the owners are more likely to sell the land for other uses. Biomass product is an important component of the larger wood market. After the higher value fiber is sold to make lumber, furniture, or paper, the landowner is left with lower value fiber like tops, the limbs, and thinnings that cannot easily be made into other wood products. When these leftovers or residues are sold to a biomass power facility, the landowner is able to further capitalize on that harvest, and the unusable fibers go toward generating baseloaded renewable energy. The biomass power facilities are located primarily in rural areas with active forests and/or agricultural economies. In some areas, biomass power facilities are actively involved in the reduction of catastrophic wildfires by repurposing forest debris that is very hazardous during wildfire season. Our fuel suppliers follow best management practices that ensure sustainable forest management. In all of our communities, forest growth greatly exceeds removals. What are some of the carbon benefits of biomass? Energy generated from biomass is recognized as having carbon benefits by most scientists as well as many environmental organizations and regulators. This is because the carbon released by biomass power generation is already part of the carbon cycle circulating between the atmosphere and the biosphere. Thus, like other types of renewable energy, including wind, solar, geothermal, and hydro, biomass energy production displaces greenhouse gas emissions that would have been produced had that energy been generated from fossil fuels. Even though the combustion of biomass generates biogenic emissions of CO2 on a gross basis, when the lifecycle benefits of biomass are calculated, the net emissions for biomass are considered neutral or negligible, depending on the type of biomass. My written testimony provides much more information on the carbon benefits of biomass. With respect to federal policy issues, we are active Members of the Biomass Power Association, and it often seems to us that biomass power is the least understood renewable energy resource. We have been working for years to urge the Environmental Protection Agency to implement the electricity portion of the renewable fuel standard and activate its biomass pathways, for an example, and to address definitional interpretations of the term ``biomass'' in the Renewable Fuel Standard. Without equitable policy support, it can become difficult for biomass to serve as a robust part of the country's renewable energy portfolio. We have been trying to address tax inequities that prioritize the growth of other renewable technologies at the expense of biomass and other baseloads. Regarding the role of biomass in underserved communities, there are many underserved communities across the country that rely on forestry for income, with biomass being part of their revenue stream. For example, Native Americans are the largest owners of commercial forestry resource in the United States, controlling 16 million acres of forestland. Some of our fuel at our facilities here in Maine comes from Tribal land managed by the Penobscot nation. My written testimony provides additional examples of underserved communities involved in the forestry sector. So, with that, I appreciate the opportunity to provide testimony today to the Committee, and I thank you for your public service. Please feel free to contact me at anytime with questions or concerns. And as always, Representative Golden, you are always welcome for a plant tour, as well as any other Members. Thank you. Chairman GOLDEN. Thank you. And now we will hear from Mr. Dane. STATEMENT OF SCOTT DANE Mr. DANE. Chairman Golden, Ranking Member Hagedorn, and esteemed Committee Members of the Subcommittee on Underserved, Agricultural, and Rural Business Development, I appear before you today on behalf of the American Loggers Council, a nonprofit timber industry trade association representing 30 States, to address the role that forest industry performs in supporting sustainable forestry and the contribution that healthy managed forests provide in addressing climate issues. Put simply, loggers ensure healthy forests. As a Minnesota DNR commissioner told a prior governor, Governor, the Minnesota DNR doesn't manage the forests; the loggers do it for us. Public and private land managers cannot accomplish their healthy forest objectives without loggers. Healthy forests depend upon a healthy, stable, sustainable timber industry. You can have both, but you cannot have one, healthy forests, without the other--loggers. The logging industry represents jobs in rural America. Although the timber resource continues to increase, logging capacity continues to decrease. This is the result of minimal profit margins, high capital investment requirements, forest products, mill closures--or forest product mill closure due to shifting markets, including the COVID pandemic, for traditional forest products such as paper, and workforce development challenges. For the most part, loggers have not seen much, if any, increase in the delivered price for wood sold to mills in the last 10 years. While they are in the same period, equipment costs have increased 30 percent, insurance premiums have increased 20 percent, and, recently, fuel prices have increased 50 percent. When lumber prices skyrocketed this year, most loggers did not see any benefit, and in some cases actually experienced price cuts. From a workforce development perspective, the timber industry workforce is aging, with the median age being well over 50 years old. The workforce is predicted to continue to decline by 14 percent over the next 8 years. Logging is difficult and dangerous work, but those risks should not reflect it in the wages and benefits paid. Logging is not competitive with other comparable industries, and younger workers are not entering the logging industry at the rate that older workers are leaving. One of the greatest challenges is transportation. There is not enough trucking capacity to meet the demand. Additionally, insurance rates in some regions are $10,000 to $15,000 per truck per year. Trucking is the weak link in the timber industry supply chain. The American Loggers Council has submitted a briefing paper as part of our full testimony that addresses these challenges, and proposes legislative and policy changes that would provide assistance in resolving some of these issues. However, this is about more than rural agricultural jobs. Healthy forests are vital to addressing climate change and, particularly, carbon sequestration. Nothing absorbs and stores more carbon than forests. That is why the global Trillion Tree Initiative was joined by the United States in recognition of the carbon sequestration role that trees provide. We need young, healthy, diverse, and growing forests, not overmature, dead, diseased, and dying trees, and certainly not burning forests. Older forests absorb and sequester two-thirds less carbon than younger forests. If we don't agree upon that, then the timber industry will have limited opportunity to contribute to sustainable forestry as part of carbon sequestration and climate solutions. Poor forest management does not create healthy forests, but instead negates the potentially positive benefits that would otherwise be achieved from sustainable forestry practices. This is evident in the increase in wildfires in the U.S. and around the world. Global wildfire carbon dioxide emissions are at record highs. The Copernicus Atmosphere Monitoring Service of the EU found that burning forests released 1.3 gigatons of carbon dioxide last month alone; the highest since the organization began measurements in 2003. The U.S. was a leading contributor. Scientists are concerned that areas with dense vegetation, including many of our national forests, have become the source--are becoming a source rather than a sink of greenhouse gases. A recent study that the U.S. Forest Service participated in acknowledged that a warming climate has extended the wildfire for obvious reasons. However, the study found that climate change accounts for just 14 percent of the influence of more destructive wildfires, while noting that live fuel was the largest factor accounting for 53 percent. Last May, I had the opportunity to fly over and survey the aftermath of wildfires in California. A video of the helicopter survey was produced and is included in my full testimony for the Congressional Record. If that video does not initiate an honest, science-based dialogue to develop a new national policy on forest management, wildfire mitigation, timber salvage, and restoration, nothing will. Sustainable forestry practiced and performed by the American timber and forest products industry is part of a solution in meeting the objectives of climate initiatives. However, it is entirely dependent on the rural jobs that the timber and forest products industries provide. The timber industry, healthy forests, and rural jobs are the climate solution. Thank you. I look forward to answering your questions. Chairman GOLDEN. Thank you all very much for your opening statements here. We are going to get to the Q&A portion now, and I will go ahead and kick things off with my 5 minutes. I think both Mr. Dane and Doran talked a little bit about some of the pandemic-driven related struggles of the logging industry over the last year. And as you both know, no doubt the Maine delegation in particular, although we have certainly had allies here in Congress, to get additional support for loggers and logging truck drivers that have been struggling through the COVID-19 pandemic. Could you talk a little bit about how the COVID-19 pandemic impacted the timber industry and why relief was needed for these small businesses at the same time that consumers were seeing higher lumber prices? In addition, can you talk about the success to date of the program? I know they haven't closed out the applications, but what do you expect in regards to the overall success of the program? And what are you concerned about as you look forward over the next year? And I think we can start with Mr. Doran. Mr. Dane, if we have some time, you can comment. Mr. DORAN. Sure. I would be happy to. Thank you, Chairman Golden, Jared. And I do have photos of you. If you would like me to screen-share, I would be happy to put them up so there is actual proof of your work in the woods. I will look for your discretion on that. So in terms of your question, you know, starting with the pandemic and the impact. So in 2020, you know, we saw, basically, the pandemic start before it even came to the United States. As a result of the pandemic and its impact upon China and the Far East, we started to see markets start to close or be reduced as far back as January of 2020, and it just dissipated from there, between pulp and paper impacts, saw log products, obviously, disruption of demand paper products, whether it is in office buildings or restaurants, et cetera. In 2020, our Members saw a drop of between 30 and 50 percent, and that has just compounded over the last 18 months. You alluded to what has happened with saw log markets. All of you read the headlines of sky-high lumber prices. I can tell you firsthand that here in the state, it wasn't a supply and demand issue. The log yards were full, and so there was a very high supply from the contractors that provide those solid log products to manufacturers. And then, obviously, demand was sky high. So it was not a simple supply and demand issue. Money literally just did not trickle down to the supply chain. So we have been hit by a double whammy, so to speak. We are very, very thankful for the work of our Maine delegation, especially Jared Golden and Senator Susan Collins, and the rest of our delegation, for providing the pandemic assistance for timber harvest, as in haulers, that was included in the omnibus appropriations bill that passed Congress back in December of 2020, and finally hit the street by USDA in late July of this year. Maine has taken the lead with respect to applications in that program. We are nearing nearly 300 applications. So we are pleased to see that folks are taking advantage of it. We don't know yet, you know, how much they have applied for and how much of the $200 million is actually going to get to them. I will say this, the agricultural community and fishing community has seen nearly $30 billion of aid. The logging community, which has never had a handout or a hand up, so to speak, by the federal government is only going to get about $200 million nationwide. It is a pittance. You know, again, we are not looking for the federal government to bail out every contractor, but this funding is certainly going to help. But, you can tell by the impacts that I am giving you that it is not going to do a tremendous amount, but it is going to help those in need to get to the other side of this. So I will allow Mr. Dane to reflect nationally, but those are the impacts here in the State. Mr. DANE. Thank you, Chairman. Real quick, yeah, the--from my estimation to this point, the funding eligibility across our nation will exceed the $200 million appropriation, which is a testimony to the need for the funding that was out there and everything else. How did the pandemic impact the industry directly? Interestingly enough, Congressman Stauber's district had a mill announce a closure about 15 months ago directly related to the impacts of the drop and demand for paper products in the offices and schools and that type of thing and permanently closed that mill, as well as another mill in Wisconsin that permanently closed, that accounted for 20 percent of the timber consumption in Wisconsin alone. So it had direct and indirect impacts. The assistance has proven helpful. Chairman GOLDEN. Well, I am out of time, but I am going to just take a little bit of privilege. Any estimate at all on what the actual eligibility demand would look like if every logging contractor that needed help ended up getting some? Mr. DANE. Chairman Golden, yes, the U.S. Forest Service conducted a study of the financial impacts as a result of the pandemic and estimated just slightly over $1 billion. The American Loggers Council did a survey with a consultant that estimated a $1.8 billion negative impact directly resulting from the pandemic. So, yeah, those are a couple of estimates of the entire fiscal financial impact. Chairman GOLDEN. Thank you. I will certainly have another round of questions later. Mr. Hagedorn, you are recognized. Mr. HAGEDORN. Thank you, Mr. Chairman. Mr. Dane, we will kind of stay with you. So listening to your testimony, it is clear that, as Congressman Stauber brought up, this forest management is very important. If we don't manage the forests properly, we are in big trouble on a number of fronts. And it seems interesting to me that a lot of times you get into States like California where they have a lot of fires and it doesn't seem to be that the forests are managed properly, and a lot of that is extreme environmentalists getting involved, either at the political level or at the grassroots level, and preventing people from going in there and basically cultivating the forest. I represent a farm area. I grew up on a farm. And, you know, forest products is just another crop. So I would have it over at the Agriculture Department and everything else. So it is kind of interesting that they don't let you go in and do what you need to do in order to protect the forests. And then when they burn down, they say, look at it, it is all climate change. But then according to your statistics, no, it is not. It is about 8 to 1 or 7 to 1, not doing proper management. So getting into it, though, you have lots of things going on that are cutting into your bottom line, driving up your costs; obviously, inflation, things of that nature, policies, and just bad government policies. I think there are some bad government policies on the horizon that might hurt your small businesses. We are looking at the majority party raising taxes again that may be making it more difficult for businesses to expense their items in current years and things of that nature. The tax reform bill that was passed under President Trump, I think, helped most of your Members. Would you not agree with that? Mr. DANE. Mr. Hagedorn, absolutely, I would agree with that. As Congressman Stauber mentioned, the margins are typically 1 to 3 percent. Any increase in taxes on this capital-intensive industry would cut into that. As marginal as it is, that in the industry cannot afford to absorb additional increases in expenses. Mr. HAGEDORN. You don't know of any Members that are asking for their taxes to be increased at this point, right? Mr. DANE. No, sir. Mr. HAGEDORN. Secondly, let's look at these big government items. You know, regulations at the federal level can affect you. Energy costs, you brought that up. And, you know, what is going on in the climate change arena, those things are going to drive up the cost of energy, make our energy less reliable. That can't help your bottom line. And then you get into some of these EPA requirements on your heavy equipment and trucks. And I think it was brought up by testimony in one of the others where you go from tier 3 to tier 4, and the difference might be this much, just this much more in trying to clean up the environment, but the cost is enormous to industries and driving up consumer costs. Can you address that a little bit? Mr. DANE. Well, my counterpart, Mr. Doran, did reference that, and he is correct. The cost of going to tier 4 has had a lot of unintended consequences, negative consequences, first and foremost, by adding tens of thousands of dollars to the prices of a truck alone or equipment, so that is a problem. Dealing with the servicing on those systems that tier 4 requires, it brings out service technicians out that are driving more out to the equipment. So I think when you are taking all the indirect impacts, it would be marginal, at best, that there would be any environmental improvements associated with the tier 4 equipment. Mr. HAGEDORN. And then you brought up a point about how important the trucking industry is to your industry or combined in many ways, and now you don't--you have a shortage of drivers, not enough trucks on the road at a time. My understanding is, at any one time in the United States, each day there might be a thousand big trucks on the side of the road because of these tier 4 requirements, and they just shut down and you have to get technicians out. There are no technicians, you know. A lot of these places are offering up $10,000 bonuses for technicians to start. One of the pieces of legislation that I have is the American Workforce Empowerment Act that says that if families have saved for college education for their kids, that they should be able to use that money, not just for 4-year college, but for technical school, certificate programs, the training for these types of things, you know. People are going to do the diagnostics on the truck and then the purchase of tools and equipment. Do you think that would be the type of legislation, anything to get more people in the trades and more people into the dirty jobs, as I think Mike Rowe refers to them? Mr. DANE. Mr. Hagedorn, absolutely, that is one of our biggest challenges. We are having a conference in Coeur d'Alene, Idaho, next week. One of the seminars is on workforce development. And my counterpart in Maine will be speaking on that, Mr. Doran. They developed a great program in Maine to enter the pipeline for workers in the timber industry. Mr. HAGEDORN. If we do have a second round, maybe we can talk with him a little bit more about that. Thank you. I yield back. Chairman GOLDEN. Next up, we will recognize Rep. Troy Carter from Louisiana. Mr. CARTER. Mr. Chairman, thank you very much. My question is for Dr. Daigneault. I am interested to hear more about the climate solutions that forest provides. Forests provide important ecosystems services such as sequestering carbon. Forests products, by their very nature, are comprised of carbon and durable wood products, storing carbon for years. As you know, the sustainability is an issue that is very important to me. I would love to hear your thoughts on what can be done and what else is happening in the area of bolstering climate solutions through our forestry. Mr. DAIGNEAULT. Yes. Thank you, Representative Carter. So some sort of big solutions that are often referred to when you think about utilizing forests are sort of three-tiered. So one is keeping forests as forests, so effort that we can put into conserve forests but not necessarily in a pure preservation perspective, but to ensure that it is not converted to alternative uses such as, you know, strip malls and things like that. Another one is to basically improve the forest management on forests that are already out there. So what can we do--and a lot of the things that we have discussed today is what can we do to incentivize landowners to get into the woods more, better treat the land that they have, and implement different practices to get what we call ideal stocking levels so that trees basically have space and resources to grow. And the third one is to basically take sort of marginal land that might be not best utilized and figure out how to reforest that area, to essentially expand the footprint that we can. All three of those are proving to be very cost effective if you sort of compare the level of sort of incentive that you might have to provide to a landowner relative to, you know, electrifying our transportation system or putting in solar panels or something like that. The key also is the healthier that we can get our forests by going in and managing and sort of freeing up space and allowing trees to grow faster, taller, wider, is that that will allow us also to basically utilize a higher proportion of the wood into what you noted as sort of durable wood products, right. And so the longer--the more--so the faster we can get trees to grow larger, taller, straighter, healthier, the more that we can basically convert that into 2 by 4s, furniture, other things that could be basically storing that carbon for decades, even when it is removed from the stump, thereby also allowing sort of the opportunity for the next generation of forests to sort of grow in its place and continue to sequester more carbon. Mr. CARTER. Let me just do a followup, Doc. My time is going to run out. But I just want to ask one follow-up question that--how do working forests differ from forests under conservation, and do they play different roles in terms of sustainability and climate solutions? What is the difference between the two and the roles they play? Mr. DAIGNEAULT. Sure. So in a place like Maine, Maine, about 20 percent of forests are actually under some sort of condition of what we would consider conservation. But in Maine, 85 percent of that forest that is under conservation is actually also designated as what we would call working forests. So they might be owned by conservation groups or they might be actually, you know, owned by family forest companies that basically want to have their land conserved in the sense that they don't want it to be converted to alternative uses, but they still want to manage that land for timber products, wildlife habitat, clean air, clean water. And so they might take a slightly different perspective than say, you know, a pure commercial landowner to some degree, but they are still managing for multiple uses of which timber is a strong part of it. So we really have to be careful when we say ``conservation'' and not align that purely with preservation or not basically doing any sort of management or harvesting from that land. A lot of conserved forest is still what we would consider working forest. Mr. CARTER. And is there competition between the two? Is there a conflict there? Mr. DAIGNEAULT. Not necessarily. There might be that the landowners that have their land under conservation might have different objectives than what you might want to think of as a sort of pure commercial landowner or forestry company, but everyone tends to acknowledge that harvesting is part of the solution, right. But it is just part of one of many sort of suite of services that we can get from how we manage our land. The key is that we have to think about this from very much a landscape perspective and sort of commercial landowners, small family landowners, conservation landowners, they all can sort of work together to help get--sort of meet society's needs at large. Mr. CARTWRIGHT. Okay. I see my time is up. I yield. Thank you very much. Chairman GOLDEN. We will now recognize Representative Roger Williams from Texas 25. Mr. WILLIAMS. Thank you, Mr. Chairman. I want to thank the witnesses for coming here today. And my first question is for Mr. Dane. As you know, forestry-related small businesses are crucial to providing jobs and revenue to our communities, and we have talked a lot about that today. When I talk to loggers and lumbermen back in Texas, I constantly hear concerns surrounding the labor shortage. Recently, I met with a second-generation, family-owned small business in your industry from my district who told me that they are struggling to keep up with current demand because of many of their workers have decided not to return to work and the X generations are joining in the forestry, and they are not doing that. So the federal government should be encouraging individuals to get back to the workforce rather than incentivizing them not to work and stay at home. So, Mr. Dane, can you speak more on how the labor shortage is affecting the small businesses that your organization represents? And, secondly, is there a specific policy that made the labor shortage worse in the last year and a half? Mr. DANE. Mr. Williams, thank you very much for the question. And I was just down in Texas a couple of months ago visiting with your timber industry down there. It is a great organization. Mr. WILLIAMS. It is a great State too, isn't it? Mr. DANE. Absolutely, sir. I have got a survey here that the American Loggers Council did in 2019, actually, before the pandemic, which references that 97 percent of those surveyed said it is virtually impossible to replace or add new hires to their operations. That is an ongoing problem that we have. Now, with the added--I will be honest with you. With the added unemployment benefits, I was talking to a logger in International Falls, Minnesota, that said he is going to have to give his guys a raise to offset the additional unemployment that they are receiving to entice them to come back to work. So it is a problem. Mr. WILLIAMS. Competition and access to capital play a fundamental role in our economy, and the government must not impede entrepreneurship and innovation but, rather, ensure that American small businesses can succeed and grow without unnecessary government interference, and you just touched on that. Paying people not to work is too much of an interference. Burdensome regulations have real impacts on small business owners and the communities who depend on them. I am a small business owner, have been for over 50 years, and I know how excessive regulations can hinder growth and competition. We work--I am in the car business. We work on the same margins you do, so any movement one way or the other is tough on the industry. And we do not need a top-down, one-size-fits-all approach, but, rather, a properly regulated economy that creates opportunity for everybody. So, again, is the logging industry properly regulated, do you think, and do you have concerns that the new focus on the green policy regulations will be harmful to the competitiveness and profitability of your Members? Mr. DANE. From a regulatory perspective, I am happy to say that at local, State, county levels, the regulation is not really excessive. But when you get to the federal level, it is extremely burdensome. The NEPA requirements and the ESA requirements have been weaponized by those that want to just stall and litigate national forest management plans. Mr. WILLIAMS. So you have all the regulations you need to deal with right now, don't you? Mr. DANE. We do not need any further regulations, Mr. Williams. Mr. WILLIAMS. All right. Thank you. Small businesses are finally beginning to recover from COVID-19 pandemic, and the last thing they need is for Congress and President Biden to raise taxes. We have talked about that. Raising taxes in this time is crazy, and the infrastructure bills that Democrats are pushing forward and attempting to pass this week will raise the corporate tax rate and drive up inflation, making goods and services more expensive. That is the bottom line. Despite the White House claim that this will cost nothing, which is a complete lie in my mind, the cost will inevitably be passed on to individuals or businesses, and many businesses can't pass it on to individuals, so they have to eat it, and they have to let people off to pay for it. So increasing taxes will cause businesses to hire less people and invest less back in the economy. So, Mr. Dane, quickly, can you discuss how tax increases would impact the small businesses that you represent? And if taxes are increased and your margins remain the same, which probably would not be, would that mean passing the cost on to the consumer? Mr. DANE. Well, I would like to answer the last part of that question first. Loggers do not have the ability to pass on that cost to consumers. Loggers are paid based on what the mills determine, and as Mr. Doran referenced, dictate will be paid. And so it is one of the only industries in the country that I am aware of that you don't have the opportunity to tell your consumer what you are going to sell them the product for. They tell you what they are going to buy it for. So they don't have that opportunity. Second, these are small businesses, and some are corporations, so that increased corporate rate would directly impact these family businesses. Mr. WILLIAMS. Thank you. Stay the course. There is help coming. I yield my time back. Chairman GOLDEN. Thank you. I will now recognize Rep. Pete Stauber from Minnesota 8. Mr. STAUBER. Thank you very much, Mr. Dane, for appearing here. I am going to put you on the spot. My good friend from Texas just says Texas is a great State. Texas or Minnesota? Mr. DANE. Minnesota in the summertime. Mr. STAUBER. Thank you. Thank you so much for being here. You know, we talked about the loggers and our truckers at the forefront of responsible management. You know, how is the skyrocketing cost of fuels for transportation and energy affect a small logging and trucking businesses? And I will just share with you. I was at a logging site just west of Grand Rapids, you know, Rajala Timber, and they talked about the cost for fuel and energy to run the machines. How has that affected--how is it affecting the industry and the ability to move forward? Mr. DANE. I will give you a quick example, Congressman Stauber. You know, Scheff Logging in Marcell, Minnesota, I think their fuel expenses are about a million dollars a year, maybe 1.2, 1.3. You add 50 percent--yeah, 50 percent increase in fuel cost right there, you are talking a half a million dollars for one company alone. So it definitely is a burden to the industry and one that is unfortunate that has occurred in the last 8 months. Mr. STAUBER. You know, also in your testimony, Scott, you discussed the Trillion Trees Initiative, which is embodied in a bill introduced by my colleague, Representative Westerman. How do the reforms in that bill, such as streamlining NEPA, make it easier for your industry to do its job and, in turn, support forest health and carbon sequestration? Mr. DANE. Well, let's go back to the Trillion Tree Initiative, which is a global initiative to plant a trillion trees around the world to, you know, absorb more carbon. It makes a lot of sense. When it comes to the NEPA reforms that are necessary--that are critically necessary, that are hampering forest management at the federal level, I was at a meeting, and I think they were talking about at one time a NEPA report was about 75 pages long. Now it is 600, 700 pages long. I was out there in California. We took a helicopter tour of the aftermath of the wildfires in May. We were up there for 6 hours. We toured 3 million acres of burned land--3 million acres of burned land. And when you look down and you see what is going on in privately owned and managed land, they are salvaging the timber, they are restoring the land, they are replanting on there. If you look at the adjacent federally managed timber, nothing is happening. No salvage is going on. No reclamation is going on. And that is all because of all the NEPA requirements that just are used to hamper forest management. Mr. STAUBER. Mr. Dane, if you had one request from the EPA for your industry, maybe two requests, what would they be? How can the EPA help your industry with decisions? Mr. DANE. Congressman Stauber, thank you for asking. I think that would probably be a question that the Chairman would also like to hear. And I know Dana Doran and myself have been working for 3 years, at least, with the EPA on the biofuels and the renewable fuel standard and feedstock eligibility. The EPA has misinterpreted the RFS. Their interpretation is contrary to all other public and private timber management organizations, and that is impeding the development of renewable fuels from forest-based feedstock. They need to accept those pathways that were talked about for feedstock to be eligible for RFS and RIN credits, and we have got hundreds of millions of dollars prepared to be invested in this new technology which, again, goes back to renewable fuels but forest-based. If we could overcome that, there would be a new plant built in Minnesota, your district. There would be a new plant built in Maine, and there is a plant being built right now in Oregon. It is a $330 million plant that would also benefit from the EPA acknowledging that their interpretation of eligible feedstock is incorrect. Mr. STAUBER. Well, thank you. In light of my short amount of time, I do know that Chair Golden and Ranking Member Hagedorn and I, we have all discussed that, and it is a priority, I know, for the Chair and Ranking Member, and I stand with them in helping with the solution. Scott Dane, thanks for your expert testimony. On behalf of all Minnesotans, and in particular northern Minnesota, thanks for your prior work with the ACLT. Tremendous. And your knowledge is really appreciated on this Committee. Thank you very much. Chairman GOLDEN. Thanks for highlighting that. That was a really important exchange right there. I am going to move into a second round. I am going to start with Professor Daigneault. There has been some talk and focus on carbon markets as a way for small family forest owners to generate additional income out of their land. Do you believe that this is currently viable for small family forest owners? Do these carbon markets help to support forest ecosystems? Can they be a part of advancing climate mitigation solutions, but just as importantly, will they help or hurt forest products economies? And is the answer dependent on how the policy is structured or not? Mr. DAIGNEAULT. Right. Thank you, Representative Golden. Lots there to unpack. Thinking of just markets at large, right, carbon markets, they are part of the solution, but it might not be part of the solution for everybody. It does--it will provide sort of a diversified income stream to ideally promote more forest management, but the policies themselves has to be structured in a way that does that. A lot of sort of existing carbon markets that focus on forest carbon tend to penalize those who are understocked but have the potential to grow and basically reward a lot of those that are overstocked in the sense that they have a lot of carbon on the ground compared to maybe the average forest. The other thing that it does is it tends to--it is getting involved, particularly in carbon markets, is very time consuming, resource intensive, requires third-party audits and things like that that can make it really cost prohibitive for particularly the sort of small and family forest landowners. There are some organizations, like American Forest Foundation and Nature Conservancy, are working to develop programs that specifically target those that own, you know, less than a thousand acres, but they are still pretty nascent from that perspective. So, again, I think there are opportunities there, but I don't think it is the full solution. I think just, you know, saying that if we create a bunch of carbon markets and create some ways that people can buy, sell, and trade offsets are going to necessarily open up, you know, the forest to all these--to all this sort of management innovation, I think it is part of the solution. But I still think there are other aspects that we need to take in account, particularly that--you know, the duration that people have to enter into these markets, the sort of complexity of how some of these things work can make it more prohibitive than maybe, you know, what someone like myself teaches in theory in an economics course. Chairman GOLDEN. An excellent point. I appreciate that. And I know someone sitting next to me said we could have a whole hearing about that subject. But I wanted to ask, then, from the perspective of going from the classroom to on the street, Dana, maybe you could talk a little. I mean, I have seen that some of these programs are structured in ways that would probably be of concern to loggers and the Forest Products Council, but is there also, you know, something good here potentially if it means that more people are going to engage in forest growth? And does it give landowners another tool in the toolbox? What is your feedback on this? Mr. DORAN. You know, thanks for the question, Jared. And I have got a picture behind me of you operating a stroke delimber, by the way, and that is you also on the skidder. So I just wanted to make sure folks knew that was there and you actually did it. In terms of carbon markets, you know, I think carbon markets scare loggers quite a bit, because, you know, carbon markets generally are a reduction of the annual timber harvest or the annual cut, but we feel like it can be structured in a way that we make sure that we actually weed the forest, remove the low-value wood, and we can still conduct the same type of forest management without an impact to the contractor. But that is something that has to be mandated up front, and it really truly is a partnership between the landowner and the carbon market and even the logging contractor. As I mentioned in my testimony, you know, we created a third-party certification program for logging contractors 20 years ago called the Master Logger Program. And the Master Logger Program is a third-party audit of the harvest. Professor Daigneault mentioned, the cost to the landowner, but there has to be a third-party audit to provide assurances and verification of the work one on the ground. I think, you know, we provide a pathway to try to mitigate that cost. And also, so you achieve the landowner point of view, you achieve the market capability, keep their land forested, because they are receiving a revenue forecast, and keep the contractor as part of that with the work that they are doing on the ground. So I think there is a path forward, but you have got to make sure that you have markets for low-value wood, whether that is biomass, or it is finding other markets for low-value wood. And then the contractors are part of that. And if we can develop a system like that that increases forest management, produces higher level products, greater markets, I think everybody shares in the prosperity. But that--that is a big nut that we have to crack. Chairman GOLDEN. Thank you both. Do you have any follow-up questions? Mr. HAGEDORN. I will just ask one, if that is okay. So, Mr. Doran and Mr. Dane, I will kind of throw this out at you. Just so people understand a little bit better, I mean, we all experience one way or another these incredible increases in lumber costs. I mean, people had their houses go up $40,000 to build, and people put off projects and everything else. But you say your industry doesn't really benefit from that. Can you explain to folks how it works and why that didn't trickle down to you? And I am just kind of curious. I mean, again, the farming and ag-based folks that I work with have to deal with meat packers, for instance, the livestock people. And they sometimes think that the meat packers are making a lot of money at the grocery stores and everything else selling their meat, but the farmer--it doesn't always get to the actual livestock farmer. Maybe that is similar here. So I would be interested in your response. Mr. DANE. Mr. Hagedorn, real quick. In my opinion, it was, for lack of a better word, gouging that was occurring within the markets because of demand. At the same time, there is an increase in forested land because the CRP maturing and that type of thing, so the supply was abundant. There was an increase in logging capacity with mills shutting down and stuff, so that infrastructure was also abundant. So the mills could afford to dictate, again, the price. I talked to a logger in Grand Rapids, Minnesota, the other day, and he said that the mill told him, we are not cutting your price; we are just paying you less. So it is a mill- controlled market right there, and that is one of the reasons that the trickle down has not occurred. But I think my counterpart, Mr. Doran, would also have good information to share. Mr. DORAN. Yeah. Thank you, Mr. Hagedorn. I appreciate the question, and Scott is spot on. You know, it is interesting, in the spring of this year, so let's say January to April, there were tremendous amount of reports nationally, the Wall Street Journal and New York Times, on the cost of lumber and kind of the breakdown of who was making the money. And I will tell you, the logging contractors, and the landowners for that matter, were not seeing any of the benefits. You know, we would communicate obviously with our Membership, but we are also talking to the landowner community, and there were a lot of folks who would talk to a logging contractor and say, oh, you must be getting rich right now; you have got to be able to pass that along. And they are just honestly saying, no, we are not, we are not getting any of this, and neither are you, and that was the bottom line. And it is interesting, we issued an opinion piece in one of our statewide newspapers back in April of this year, basically calling into question what was happening both here in the state but also nationally as to where the money was going. And, you know, I am not going to point the finger at one piece of this. There are a lot of players that are involved, you know, from the mills to the retailers to the wood brokers in between. I will tell you, there are also large cooperatives who buy materials on behalf of retailers. They are all involved. And so anywhere from retail to manufacturers, that is where the money was, and it wasn't just one piece of that that was making the money. But I will tell you, none of it was trickling down. But after we issued that opinion piece, we saw an increase in pricing that was paid to the contractors and to the landowners. So it is funny what happens sometimes when you get punched in the eye. There is a noticeable change that took place. Obviously, this summer, the commodity markets have changed. Lumber prices have come down in many respects. There has been, you know, a change in pricing. But a lot of the public attention has, I think, influenced where money has trickled and what has happened to overall pricing. But Mr. Dane is absolutely correct. There was gouging at a high level between those areas that I identified for you. Mr. HAGEDORN. Okay. Well, I appreciate that. It just seems like you are in a little bit of a precarious spot. You can't control your destiny in many ways. But the one thing that can always help you is to make sure that we have downward pressure on cost of production, to make sure that you can meet your bottom line, that whether--whatever money you are going to get from the mills, you can try to keep the cost of production low. And I will just come back to it. It is these big things that sometimes government can really screw up and hurt you on-- taxes, regulations, energy, trade, and equipment, in this case, with the way the EPA jacked up the prices and made the equipment less reliable. In all those instances, government has an opportunity to improve your bottom line or government has an opportunity to move you towards being out of business. And I want you to know, I am on the side of trying to help you build your bottom line, so we are going to stand for those policies. Thanks for your testimony. Chairman GOLDEN. Speaking of regulations, I think Mr. Stauber has a question. Mr. STAUBER. Thank you, Chair Golden. I just have one additional question for Mr. Dane. You know, there is a lot of talk about adding endangered species to the list of endangered wildlife, et cetera. What does that do? You know, how does that affect your industry? I know in Congressman Golden's area, you know, the lobsters are having--they are having major issues, and I know in some parts of even Minnesota. What does that--what is the economic impact even prior to something being listed? What is the economic impact, and how does your industry look at that? Mr. DANE. Congressman Stauber, thank you very much. It is ironic that we think about this issue from a Minnesota perspective, and it is just one more tool that is going to be part of the arsenal to allow those who want to litigate forest management to death to utilize. And here is an example of it. The Canadian lynx is--kind of goes back and forth. Is it going to be in danger, is it not going to be endangered or threatened or whatever else it is. So they track Canadian lynx. First of all, that is just in Canada. They are not coming to Minnesota to mess up our timberlands. No, just kidding there. But they tracked them. And you know what they found out? The Canadian lynx traveled on logging roads. They are not stupid. You know, they are not going to go through the brush and everything else. They are going to travel on logging roads. So logging roads are not counterproductive to the Canadian lynx habitat at all. But, again, once you get something on that list, you can use it as a tool to interfere with forest management. Mr. STAUBER. Yeah. That is what we have heard, I have heard back home as well. And I think it is nationwide. And I think we have to really take a healthy look at that and what we need to do to really, I guess, stop the weaponization of the courts and allow your industry to do what you do well: manage forests, bring great jobs. You know as well as I do, in Minnesota, it is like a $10 billion industry statewide. It is huge. And so we stand ready to help, as Congressman Hagedorn stated, not only in Minnesota and Maine but across this great nation. So, with that, I will yield back, Mr. Chair. Chairman GOLDEN. Thank you. Good question. The lobster industry has taken a big hit, and weaponization of the courts is, I think, the perfect way to put it. That is a whole other topic right there but one we are in the thick of in Maine. I wanted to ask Mr. Thibodeau. I am sure you are aware that there is a perception out there that burning wood for energy isn't the best use of forests and trees, particularly when it comes to carbon sequestration and climate solutions. I wanted to give you the opportunity to talk about how ReEnergy uses fuel and where it comes from and how using that wood for energy generation helps ensure the continued health of forest land. Mr. THIBODEAU. Thank you. Thank you, Mr. Golden. Yeah, forest and mill residue that we use for generating renewable electricity at our facilities come from logging operations in mills near our power plants. The vast majority of that comes from within about a 75-mile radius. When forests and land are maintained and harvested in a sustainable way, the forest continues to grow, and it grows healthier. It continues to consume atmospheric carbons. So wood markets and wood utilization are essential to forest maintenance. Without an outlet for owners to sell their harvested wood, the owners are more likely to sell their land for other uses. If you think of the biomass energy industry as taking the leftovers or the mill residues from forest operations, the low- value, low-grade products are critical, as many of our other witnesses have testified today, to promoting forest health. For example, creation of jobs from biomass industry as well as the economic output of our facilities. We recently had an economist study our two facilities in Maine, and they supported more than 360 jobs and had an economic output of $95 million per year, on an annual basis. The Stratton facility alone, where I am located, purchased fuel from more than 58 Maine-based logging and trucking companies and more than 19 different mills in the State of Maine. So that is supporting that low-value market. So there is a perception out there that burning wood is not the best use of forests and trees, and I would agree with that. When you think about the higher value markets for lumber mills, furniture makers, paper, I would agree with that. However, you have to make sure there is a clear line there that we are not cutting down forests to make power. We are taking the leftovers, the residuals that are left behind and from mill residues. In order to make a 2 by 4, you have to debark that tree. That bark will come to a biomass energy facility such as ours for power production. Again, stressing baseload renewable power, biomass is one of the only, along with geothermal, that is considered baseload renewable power, which means, you know, we are producing power 24/7, no matter how hot or cold it is, if it rains, if it is windy or not, or if the sun is shining. So thank you, Chairman Golden. Hopefully, that answered your question. Chairman GOLDEN. Yeah, of course. I am assuming, by the way, you don't have to go too far into it if you agree, that you are in agreement with Mr. Dane about the importance of the RFS for biomass. Mr. THIBODEAU. Yeah, absolutely. I would echo Mr. Dane's sentiments exactly. The RFS is something that we have been working with very closely through the Biomass Power Association and trying to activate those biomass pathways, kind of how I had mentioned in my testimony. It is really critical from a federal policy issue for the biomass industry and to address the interpretation of the term ``biomass'' as well. You know, infrastructure that supports, you know, such things as use of electric vehicles is very important to climate change. And in terms of development and continued operation of renewable energy projects such as ours, that renewable fuel standard is really critical. It will strengthen our potential role in the renewable fuel standard. So we hope and expect the biomass electricity pathway will become operational. Chairman GOLDEN. I know in Maine, we are really looking at policies that could turn our State into a bit of an energy island where we really can be producing, you know, and self- sufficient on our own energy production, and biomass is certainly a part of that. And we see it also helping small- scale manufacturers when they are able to, you know, generate onsite, which has occurred in a few places, but there are some tweaks that need to be made, I think, to increase that. Dana and I always agree: We shouldn't build a public school in Maine that doesn't have also some kind of biomass boiler or something built into it. It is public expenditures. But all of that depends also upon the future of having this forest resource and making sure that it stays healthy. So I guess my question is just to the professor. What types of policies are you looking at, either private or public, looking into the future to make sure that we have a healthy forest? I mean, do you think we are going to need to introduce new forest species or is it sustainable the way it is? I mean, what is your recommendation for the forest products industry in Maine? Mr. DAIGNEAULT. Yeah. So great question, Congressman. So one thing to think about is that I think we have to acknowledge that climate change is inevitable, right. We are already experiencing that, as Mr. Doran said, you know, how we have to harvest and what species we are seeing. It is changing, right. And so we have to do more to basically get that information out and help those on the ground who are managing, logging, et cetera, handle that and adapt accordingly. In addition, you know, with that, we do need to acknowledge that some species are going to grow faster than others, but at the same time, you know, those aren't necessarily basically the most desired species, per se. Coupled with that, you know, as we noted, we talked a little bit about carbon markets, but I think, again, we need to come up with ways to basically get people in the woods and managing from a whole suite of different opportunities. So that is more incentives to do management, more--you know, more through the USDA's NRCS and other things that at least are facilitating more management, more removal. That goes--couples with what Mr. Thibodeau was saying where we do need to basically have sort of robust markets for biomass, which is going to help basically get some of that lower grade wood out there, which is then going to increase and enhance the resiliency and health of our forests of what remains. In addition, I have noted that, you know, what everyone has talked about today is that we need to continue to find ways that make it, again, profitable to want to do things in the woods, right, and actively manage. And so I have noted at least that some of the sort of federal tax incentives that have been out there, at one point a couple years ago, they were considering dropping them. I think keeping those were a huge boost or a very important aspect for, not just the sort of logging and forestry community, but for climate change at large. And, lastly, I think we just--we also need to acknowledge that the economy is changing, people's needs are changing, and their uses of wood products are changing. So by continuing to explore other ways that we can use wood as substitutes for fossil-based products, you know, things that, you know, are more durable and sort of meet the needs, you know, the consumption needs, that is going to help put more value on the forest and in the woods that we rely on, which is then going to help boost a lot of these communities that, you know, have a long heritage and history of relying on our forest resources, you know, to make those communities thrive. We need to continue to push in that way and probably acknowledge that maybe, you know, pulp and paper is not going to be the solution for the next hundred years, but we still have an abundant wood basket that can provide a lot of resources that we can take advantage of. Chairman GOLDEN. Thank you. I think that is as good a place as any to wrap things up right there. I want to thank all the witnesses on the panel for joining us today, and I want to thank all my colleagues for joining us and for their good questions. From the testimony and the exchange sought here, I think it is clear the great benefits of the forest products industry and sustainable forestry can have for the country. And we all have a role to play in contributing to a healthy forest, to mitigating climate change, and to taking care of our local economies, making sure they can be successful. So I believe it is our responsibility to support industries like those that we have in our forested States and communities. Protecting our environment doesn't have to be bad for business, and I think our witnesses proved today that that is certainly not the case in places like Maine and Minnesota and a lot of others. I know down south as well. Sustainable forestry provides positive economic and social outcomes and meets the needs of the present and we hope future generations as well. So I look forward to working with my colleagues to advance policies to keep our forests healthy and continue to help small business owners and the forest products industry. So I would ask unanimous consent that Members have 5 legislative days to submit statements and supporting materials for the record. Without objection, so ordered. And if there is no further business before the Committee, we are adjourned. Thank you all very much. [Whereupon, at 11:40 a.m., the Subcommittee was adjourned.] A P P E N D I X [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [all]