title: Bonus Ep: Big Money Bought the Forest
author: Timber Wars Season 2: Salmon Wars
contenttype: podcast
publication: Timber Wars Season 2: Salmon Wars
published: 2020-11-14T12:34:36-05:00
sourceurl: https://pds.cdnstream1.com/p/opb/timber-wars-season-2-sal-760bb5/bonus-ep-big-money-bough-cbccaa/audio.mp3
word_count: 5812
Hey there timberwards listeners, if you've been enjoying this podcast, there's a new show you should also check out. It's about a very weird and wonderful bird, one of my absolute favorites. That is the sound of the greater sage growls, and it is a mighty challenger to the spotted owl for the illustrious title of most controversial bird in the west. You'll find these creatures in wide open sagebrush country trying to hang on alongside oil and gas drilling, recreational activity, development, ranching, and everything else that goes on out there. The host of the show, Ashley Aherne, moved to sagebrush country not long ago, and she's trying to figure out where her life, one cattle drive at a time. Here we go, let's get those cows pistol. And along the way, she's developed an obsession with sage grass that's taken her on a journey across the west. To learn everything she can about this strange controversial bird, and the people trying to figure out how to save it. The show is called Grouse, it's from Bird Note Presents, and you can find it wherever you get your podcast. In the Timberwarze podcast, we chose to focus on the fight over logging and national for us, because that's where most of the remaining old growth was, and it's where environmentalists had the most leverage in the courts. So in other words, it's where the fighting was hottest, but the thing is, there are a lot of forests that aren't owned by we, the people, and under the control of the federal government. There are forests owned by states, there are forests owned by Native American tribes, and there are huge stretches of forests owned by private landowners, ranging from small families to giant corporations. And these private forests have always fed a significant chunk of the timber industry. Chances are, if you see a clear cut these days, as you're driving to the coast or over the mountains, it's private forest land. So you really can't tell the story of the Timberwarze without talking about them. And that's what we're going to do for this in another bonus episode. Remember how we talked about how the northern spotted Owl took the blame for a lot of other things that cost jobs and hurt Timber dependent towns? Things like automation and international competition? Well, there was another huge thing the Owl took the fall for. In fact, it's something that costs Timbertown's even more money than locking up the national forests, at least in Oregon. My OPP colleague, Tony Schick, has spent a year investigating this, in collaboration with the Oregonian and pro-publica. So I wanted to bring you his stories about how Wall Street real estate trusts and other investors gain control over the state's private forest lands, and how they've profited at the expense of rural communities. This is Tony. Here in Falls City, the back wall of Frinks General Store is covered in black and white photographs. In one, logger stand on trees wider than a city bus. The photos beside it include a shot of Main Street, complete with shops, a hospital, and a sawmill. That customer, Cheryl Lowry, is a third generation fall city resident. The town she lives in today has none of those things. No, there's no mill, but not any more. But they do still do a lot of logging. There's trucks that visit my house all the time. In fact, there's more logging now in Polk County than in any of the three decades before the spotted Owl hit the headlines. Fall City is surrounded by some of the most productive timberlands in the world, being logged more frequently than ever. And yet, as many as half the families in town get by on weekly food deliveries at the local church. The city doesn't have a police officer anymore. It had to close its library, and it can't afford to pay its roads. Kathy Frink owns the General Store. In a town of a thousand residents, she's the biggest employer, with nine people on the payroll. We don't have a lot out here, and when the timber industry is going up in here and the loggers, all we really, from what we benefit from them logging here, is the log truck driver stopping either at the bar or here. Frink is tending the store and answering my questions when another customer walks in. But we are poor community. Hi Bill. And Bill could tell you about this town. This town is excellent. I introduce myself to Bill Lawler. He's a retired truck driver. Frink tells him I'm here to learn about what the town gets from the timber industry. We don't get any money from, they just take our resources or timber, and we don't get nothing for it, except dust from the log trucks. Most of the forests around fall city are not owned locally, but by far away investors. They are real estate trusts or hedge funds that buy timber land instead of stocks. Warehouse is the biggest timber owner in Oregon and has 21,000 acres around fall city. The long time Seattle timber company became a real estate investment trust in 2010. The company declined an in-person interview, setting the need to be cautious during the coronavirus pandemic. In a written statement, the company said it is proud of its role supporting local communities and economies. Warehouse said it has donated $1.6 million to various causes across Oregon in the past five years, and that it currently employs 950 people in the state. That's a fraction of the 4,000 workers it employed in Oregon 15 years ago. Many of those jobs were lost to consolidation or automation. Fall city mayor Jeremy Gordon said timber is still a vital part of his town's identity. I know a good handful of people who work in the industry, and there's a lot of support for the industry. He wishes it could be a bigger part of its economy. Residents of rural Oregon counties talk about how cuts to share patrols, libraries, and local schools are solely the result of logging cutbacks on publicly owned forests. But our investigation found that here in Oregon's timber belt, half the counties have lost more money from tax cuts on private forests than they did from the reduction of logging on federal lands. In all, the tax cuts have cost Oregon an estimated $3 billion. Unlike Oregon, Washington and California still fund local governments with logging tax. Link Cannon lobbied to get rid of Oregon's. He was the director of taxation for the Oregon Forest and Industries Council until he retired in 2017. Oregon got it right in the 1990s, he says, recognizing that by then, NATO forests on private land had been chopped down and replaced by tree plantations. And since Oregon doesn't tax farmers wheat or strawberries, the industry felt it wasn't fair to keep taxing trees. It's an inaccurate or incorrect policy to tax timber independently from the land if you believe the timber is a crop. I asked Jamie McGovern about the money that local governments lost because of this tax break. She's been analyzing the shift for the Oregon legislative revenue office. She said when revenue from timberland dried up, the burden fell to local voters to decide if they wanted everyone else, namely homeowners, to pay more taxes. In many cases, voters in poor, role places like this said no. So of course you've seen, you know, libraries close, police stations close. I told McGovern that when I talked with people in these counties, they usually didn't trace the problem back to the way taxes have been cut for companies that buy up private forest land. It's almost always attributed to, oh, we're not getting the forest service or BLN payments that we used to get. This never comes up. I can't explain why people do or don't say things. In fact, all these years later, I had a hard time finding someone who could even remember when Oregon got rid of what it used to call the severance tax. Let alone explain the impact of it. Not the legislative staffer who analyzed it, not the lawmaker and lay in generally who introduced it and ran the committee. I sat down with former governor John Kitsover who signed the bill that cut taxes on logging. He didn't remember it either. This is a tax cut that costs counties millions of dollars a year and almost nobody seems to remember it. I do, but no way listen. Hans Radsky is a small woodland owner, an economist living on the Oregon coast. I called him because he was an economic advisor to the governor's office for years and he served on the state task force about timber taxes that ultimately led to the tax cut. Radsky remembers sitting next to a timber lobbyist during those task force meetings, warning about the future impact of eliminating the tax. Then Radsky leaned in and he told the lobbyist that the industry was screwing over Oregon counties. He didn't use the word screwing over. The lobbyist? He just looked back at Radsky. A few months later, the industry got what it wanted and the severance tax was gone. Do you remember back in episode two when we loaded into an SUV with the Forest scientists Norm Johnson and Jerry Franklin to drive through the clear cuts that blanket Oregon's coast range? Well, if you were listening closely, you'll remember that I mentioned there were actually eight adults squeezed into that SUV, even if we just heard from Jerry and Norm. And Tony was one of them. And with his collaborator at the Oregonian, Rob Davis, this second partner series is going to pick up on that trip to continue the story of how this new wave of investors has transformed Oregon Forest. Norm Johnson and Jerry Franklin are heading up a logging road in the Oregon coast range. It's a drive they've made many times before. They're two of the Pacific Northwest's most renowned forest scientists. They've spent a lot of time doing research in what Johnson calls Oregon's wood basket. We ever said that money doesn't grow in trees, it wasn't thinking of the coast range. They're heading for an iconic patch of old growth known as the Valley of the Giants. On the way, they stop and examine the miles and miles of industrial forest lands. As smoke and fog rise into the hills, patchy with clear cuts, Franklin is shaking his head at the stops below. This is not stewardship. This is exploitation. It's not that Franklin is against logging. He and Johnson have taken heat from environmental advocates because at times they've pushed for more of it. It's more of it. At 83, Franklin is older than most of the Douglass Fertries, now growing in Oregon. Douglass Fertries can grow to be a thousand years old. But the investment companies that log these forests now typically cut them down at 40 or 50. That not only stunts their ecological value, it means they're not producing as much wood as they could either. Franklin sees the landscape being farmed for short term gain. This is being managed for capital return. It ain't being managed for anything else. It's not happening just here but across the northwest. In Western Oregon, at least 40% of private forest lands are now owned by companies that treat forests like stock portfolios. Decades ago, when more forest land owners ran mills, they grew bigger trees because they wanted more wood for the long haul. For investment companies, growing trees 80 years like companies did decades ago, doesn't pencil out. They can maximize profits by cutting them sooner, exporting additional logs overseas, and then selling the land. Just as Franklin is making these points, a truck passes us as if on cures. Small logs. Of course you just chip them up, growing back together. Trees that size don't store as much carbon as older ones. In the past few years, multiple studies have shown plantations growing nothing but young, thirsty trees really suck up water. That means lower stream flows for fish and other wildlife than on older forests. Urbicides and fertilizers go hand in hand with this kind of intensive tree farming, and that can be another blow against native species like songbirds and salmon. And one of the things that the foresters have deceived themselves about and the deceived society about is that these plantations are forests. They are not. A few months later, I went back to those same plantations with Jerry Anderson. Anderson is with Hancock Forest Management. It's a subsidiary of ManuLife Financial, a $25 billion company out of Canada. It's exactly the kind of company Franklin was talking about. I think our decision making is very measured. Standing on a rain soaked hillside covered in trees and ferns, Anderson planks a small middle tool into the side of the tree and spins it like he's uncorking a bottle of wine. I didn't go clear to the center of the tree because I'm not trying to find out how old it is. I really just want to see how well it's growing. It pops a thin strip like the core of an apple. Darkened stripes mark how fast the trees grow. This is a nice tree for 34 years old, but you can see it's starting to slow down. So this stand will be ready to harvest in the next 5 to 10 years. He acknowledges that's much, much younger than the industry used to cut. But he said that's not because his company is owned by investors. He said it's because they've learned to grow trees faster. That and mills today want smaller logs. That's what they're tooled for because it's pretty much all that's available. Anderson's been a forester in Polk County under various companies for the past 40 years. The last 8 have been with Hancock. And there's nobody from outside of this area that has come in and told us what to do on these individual plantations. In its investor materials, Hancock touts both its sustainability and its high rate of financial returns. Mysticologists, the US Forest Service, and even many people within the timber industry have warned that investor driven forestry can be worse for the environment and for real timber towns. So this is the old mill at back in Falls City. Mayor Jeremy Gordon is standing in the empty lot that used to house the town's mill. He's dreaming about what it could be. I would love to see like a two or three story restaurant in Brewery or DeCyllery with some rooftop access views of the river in the fall. Old City is rebranding itself. It's like many struggling timber towns looking to outdoor recreation and tourism for its future. Investment fund forestry may have left Falls City surrounded by brown hillsides denuded of Oregon's famous green trees, but it still has the valley of the giants, with trees the size of redwoods older than the founding of the country. I've been talking about access to the recreation. That's a necessary condition, I think, for this community to thrive. One problem. The road through, it's owned by timber companies. Matt Corthel, the city administrator, said at any given time town residents or visitors could find locked gates blocking their way. I just don't think that's something that would sit well in the stomachs of the most Oregonians. And to know that there's a town right here that's, you know, suffering for lack of ability to support itself in many ways and that we have this giant asset right up the road that we can't get to because the big corporations have control over it. Timber companies closed the road during peak wildfire season, which also happens to be peak tourism season. They're also worried about vandalism. Hancock stopped charging people access fees near Falls City after getting grant money from the state. Warehouses are still charging up to $250 for a permit, but before you get to any gates, there's another problem. The road that leads out of town, it's falling apart. It's cracked like a jigsaw puzzle. Because it's a main road for log trucks, Corthel figured the timber companies should be willing to pay for the repairs. He said it took him nearly two years to get a meeting with Warehouse. The company said it was willing to chip in some if the city could get a road repair grant for most of the cost. If towns like Falls City were still sharing in the wealth from logging, Corthel said they'd easily have enough to fix that road. You see this entire industry disappear, and you're left still with these companies that have reaped these benefits, but those small cities that have supported them over the years are left and are dust. That's something that can't be fixed by repairing a single road. Though it's Tony Shick. Tony didn't get into it much, but the other surprising thing we learned while looking at clear cuts with Jerry and Norm and their friend, the fish biologist, Gordy Reeves, is just how much weaker Oregon's laws regulating logging are than Washington and California. In theory, there are laws that require that logging companies buffer streams and leave a certain number of big trees behind so that they'll act like a habitat lifebook for all the animals that call before us home before the logging. But in practice, there are loopholes big enough to drive a logging truck through. For all practical purposes, they can clear cut whole landscapes in a very short period of time. Part of the reason Oregon's logging regulations are weaker than our neighbors is that despite the fact that timber companies employ far fewer people and contribute far less to their local economies than they did back in the 80s, they've managed to hold on to much of their status and influence. And they've done that with the help of an obscure public agency called the Oregon Forest Resources Institute, and that's the focus in this third story in Tony's series. If you watch TV, listen to the radio, or surf the internet in Oregon, chances are you've encountered the work of the Oregon Forest Resources Institute. And we have strong laws to make sure our forests are replanted and well managed to protect wildlife habitat and water. These ads have been seen by hundreds of thousands of Oregonians, though the institute's polling shows almost no one knows who's behind them. The institute was created in 1991 when timber companies were reeling during the height of the timber wars. At their request, state lawmakers created the Oregon Forest Resources Institute, known as O-Free. They funded it with the tax on logging and gave timber companies control of almost all of the voting seats on its board of directors. Here's Aaron Isleman, the institute's director describing its mission. Oh, do you educate foreign unions, abortion practices through land on our education? In the decade since its creation, O-Free has done a lot more than that. Our investigation found that despite its educational mission, the institute has at times acted as a public relations agency and lobbying arm for the timber industry, in some cases, scurrying legal constraints that forbid it from doing so. It has on multiple occasions worked to undercut scientific research by public universities. Last year, its board discussed whether rushing a report could help stop ballot measures that targeted logging practices. A year earlier, top staff sat through private timber industry deliberations about attack ads opposing the governor's re-election. The institute's most visible work is the $1 million advertising campaign. Its overarching message has been that Oregon's forestry laws already protect the environment. Remember that our forests are being managed responsibly. It's why we have strong laws. Strong laws. Strong laws. Thanks to the Oregon Forest Practices Act. O-Free calls its messaging objective, but it has avoided publicizing information that could make Oregon's forestry laws look inadequate. The institute's ads often mirror the industry's lobbying efforts to resist more stringent environmental rules, like this one, featuring a father-son pair of loggers, holding a glass of water, and standing in a forest stream. This is Oregon Water. Oh, thanks, Dad. Hey, that's a prop for TV. And to remind people that Oregon has strong laws that help protect their watersheds. And besides, it's the right thing to do. Our investigation reviewed thousands of emails from the institute. They revealed many instances where O-Free's work was closely aligned with the industry's political lobbying. The institute's public employees also tried to undermine science the industry feared could result in unwanted policy. Our investigation uncovered four examples. This is just one of them, which started to play out in 2018. That's the Oregon State University's Beverly Law and Mark Harmon co-authored a study that identified industrial logging as one of Oregon's biggest sources of carbon emissions, which contribute to climate change. Here's Professor Harmon. It kind of undermined the role that they had been telling people they were playing, which was that they were taking up carbon on the land and storing it in products. The timber industry had spent years marketing logging as a climate solution. In a warming world, it promoted cutting trees down to store carbon in lumber, instead of letting trees burn in a wildfire. O-Free's director at the time, Paul Barnum, sounded an alarm about the study, telling two industry groups the findings were, quote, of grave concern to all of us in Oregon. Hours before Professor Law, the lead author, was scheduled for an interview on Jefferson Public Radio, Barnum emailed her college dean suggesting the study was built on faulty assumptions, and that the radio interview seemed like policy advocacy, which should be out of bounds for a scientific researcher. Law said she recognized the institute's tactics as the same ones used by the tobacco or oil and gas industries to push back on unfavorable science. It's the same playbook. How do you discredit scientists and then continue to hammer on them and try and prevent them from publishing more? Law said she later learned that the same criticisms of her study made by the institute became talking points used by Oregon senators. It's dirty tricks that it's just not in science. We don't do those things to each other. Barnum was the institutes director before his 2018 retirement. He sent Laws Boss a letter urging him to publicly announce a university review of the study's validity, Laws Boss, declined. My partner on this investigation, Oregonian reporter Rob Davis, asked Barnum about his involvement in the pushback to the carbon study. He defended the institute's actions. Historically, we have not felt it our role to be silent when we believe research to be biased, non-objective, or opaque. Did you think the harming law study was biased, non-objective, or opaque? There were aspects of it that concerned me, yes. Okay. What? I don't think we need to go into specifics about it, Rob. That's water into the bridge at this point. Barnum did acknowledge he made inappropriate comments, including some that impugn the researchers motives. William Funk is a professor of Law Emeritus at Lewis and Clark. He said the institute's pushback against Oregon State might have violated the law. They're using resources to try to undermine something that is in the public policy debate area. It may well be a violation of the statute. The institute's current director, Isselman, said she had solicited an opinion from the Oregon Department of Justice about what the institute is and isn't allowed to do under state law. She declined to make the document public, citing attorney client privilege. Isselman has been the director of the agency since 2018, and she defended its record under her tenure. She's been an evaporate under the highest ethical standards. And I would not take my reputation to do something that's unethical or to disseminate information that is factual. In response to our findings, a spokesman for Oregon Governor Kate Brown said Ofre's actions merit an investigation by the Oregon Government Ethics Commission, or an audit from the Secretary of State's Office. The institute hasn't been audited since 1996. Tony Schick, OPB. Though his OPB's Tony Schick, these three stories were produced through the ProPublica local reporting network, and they were co-reported with Rob Davis of the Oregonian and Leila Unis of ProPublica. Maya Miller also contributed reporting. This last story came out in August, and there's been some news since then. So I wanted to get Tony into the studio, by which I mean we're in our respective closets talking over the phone, although you said you're actually up in an attic, Tony? Yeah, I'm in a closet in an attic. Doing double duty. The only thing better would be a dungeon beneath a basement or something. Well, that's why I normally work out of it, but I don't get a signal down there, so I'm in an attic. So I wanted to pull the curtain back a little, because you did a huge amount of research in these stories that I don't feel like is immediately visible when we listen to it. I mean, I remember when you started, you had just these maps out of land ownership and tax maps and other tables, and can you talk a little bit about the process you went through as you were trying to figure out how much tax everybody's paying on their trees? Yeah, so the first step was figuring out who owns the forest, and that was trickier than I thought it would be. You can kind of get a vague sense of this patch of land is federal, this is private industrial, and for some of the big companies, you can figure it out. But the details of who owns exactly what piece of land is only kept at the county level. So we went to 18 different counties in Western Oregon and requested their data of their tax lots. It's like the official county recorders office keeps like this plot of land and this person owns it. And it all seems like fairly boring stuff. But with it, you can do a lot of stuff. You can track like we figured out who owns how much land, and the tricky thing about it was a lot of these things are kept in like LLCs of LLCs, and so there are stretches around a false city, which is where one of the stories that we just took place, where you've got one whole section of land that looks like it's owned by 10 different companies, but it's all the same company or all the same two companies. And so once we figured out ownership, we also wanted to figure out what kind of tax these companies were paying. And so the question we wanted to answer really was, what are Oregonians getting out of the force compared to what they were and compared to other nearby states? And so we ended up looking at something called a severance tax as we just heard about. And so what we needed to do for that was go through all these old timber tax reports from 1989, 1985, all the way as back as far as we could and gather all these different reports, I was checking stuff out from the state library of Oregon and have a bunch of stacks on my desk as you said. And so what we found was the rate that Oregon was taxing on this timber has just been, since the early 90s, been dropping and dropping and dropping and dropping and dropping. And it hasn't really been made up for in any other sense through any other taxes. Do that end, I mean talking about layers of LLCs and I think you mentioned in the story real estate investment trusts and and TEMOs, which is a timber help me out. Timber investment management organization. Right. So we've come a long way from our mom and pop landowners. Can you talk a little bit about these different financial vehicles that logging companies have transformed themselves into in order to basically rethink a plot of land from just trees to now an investment? Yeah, yeah, I mean once upon a time, you know, it made more sense. I mean the trees were seen pretty much just, they were seen as the fuel for your mill, right, what you would feed into your mill. And the end product was what was what you were focused on. And so you didn't really think of yourself as investing in trees. You thought of yourself as producing lumber. But now that's all been kind of separated and a lot of that has to do just with economic trends and a lot of it has to do with what happened with with the owl and how that changed the economics. And so now you've got you've still got some of the old guards, so to speak, you've got you know, Stimson, lumber, Hampton, lumber, making stuff in mills. You also have companies like Warehouse, which still owns mills, but they've undergone massive corporate changes to the point that they are technically a real estate investment trust, which means that on paper their primary aim now is not a company that manufactures but a company that invests in real estate. And so the trees are seen as, and the forest land is seen as a real estate investment and managed as such. And so you want, you know, in that you, you know, want different things to an extent. You'd want to be looking at the rate of return on the land itself as opposed to how do I get the most wood fiber out of this to go into my mill. And so that might mean, you know, cutting it and selling it on a shorter rotation, which we've seen and we've heard about. And it has tax ramifications for governments as well, right? Because real estate investment trusts are taxed differently than corporations. They are. So real estate investment trusts and these timber investment management organizations do not pay the same corporate taxes that an old school timber company would pay. They're paying, instead they're just paying a capital gains tax when it's passed to their investors. And so, you know, warehousing was able to cut its corporate tax bill significantly by shifting a few years ago from, you know, a traditional timber company to a real estate investment trust. And so you've got a lot less tax revenue coming in through these corporations. And you know, from the timber owners perspective, it just makes a lot more sense not to be taxed on it at a higher rate. And so you've also got companies who do still own mills. A lot of times you'll see the forest land kept in a different LLC from, you know, the name of the company. I'm really happy you were able to explore that because I feel like I wanted to go deeper into it and didn't get to in the podcast of Owls versus Jobs and that it was so much more complex and that there's much bigger business currents that were swirling around the industry. And yet that's the narrative that we still have is that spotted Owls shut this down, environmental ists shut down the forest, the severance tax has been forgotten. The last story we just listened to about the Oregon Forest Resources Institute is part of that bigger narrative and crafting the way we see the forests. You ended the story by saying it hasn't been audited since 1996. What happened since that story came out? Yeah, so a few weeks ago, Governor Cape Brown announced that she was calling for an audit from the Secretary of State's Office to audit the Oregon Forest Resources Institute. And that is now underway. The other thing is that lawmakers in this upcoming session have signaled that they are going to take a close look at the Oregon Forest Resources Institute. And also at the severance tax and wildfire funding and just a whole slew of forestry issues, it looks like it's going to be a pretty eventful legislative session as far as forest issues go. Obviously, I don't know what it's going to look like, but I think a lot of these things are going to be up for discussion, which should be interesting to see. And which comes on the tails of this past year where there was, what was touted is this big compromise between environmentalists and logging companies around some new restrictions on aerial spring of herbicides. Right. Yeah, which was pretty monumental or has the potential to be a pretty monumental agreement. The first domino in that was aerial spray restrictions around certain buffers for streams and things like that. And notification of when pesticides are going to be sprayed from helicopters. And there's going to be some interesting discussions going forward because that was just part of a bigger negotiation over the future of Oregon's environmental rules for logging the Forest Practices Act and what it does to restrict logging and protect habitat for salmon and other species. So that will be something to watch for sure. So Tony, you have a little bit more reporting to come for us in another bonus episode. Do you want to give us a preview? Yeah. Yeah, we've been looking at not just the economics, but also some of the ecology of all this. And as you've noted in recent episodes, Oregon's just devastating fire season. After that fire season, there is a lot that came out about essentially blaming the lack of logging and blaming federal forest management and how it's changed. And we dug into that. Found it's not really that simple. Excellent. Tony, thank you very much. I will look forward to talking with you again a couple of weeks for that episode. All right. Thanks, Eric. Take care. You can find the full series of investigations that he did with Rob Davis at the Oregonian and pro-publica at our site, opb.org slash special reports slash timber wars. I also highly recommend that you check out Rob's reporting into the influence that industry has over environmental laws here in Oregon. It's called polluted by money and it's on the Oregonian's website. Thank you for listening. We'll come back in a couple of weeks with some more reporting from Tony as well as a little treat involving greater sage growth.