History of the Federal Sustained Yield Units?

Folks, an acquaintance has asked for help in finding information about the 6 Federal Sustained Yield Units established under the Sustained Yield Forest Management Act of 1944. I know a little about the Lakeview unit, the only one that still exists, I think, but nothing of the others. What happened to the others — Vallectios, Flagstaff, Grays Harbor, Big Valley, Shelton? Anyone know of a paper or article that looks at these as a group?

8 Comments

  1. Steve, “Community stability in forest-based economies ” edited by LeMaster and Beuter includes a good history of sustained yield and the creation of sustained yield units, but not a lot of detail on why some persisted and some did not. A quick search generated this article from the Journal of Forest History, which looks promising: http://foreconshist.oxfordjournals.org/content/31/1/4.full.pdf. Good luck to your friend. This is a very interesting part of national forest history.

  2. Steve,

    I have a boxful of references as my graduate work was titled, “Privateering in the Public Forest.” The British Columbia Tree Farm Licence was modelled something like the Shelton Sustained Yield Unit and our Forest licences look something like the other public sustained yield units. I also worked on the Olympic both for the forest service and an Indian Nation. The contract between Rayonier and the Government to cut the Quinault reservation also work like the Tree Farm Licence.

    I also have worked with the Canadian Model Forest Network. The US model forests did not reach their potential for similar reasons the public sustained yield units also did not reach their potential.

    I would love to talk with your acquaintance.

  3. My comment is from memory, and as usual, memories are certainly not to be wholly trusted. I can take criticism. Married, with children. Some will understand.

    The Gray’s Harbor Working Circle unit kept the Harbor wages and economic indicators above the adjacent county averages in wages, employment and for indicators, which the Feds thought “unfair” in time, and in 1986 let half the available timber go to out of working circle bidders. I have my suspicions it was a Weyerhaeuser lobbied deal, as Weyco couldn’t bid on SBA set asides, had export liability as per “substitution” when buying Federal timber, and could not compete when log hauls got longer. Weyco went through their larger dbh fee timber, in the export frenzy from 1960 to present, and got out of the milling business in the Harbor area. And even paper. Sold all their pulp and paper operations to International Paper. No monopoly investigation of that deal. IP immediately closed a half dozen Kraft paper pulp and paper operations, including ones Weyco had recently bought in the Willamette Ind corporate raid. Fewer goods being produced and shipped, thus reducing needs for packaging. More digital storage of data. And, lots of paper coming in the import market packaging, so IP shifted over to recycled paper use.

    On the surface it appears Weyerhaeuser is selling “fog belt” timberland, along the coasts of Oregon and Washington, that grow hemlock, spruce and cedar, lesser valued trees. If planted to doug fir, the ongoing Swiss Needle Cast problem slowing and stopping doug fir growth, also has resulted in their selling what they own of that type of site. John Hancock Ins Co has been a big buyer, now closing in on a million acres of that site land type, and we see that CalPERS has bought that kind of land in Clatsop county in Oregon from Weyco. The fog belt rainforest species have export value at times, and were the fodder for pulp mills before imports and recycled cardboard, liner board, and paper became abundant. Life insurance terms of contract length and managed forests to harvest on that site almost share a like time frame, and the John Hancock deal makes sense. And so does the long term return to a public employee retirement system, as rotation length and employment lengths are similar. Insects and fire are the only risk, and wind maybe. Fog belt fire is rare. Hemlock loopers come along periodically, but what, in 5O to 100+ year intervals? Long aphids? Spruce have leader growth tip issues with insects. All in all, probably a good long term investment, and that is what insurance companies and pension funds are about.

    Merchantable timber inventory to a publicly held company is lethal. It will cause you to be bought out and the premium will be paid in a fast liquidation of the available saw log timber. The company can then sell again, and whoever buys will match their growth with logging, sure to not have more than a year’s worth of merch inventory, which is really doable in high growth sites.

    The mills that were suddenly able to bid on USFS sales in the Gray’s Harbor Sustained Yield Unit in 1986(?) had maybe two years, to five, to buy timber after that change, and then the Clinton Forest Plan essentially ended the whole deal (Olympic Peninsula NSO were thought to be flying squirrel dependent, and therefore had the largest home territories, 3000 acres + per found pair). The Gray’s Harbor Unit might still exist but has little to sell with Marbled Murrelet and NSO reserves, other issues, plus the never ending planning process that never is quite good enough to pass muster to result in a sold timber sale. Mills closed, and the Harbor is a log export deal today.

    There were indications that the failed nuclear power plant fiasco (WUPS?), with two of them sited and mostly built in the Gray’s Harbor working circle, contributed to higher average wages and incomes. For the time period determining that conclusion, “fair” competition would produce a decision to let half the USFS offerings be bid on by entities not in the Gray’s Harbor working circle, counties where incomes were less and the workers needy. Socialism was expanded until it no longer worked, as it usually ends. Too little spread over too much.

    We will never know because “stuff” gets hidden and lost over time, but in my mind’s eye, the whole of the opposition to Federal timber sales and logging was fomented and financed by Weyerhaeuser, and other large timberland owners. Who has financially benefitted more from a constrained timber supply than the companies that owned the most private timberland in the West? Who has the most and largest clear cuts and monocultural forestry? The least biological “diversity” despite years of calendars showing wildlife by the best illustrators in the US? The environmental community has held them harmless, all in all. Why? No more competition in the lumber market by those pesky gypo mills with truncated chains of command and the ability to morph into whatever they need be to access Federal timber and sell a product the market wanted at a profit. As Little Annie Fannie was to tell us, “What is good for General Bullmoose, is good for America!” Hard charging capitalism using a public resource. Once upon a time….

    I remember the week in 1989 when the mill I worked for was notified by our bank that our inventory and receivables financing was done in thirty days. Our “credit line”, as it were. We could borrow 60% of scaled value on log decks and lumber inventory, and when we shipped lumber, we could borrow 85% of the invoice value, receivable, all to have short term financing. All that we owed or had financed had to be paid back in 30 days, or the bank was coming after assets. We had to find another source of financing. We were very profitable. As I looked for other financing, a job I somehow was tasked with, I was to find out that mills bigger than ours, with much higher cash flows and financing needs, had also been dumped by their banks, including if I remember correctly, Roseburg Lumber. A wholesale dump of sawmills by banks, in one fell swoop. Of course, all of them somewhat dependent or entirely dependent upon Federal timber sales. Coincidence? I wonder. Or was it bank “board of directors” composed of executives from other industries making the decision? Like pulp and paper, big timber executives.

    The dramatic downturn in timber sales offerings, and the upticks in stumpage prices probably drove the banking decisions. But, we stayed in business for two years buying logs from the log market. And then the boss folded his tent and sold the mill at auction, the pieces and parts going for a dime on the dollar, much of it computerized and less than five years old. That mill, and 300 like it, are no longer there to cut a Federal log if it were offered for sale today. You can’t increase the flow of logs off Federal land by very much, because the milling capacity meets the present log and timber offerings from all timberland producers, and if there are too many logs offered, the export market takes the overflow off private land to keep prices up. There is no “overflow” device for public timber purchasers. The export sellers can’t buy Federal timber anyway, due to substitution regulations. The “system” is pretty much rigged to a status quo, and profitable. Now you tell me where you think the opposition to selling public timber REALLY came from. I am of the opinion that to find out, you have to “follow the money.” Todd True charges $650 per hour for his EAJA billings. Bright people are not working for free.

    Owners of wood lots and small timberland parcels are imprisoned, in a sense, as their market is mostly mills with their own timberlands that closely match their timber needs. So the “smalls”, none owning mills, can either sell at a discount to the local monopoly, or haul to another mill, where the price will reflect the extra haul costs, but not much more. Export offers competition, and keeps log values up, local taxes paid, and local loggers and others in work. Export has a place, serves a need, and is essential for competition in a far different market from two or more decades ago. All larger Federal timber offerings will do for woodlot and small acreage owners is reduce the value of their holdings, and they are 40% or more of the private timber holdings. Unintended consequences can ruin the best of plans, and produce the ugliest of results. Even for people who only log small amounts, infrequently.

    Lots of obscure trusts and foundations rest at the core of the legacy of those big timber outfits, and no end to great, great grandchild trust puppies with plenty of coupons to clip and preferred stock dividends, even in years of no profits (re: past stockholder lawsuit claiming Weyerhaeuser family preferred stockholders in Potlatch getting dividends when Potlatch was losing money. Now Potlatch is an REIT). How much and to whom they might write checks because IRS rules mandate trusts pay a percentage of value annually to charity and assistance to NGOs or whatever cause, is not widely known, if at all. And there are millions getting tax deductions giving to tax free non profits. My opinion is only a face value peek at the winners and losers in the “timber wars.” Who gets the money and how has it been used?

    As one of the top ten fortunes in America, the Weyerhaeuser entity in all its forms is an exclusive, low profile company and wields a huge amount of political power and influence, much of it out of public view. I also see they are still viable, in business, and still powerful enough to have prevailed on former Senate Finance Committee Chair Baucus to give them a tax break worth $172,000,000 when Baucus got the Montana Lands Bill and financing through Congress a few years back, whereby Plum Creek got to sell over 350,000 acres of their fee simple land AFTER they logged it once again, for a price of about $1300 an acre, to the USFS, State of Montana, or any local government in Western Montana. (Driving the issue was to keep the checkerboard PCT lands, PCT an REIT, from being sold to private individuals and creating a wildland fire protection and suppression problem…so get it into US hands so they might just let is burn “naturally.”) All paid for with appropriated Federal funds. Weyco had yet to make it through the REIT transition, and felt they were at a “disadvantage” due to the largesse extended to PCT. So like a spoiled rich kid in the sandbox, they threatened, we might believe, to bollox the deal if they didn’t get equal attention and profits. They did, by golly, with a generous tax break just for them. Baucus is a fair gentleman with OPM (other people’s money). Gee. I admire Weyco for being such astute and deserving keepers of the public trust and looking out for their stockholders. And Baucus! What a guy! Why you’d think he was from Iowa the way he “brung home the bacon.” He will make a great ambassador. He is being replaced as Senate Finance Chair by Oregon’s own New York senator, Ron Wyden.

    An after thought: I was working for Weyco on the rigging in 1966, when our side got a big Skagit I-90 yarder and a T-110 tower from Northern California, that had been working in Weyerhaeuser’s Rottiscraft Door redwood holdings. One stout machine for those days. Weyco had sold those holdings, that year, to Simpson Timber Co of the Shelton Working Circle. I have always wondered how Weyco knew to get out of the redwood timber business ahead of the condemnations and creation of the Redwoods National Park. And Simpson, who is today successfully managing about 350,000 acres in NorCal, has done a lot of NSO research and documentation, and has shown second growth redwoods growing off root sprouts from old growth redwood stumps, form a circle of fast growing, large dbh trees, which give good security cover to NSO. Add the many varieties of oaks, chinquapins, hazelnuts, and other deciduous plants to nurture white footed wood rats in abundance, and a pair of NSO can make a good living on a quarter section. So Simpson logs, and Simpson is out there right now killing barred owls under USFWS permit to keep them from dislocating Northern Spotted Owls. Simpson has a managed tree farm that has the most secure, abundant, successful NSO populations in the whole of their range. I would offer that one could expect that in the epicenter of any critter’s habitat. All of it managed forest, under the most stringent forestry regulations in the nation, all in a situation which cannot happen on public lands because…just because. Can’t be done. No. No.
    Where does Weyerhaeuser get their prescience? Is that, too, one of those interlocking boards of directors deals? They seem to know what is going down a long time before the press, the other industry and parallel government agencies, and the public at large. Is it because they are the ultimate insiders in a rigged game? Only my musings. Wonderment, actually.

    Weyco sold their Klamath county pine holdings in the 1980s to a company formed by a former President of Roseburg Lbr. Perhaps the Lakeview Working Circle still is functioning, going strong, because the participants are no threat to Weyerhaeuser and other large timberlands owners since Weyco divested themselves of ppine timberland and milling in that area. The companies in the working circle are well managed, and live within their means. Some have said their private holdings are the best managed in the West. The result has been good for the Federal forests. No export demand and way too far to ship logs to a port from the local private timber economy. Perhaps it works because there are no big public timber company feet to step on.

    I might add that Lake county, Oregon, has an old trust to send kids from Lake county, graduates of the county high schools, to college. Daly Foundation. Doc Daly was the family physician for my father’s outfit at Fort Rock. The trust fund has existed since ?1926?….produced some great results. I think there are other foundations, from local mill and timber interests, that have similar trusts. Logging is supporting higher education in that area, as good or maybe better than any place in the country. No way to measure that as a result of the Working Circle concept. Someone else will know much more than I, and would report in how many college trust funds exist in the under 7000 population Lake county.

  4. John is right about the privates stymieing public harvest. I was at the Logger Bums Convention in Spokane about 5 years ago when Forest Capital’s guy (along with Mike Covey (PTLCH, former PCL) and I think PCL’s Tom Ray) was honest and said public wood competed with his private wood.
    I was not surprised, but still shocked. I turned quickly to two other mucketies with whom I’d had discussions (and arguments) about the same issue and they were both deer in the headlights. That night, I sat down the logger boys and said — No New 445 for you. They kept the old one running, and are still solvent.
    John is also correct about PCL’s rent-seeking through Baucus. 250 mil in federal backing targeted only at the Nature Conservancy, all to vastly overpay for slicked off ground that was PALCO-ized physically by Plum Creek. I smelled such a skunk on that deal, I did a full NPV analysis after prying inventory data I should not have. Net present value was, at best, 165 to 310 dollars per acre based on rotation and growth, on average. In other words, the PCL ground could be had in the market for 50 million, not 500 million. The state of Montana could have done that easily.
    But guess what….nobody in the industry will back me publicly. Privately, oh, yes, but while these guys still draw checks, they are silent.

  5. Good comments.
    All that makes it about impossible to turn the public forest management ship around. Seems like the proposed deals, Wyden and Defazio, are to give “Weyco”, access to O&C lands, and the rest to wilderness. Another poor sellout at best.
    The mills that are left are going to need more timber while their own, and the grounds of the privates, big and small, grow back. Remember for the last 20 years its been almost all private ground supplying the market.
    I am not even sure we have the knowledge base any more in the Forest Service to properly manage our forests.
    But they are our lands and once in awhile, wise decisions are made.
    I remember in late 80’s when it seemed everyone knew that timber management was going to have to change there was talk of thinning your stands and having mixed species. After a few years of the Clinton plan, when most realized that was the end of the big trees, and most everyone shut down or retooled for small logs, that was the end of thinning on private ground and seems like everything went to df plantations, the environmental groups never said a word. They seem to spend most their efforts making sure that none of the valuable, salvageable
    timber from our public land flowed to the local communities.

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