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Bemidji Day at the Capitol: Panel hears forestry questions

Rep. Denny McNamara, center, R-Hastings, chairman of the House Environment, Energy and Natural Resources Finance and Policy Committee, ready to talk issues with a Bemidji Day at the Capitol delegation with Reps. John Persell, left, DFL-Bemidji, and Dave Hancock, R-Bemidji. Pioneer Photo/Brad Swenson

ST. PAUL -- "I'm a tree guy," says Rep. Denny McNamara, R-Hastings, chairman of the Minnesota House Environment, Energy and Natural Resources Finance and Policy Committee.

For 30 years, McNamara was in the landscape, nursery business, "so I like growing trees, cutting trees, selling trees, buying trees, all that kind of stuff," he told a Bemidji Day at the Capitol delegation here Tuesday.

Flanked by Reps. John Persell, DFL-Bemidji, and Dave Hancock, R-Bemidji, both panel members, McNamara told the delegation that the panel would be taking up the issue of spearing on Cass Lake and of mercury levels in the air. The panel already passed legislation lifting a ban on coal-generated electricity from North Dakota.

The Bemidjiians asked about forestry issues, that the Department of Natural Resources be fully funded to provide forestry management that meets the demand for wood.

A lot of DNR workers took early retirement, McNamara said. "We may have the opportunity to use the private sector here to supplement what DNR is doing. ... We need to move that forward; we don't want people not cutting because we don't have DNR people to mark them (trees)."

Through the Great Recession, where wood comes from has changed greatly, said Jack Wollingford, general manager of Norboard Minnesota, located at Solway.

"The biggest shift in the forest products sector since 2005 has been in terms of land ownership bases," he said. "Not everyone is contributing equally."

In the early 2000s, most of the wood coming to market came from private lands when prices were higher, Wollingford said. "The markets crashed to correct that."

At one time, wood could be procured in the Southeast at $22 a ton but in the upper $40's locally, he said. "That's not good when that cost is only 20 percent of their cost structure and 40 percent of our cost structure."

The shift that has occurred has seen Norboard taking 38 percent of its wood from private sources and 30 percent from Canada in 2005, and only 32 percent from public sources, to 82 percent today from public sources.

"We rely very heavily from public sources of wood," he said. "The counties are about 43 percent and the state about 24 percent of our wood base. We have good supply and demand balance right now -- what is being marketed is all being bought and there's really not much excess on either side."

The risk for Norboard, he said, is if the DNR doesn't have adequate "boots in the woods" and the timber volume becomes reduced, that could constrain the company's business.

The state needs to put up about 1 million cords a year, he said, while it is planning for 800,000 cords.

"The issue is does the DNR actually have the foresters to put that wood up," Wollingford said.

With the state generating about $20 million a year in stumpage fees, it could gain even more revenue for the short-changed state budget if more wood were prepared for sale, said Bill Sanford, general manager of Lakeland Public Television.

"By adding some more people to manage that resource, the companies can hire more people, the state could net some money, it's a win-win," Sanford said.

"There are plenty ramifications if we have enough personnel, the real commitment, to do that," said Hancock. "The model I've heard is that of the three-legged stool -- we want to protect the environmental concerns, that's obvious to all of us. We also want good public usage of the lands and that's an area that's important. The third leg is the economics of it."

A good job has been done in protecting the environment, and Minnesotans do use the resources, Hancock said. But more work is needed on the economics of the resources. "We have an abundance of forest lands, it's one of our greatest resources in Minnesota. And we should use it with good stewardship and also use it to maximize our economic viability as well."

"We don't want to see not being able to harvest," McNamara said. "Many of us come from a business background and we understand some of those basics of what makes it work."

At a later meeting with the Bemidji delegation, Senate Minority Leader Tom Bakk, DFL-Cook, suggested that the wood products industry may be diversifying from a timber-based economy to an energy economy.

Sen. John Carlson, R-Bemidji, invited Bakk to visit Deep Portage, where it is experimenting with a wood gasification heating plant.

The state needs to incentivize biomass energy, Bakk said. "It could be that the highest and best use of our trees is not for lumber any longer. ... The highest and best use might be for energy."

If plants aren't cutting aspen, they can't get the residual trees they need to operate the plants, Bakk said. "When the board plants went down, we lost 1 million cords of aspen production a year. And then you lose all the residual cuts that aren't part of the dominant species."

That leaves plenty of opportunity for biomass, he said, especially on the Iron Range where the kilns run at 2,400 degrees. Minntac is running some lines on dry sawdust hauling from as far away as North Dakota cabinet shops.

The material must be dry, he said, as green material costs more. By the time biomass is dried in fed into mining company kilns, it costs about $6, compared to $4 for natural gas per comparative unit.

"If we can find a way to create an incentive so that we can make green biomass competitive for energy in the mines, there's going to be a huge market," Bakk said.

Natural gas can't be used commercially on the Iron Range because it's too close to the Boundary Waters Canoe Area and Voyageurs National Park, he said. Nitrous oxide from burning natural gas creates a blue hue in the air, against the law in pristine areas.

"You can't put haze in the sky," Bakk said. "We can't switch from coal to natural gas because of the NOX issue. But wood doesn't have that problem. The mining companies would really like to use more wood if we can figure out how to make it more competitive."

The House environmental committee is working on streamlining the permitting process between the DNR and the Minnesota Pollution Control Agency, which may indirectly help an Iron Range firm, PolyMet, to acquire permits to build a non-ferrous mining operation.

So far, Hancock has been in favor the legislation and Persell against.

"There's a fine balance on where we end up on that," McNamara said. "I think we can mine precious metals in northeastern Minnesota and protect the environment. But we're only going to get one chance to do it right to begin with, and that's PolyMet. If we screw it up, that whole industry is going away forever and we won't be able to touch it with a 10-foot pole."

MPCA is in conflict, he said, because it is supposed to protect the environment and yet issue permits to companies that pollute.

Persell said he supports non-ferrous mining but "we have to do it right, or we lose billions in tourism. And we have to do the logging right or we lose. We're right in the middle of it."