USFS to grant Tricon Timber project an extension

A quandary that threatened the existence of one of the few large sawmill operations left in Montana moved toward resolution Friday evening.

A spokeswoman said Sen. Jon Tester had just received written assurance from the U.S. Forest Service that Tricon Timber’s Aug. 12 deadline to complete an expensive helicopter logging project near Thompson Falls will be extended if a permanent agreement isn’t hammered out soon.

“That’s the best news I’ve heard in quite awhile,” said a relieved Ken Verley, who owns the St. Regis mill.

The letter from Faye Krueger, new head of the Forest Service’s Region 1 headquarters in Missoula, came in response to Tester’s letter dated Thursday that urged prompt action to formalize a verbal agreement reached last month and to relieve the anxiety of Tricon and its employees.

“As you can imagine, they are rightly concerned that the agreement they reached with your agency in May is not yet formalized on paper,” Tester wrote.

Verley, who has been working with Tester on the problem since March, thanked him for forcing the Forest Service’s action.

“We couldn’t get those guys to tell us nothing,” Verley said. “It took pressure from the press and the legislators to get them to move. We’ve been working on this since August, and all we’ve gotten are cancellation letters and refusals to extend. If they’re telling Tester’s office that they’re going to conditionally extend, that’s a good thing.”

Verley said Tricon could lose $7 million if it completes the timber cuts on the 2003 “Game Range” purchase and three others in northern Idaho. All require helicopter logging to lighten the footprints on steep terrain.

“We bought them when the housing market was at its height, anticipating that it would stay there,” he said. “Of course, we all know that hasn’t happened, so now we’re faced with dealing with these high prices of helicopter sales.”

It’s difficult even to find someone to log by helicopter these days, Verley added. “There are only a few left in the country that will do it, and it’s very, very expensive.”

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The Forest Service, bound by its own regulations, formally threatened to bar Tricon from future contracts on federal lands if didn’t hold up its end of the contract. A 90-day notice sent in May said as much, in what Region 1 spokesman Phil Sammon called “boilerplate language” contained in all such Forest Service legal documents.

Tricon stood to receive a 60-day notice next week and a 30-day notice on July 12. Krueger’s letter promised that a process to grant a deadline extension would be initiated if a formal agreement isn’t in place 30 days prior to the contract termination.

“We have no thought Tricon is going to have to default,” Sammon said before Krueger’s letter appeared. “They’re a long-standing company, they’ve got deep ties to the community, and they’ve done a number of outstanding projects and a lot of fine restoration work for the Forest Service.”

Verley said Tricon employs 200 millworkers and supports 500 to 600 subcontractors as well as auxiliary businesses that keep the mill and its trucks running. Loss of Forest Service timber contracts in a county (Mineral) that’s 86 percent federal land would be Tricon’s death knell, he said.

An in-depth plan to address Tricon’s situation is at the Office of General Counsel in Washington D.C.

“We are working on the final details of a proposal with our Washington office, and we anticipate in the next few weeks to extend an offer of further relief to Tricon,” Sammon said. “I can’t talk about the details.”

Krueger’s letter to Tester said the Northern Region’s renewable resource staff is working with headquarters in Washington, D.C., “to develop a fair and legal process that would provide for mutual cancellations” of the helicopter logging portions of the Thompson Falls sale contract.

Sammon said the 2008 farm bill provided two options for relief for mills with onerous timber contracts. One is to grant contract extensions in 30-day increments to “hopefully spread the length of the contract over a longer period of time and lessen the impact they might have from a declining market.” The other is a rate re-determination, to adjust for reduced market values and increased costs to contractors in these hard economic times.

Since then, the Northern Region has granted 45 contracts and reduced the values of 40 contracts by 40 percent to 70 percent. Sammon said the Forest Service is required to ensure no individual contractor receives an unfair competitive advantage with its relief agreement.

“A lot of these contracting regulations are very detailed,” he said.

The Forest Service relies on timber contractors like Tricon to help carry out a variety of programs.

“Watershed restoration, for example, is a big part of what we do, and these timber contracts are vital to our being able to restore watersheds and maintain their functions,” Sammon said. “It’s a real key component. So it’s not in our interest at all to see any timber contractor not be able to stay in business.”

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Both Max Baucus, Montana’s senior senator, and Rep. Denny Rehberg received word of Tricon’s plight and a plea for help from Mineral County commissioners earlier in the week.

Baucus followed up Tester’s letter to Krueger with one of his own on Friday. He noted Mineral County’s double-digit unemployment rate, and said, “Given the ongoing fragility of timber mills in Montana, I urge you to reach an agreement with Tricon – the largest employer in Mineral County – before the expiration of the contract in August.

“As we all work to rebuild a healthy logging industry in Montana, prompt assurances in cases like this are invaluable.”

Rehberg spokesman Tom Schultz said late Friday afternoon the congressman has received verbal assurances from “a high-ranking Forest Service official” that relief was on the way to Tricon. Rehberg vowed to follow up Krueger’s decision with a letter to Forest Service Chief Tom Tidwell.

“With this many jobs on the line, Denny intends to do everything he can to see this process through to resolution,” Schultz said.