Holbrook, AZ — As I begin, let me be clear about one important issue. Navajo County and I personally, continue to appreciate and support the outstanding work performed by our local Forest Service friends, District Rangers and Forest Supervisors who have been tirelessly dedicated to developing the Four Forest Restoration Initiative (4FRI) with us. I imagine that many of them must be as frustrated as we are to see the result of our collective efforts jeopardized by the decisions coming down from the Regional Contracting Office in Albuquerque. I can only hope that taking a hard look at real issues will honor their work and produce real progress on 4FRI. With that said, I am hopeful that Mr. Cal Joyner, the newly named Regional Forester in Albuquerque, NM, will take a serious look at the direction 4FRI is headed. I am told that we are very lucky to have Mr. Joyner in his new position, and I welcome the chance to walk through these issues with him.
For nearly 7 years, Navajo County and other eastern Arizona counties have strongly supported the unprecedented effort between industry, environmental interests, diverse stakeholders and local government to exponentially increase the number of acres annually thinned in northern Arizona's national forests from several thousand to over 30,000 per year.
On more than one occasion, I have traveled to Washington, D.C., and Albuquerque, NM, to meet with the Chief of the US Forest Service, high-ranking officials at the US Department of Agriculture, the Regional Forester who was in Albuquerque, Corbin Newman, and their respective staff members. The purpose of all these meetings was to discuss the importance of the 4FRI as both a nationally recognized model for collaborative work in our national forests, but more importantly, as a solution for the catastrophic wildfires that have destroyed or severely damaged over one million acres on the Mogollon Rim of Arizona.
The issues that I, and many others, have discussed with these local, regional and national leaders are well chronicled, and among all those conversations I repeatedly stated that the only thing worse than not issuing a contract would be issuing a contract to a bidder that could not finance and would not perform. As predicted, the worst has happened.
On May 17, 2013, the Forest Service issued a press release marking the 1-year anniversary of the awarding of the contract to Pioneer & Associates. The overreaching tones of the Forest Service's statements in that release leave an impression that real progress is being made on the ground.
For over a full year, since May 2012, Pioneer, the contractor selected by the Forest Service, has made repeated attempts to secure financing for their operation. All have failed. According to Pioneer, and now the Forest Service, market conditions and a bad economy are the culprit. I have thought about the May 17th press release and the lack of substantial progress that I see, and I feel compelled to make some observations.
Can we still believe that market conditions and a bad economy are the problem? In their press release of May 17, 2013, the Forest Service said, “Due to current market conditions, the contractor – Pioneer Forest Products – may complete the work with multiple entries over 18 months, rather than completing all the work with one entry into the area.” This statement and the reality of the market are inconsistent. The housing market seems to be making a strong recovery, the salvage projects on the Wallow Fire are booming and the OSB market is the highest it has been in years. It seems to me that market conditions should be perfect to get financing for a qualified contractor with the largest ever stewardship contract. How can we believe that Pioneer's continued failure to fund their project is market related?
Are we to accept that 1,000 acres of treatment by Pioneer over the next 18 months is a step in the right direction? In their press release of May 17, 2013, the Forest Service said, “This is the beginning of restoration work that will treat an average of 30,000 acres per year on the Coconino, Kaibab, Apache-Sitgreaves and Tonto National Forests over the next nine years and is an important step for the 4FRI – a 20-year plan to restore 2.4 million acres of ponderosa pine forest in northern Arizona.” Based on the Forest Service's own previous statements, the 4FRI implementation schedule called for 15,000 acres to be awarded (and assumedly cut) in 2013. Now the expectation seems to be for 1,000 acres over 18 months. If this is the new pace of 4FRI, it would take 450 years to implement the 300,000 acres awarded to Pioneer under the 4FRI contract. How can we believe that this is good news which is worthy of celebration?
I want to be clear that I am not criticizing the sub-contractor who is taking the 1,000 acres for Pioneer. A job created or retained is a good thing for northern Arizona. Instead, I wish to state that it is hard for me to believe that the 4FRI contract is still being managed by the implementation schedule required in the Request for Proposal that the Forest Service issued. There is a monumental gap between what 4FRI was supposed to be and what it has turned into. There should be a significant increase in jobs, production and logs coming out of the forest, but there is none.
In his January 2013 update, Acting Regional Forester Gilbert Zepeda stated: “In late January, 2013, Pioneer Forest Products submitted a request to extend the date by which they secure financing. The Forest Service is reviewing their request and will either approve or deny within the next several weeks. If an extension is granted, it is expected to contain very specific deliverables and dates in order to show progress. The Forest Service will consider meeting these dates to be conditions of the contract and, if they are not met, will follow the appropriate contractual procedures to either remedy the issue or terminate the contract.” This statement was made four month ago. I am curious to know what specific deliverables and dates were included in the extension in order to show progress because I want to know if the Forest Service is keeping Pioneer accountable. This project is too important to let things slide.
Fundamentally, how are we to believe the Forest Service when they say that this contract provides for treatment of 2.4 million acres over 20 years, when the first year saw no activity whatsoever; the second 18 months are already down to 1,000 acres; the financial updates from Pioneer are not credible; and, the Forest Service is now powerless to enforce a date by which Pioneer was supposed to secure financing? If this is the Forest Service's game plan for the next 18 months, the time has come to hold the Forest Service accountable. It is tragic that nothing is going to be done by 4FRI to mitigate catastrophic wildfire risks this fire season, but it is beyond irresponsible to sit by and wait till we are completely through the 2014 and 2015 fire seasons for Pioneer to only thin 1,000 acres. In good conscience, I cannot accept that this is the best plan for Arizona's forests. The enjoyment, custom, culture, health, safety and economic well-being of our communities deserve better than this, and I call upon the Forest Service to do something about it.
Let me repeat: in January 2013, the Forest Service stated: “If an extension is granted, it is expected to contain very specific deliverables and dates in order to show progress. The Forest Service will consider meeting these dates to be conditions of the contract and, if they are not met, will follow the appropriate contractual procedures to either remedy the issue or terminate the contract.” How can the Forest Service stand at the opening of June 2013, and say that Pioneer is in compliance with any specific deliverable and showing progress when 1,000 acres over 18 months is the best that can be expected? The Forest Service should not be able to say one thing and do another, but they are trying to do just that.
Why is the Forest Service allowing this to happen? During the 8 months that the Forest Service reviewed the proposals submitted by bidders, they issued 6 amendments to the 4FRI Request for Proposal (RFP), presumably to allow bidders with incomplete business plans to still be able to bid, then to allow the Forest Service to do a thorough job of evaluating the business plans which were submitted. Several of those amendments, particularly the sixth, were devoted to obtaining information about the bidder's financial standing and ability to obtain funding for their proposed projects. Is the Forest Service still using the same failed evaluation criteria to ascertain if Pioneer can get their funding?
The premise of 4FRI is that landscape fires can only be mitigated at a landscape scale, and that the volume of wood taken from the forest will provide the economies of scale necessary for a contractor to invest in an appropriate scale industrial facility and earn a profit instead of asking the taxpayers to subsidize the project. Has the Forest Service asked itself how they are going to pay for all the work done on 4FRI when the contractor is only going to cut 1,000 acres for the better part of two fiscal years? I don't believe they have, but they should. Quickly.
On June 2, 2012 I made the following statement in a letter to the editor regarding the Forest Service's decision to award the 4FRI contract to Pioneer, “We have tolerantly waited for the United States Forest Service to analyze the bids submitted for 4FRI's first contract. From the outset of 4FRI, we have assumed that a winning bidder would need to clearly demonstrate: 1) the strongest business model centered around small diameter wood harvesting and utilization, proven technologies, and established markets; 2) the most substantial financial return (or cost offset) to the federal government; and 3) a proven ability to actively collaborate and build strategic partnerships with key community and environmental stakeholders.”
Everything tied to that statement, and all of Navajo County's analysis at the contract awarding back in June 2012, including our deep concern about the ability to finance, turned out to be verified by actual events. Planning to turn tree limbs and needles into cellulosic bio-diesel; planning to turn juvenile pine trees into finger-jointed furniture panels, and ignoring the social license component of the project were unrealistic. This is because cellulosic biodiesel has never been produced profitably at an industrial scale, and because, as indicated in the Forest Service's own research, the U.S. wood furniture industry is struggling against offshore competition. My hope and focus from the outset of 4FRI was to have proven products that could be sold in proven markets. The experimental nature of Pioneer's uses for the wood caused great concern to me because I did not feel that they met either of those criteria, and could not be financed easily. I hope that the Forest Service will now consider the concerns that we have raised on the 4FRI Draft Environmental Impact Statement (DEIS) as expressed in our NEPA comments more seriously that they did the concerns we raised about contract awarding, since the County has proven to have a track record for reliable analysis.
I cannot state strongly enough that northern Arizona generally, and Navajo County specifically, need the work outlined in the 4FRI contract to succeed. Unfortunately, based on what I have seen and heard from the Forest Service Regional Office in Albuquerque, and not seen or heard from Pioneer, I think it is time to ask the Forest Service if they really believe what they have written. I, and many others, have critical concerns regarding the viability of the overall effort given the inability of the Forest Service to analyze a business plan.
For example, in their document entitled, Evaluation Criteria for Selection of 4FRI Contractor, released in June 2012, the Forest Service stated: “Another risk factor considered in determining price reasonableness is the transport price risk. [Pioneer & Associates] propose to produce the diesel they need from the biomass and mill waste so [they] will not be completely reliant on the commercial market … They will create more bio-diesel than they need for their operations so they plan to sell the remainder at a fuel station that could be built nearby.” It appears to me that the Forest Service failed to recognize the difference between agricultural biomass (corn, soybeans, sugar cane, etc.) or recycled frying oil that is commonly used to make bio-diesel, and woody cellulosic biomass. In addition, apparently Pioneer's plan to produce cellulosic bio-diesel with a non-existing technology was analyzed by the Forest Service as a positive factor to lower the risk for the 4FRI contract, and another reason to select their business plan. This does not seem to be a credible business plan analysis to me.
Forest Service officials have repeatedly stated that Pioneer's stated ability to start treatments faster than other bidders was critical in their being awarded the 4FRI contract. In their document entitled, Evaluation Criteria for Selection of 4FRI Contractor, the Forest Service also stated: “Pioneer Forest Products provided an excellent plan for completing the work on the National Forest … They will begin implementation 7 to 8 months after the contract award … Pioneer will start in woods operations in late 2012 so the risk of resource destruction is reduced. Delaying the start of in-woods work would increase the potential for areas planned for treatment to be destroyed before being treated.” If Pioneer's stated ability to implement the treatments faster than other bidders was so important in selecting them as the 4FRI contractor, I think that the Forest Service should hold itself accountable on this point. Action needs to be taken now, not later.
As evidenced by the Rodeo-Chediski and Wallow fires, the future of our forests and communities depend on the success of 4FRI. Therefore, I call upon the Forest Service to take decisive action and put an end to any further delays in taking real and demonstrative steps towards treating 30,000 acres annually on phase-one of the project for the next 10 years. We need a full investment in an industrial facility capable to fund landscape scale restoration in northern Arizona at the rate of at least 30,000 acres per year over the next 20 years. We need a real reduction in the threat of catastrophic wildfire. We need a real effort to create hundreds of jobs. A token level of action and life-support funding to keep the contract out of technical default is a mistake. This effort is one that Navajo County's residents are counting on for generations to come and we cannot wait any longer.
Supervisor David Tenney | District IV
Navajo County Board of Supervisors