Regulatory certainty a prerequisite for investment
06.25.2012

You don’t need an MBA to understand that a shaky regulatory climate can have a damping effect on business.

The threat of shifting regulations injects an unknown quantity into business planning that gives a business owner reason to pause before investing in new projects, new equipment or new people, all of which spell j-o-b-s. 

That’s what’s happening right now with logging roads. Last year, the Ninth Circuit Court of Appeals reclassified logging roads as “point sources” of water pollution. The impact of that ruling could require forest landowners to get industrial discharge permits, typically required of factories and sewage plants, for each drainage pipe or rainwater ditch on thousands of miles of logging roads across Oregon. This is a network of roads and stream crossings that has seen tens of millions of dollars of investment to meet Oregon’s tough water quality standards. A permit system would impose significant new costs and expose landowners to legal costs associated with challenges and lawsuits.

Congress approved legislation last year that temporarily prevented the Ninth Circuit ruling from taking effect. But hold on. That legislation expires Sept. 30.

In the meantime, the Supreme Court is set to rule yet in June whether it will review an appeal of the Ninth Circuit’s ruling. 

Still confused? The U.S. Solicitor General isn’t. Though the SG agreed that the Ninth Circuit was wrong in its ruling, the SG argues that the Supreme Court should not review the Ninth’s decision because EPA and Congress are best able to resolve the issue.

With exquisite timing, the EPA came out the day after the SG’s announcement to propose that it would manage forest roads under the Clean Water Act using state administered best management practices instead of industrial permits. In Oregon, that means the Oregon Forest Practices Act and associated rules.

While an administrative solution could work, it would not provide legal certainty, which means the whole issue could end up in court – again. Of course, that does nothing for the beleaguered business owner, who’s trying to figure out whether to invest in new equipment and more people or start saving for expensive permitting.

If you’re interested in learning more about the significant steps Oregon landowners are already taking to protect water quality in forest streams, I encourage you to view OFRI’s seven-minute video, “Oregon Forests & Water.” You can read more about it in our special report of the same name. Also, check out our section on laws and planning

The conclusion I draw from the OFRI report is that the vast majority of forest landowners want to do the right thing and protect forest resources, including water quality. “It just makes sense,” said John Blackwell, chairman of the Oregon Board of Forestry, quoted in the report. “Forest landowners have a huge capital investment, so they have a strong interest in protecting the resource. Beyond that, many either live on or close to the land and take a natural pride in forest ownership and protection.”

Regulatory certainty – provided by either the U.S. Supreme Court or the U.S. Congress – would go a long way toward easing landowner anxiety and encouraging investment of the kind Oregon forest landowners have been making for decades. And that’s the kind of thing we need to get the U.S. economy moving again.

For the forest,


Paul Barnum
Executive Director
barnum@ofri.org

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