Green Printing Bill Unveiled -- And Sure To Be Controversial

A proposed U.S. tax credit for "green" printing that was unveiled this week could lead to some interesting arguments among environmentalists, printers, paper mills, and print-buying organizations.

As Dead Tree Edition reported last month in Federal Subsidy For Green Printing To Be Proposed, Print Buyers Online revealed the proposed legislation at a conference this week as scheduled. (See full text of the bill below.)

The legislation would be good news for paper mills using recycled fiber and the Sustainable Forestry Initiative but bad news for big printers and overseas paper manufacturers.

To be declared "a qualified sustainable print project" must meet 13 of 15 criteria, including (with my comments in Italics):

• "The materials used in the print project must be recyclable." (All of the materials? Can ink be considered recyclable if paper has to be de-inked before being recycled?)
• "The print project must contain verbiage that encourages the reader to recycle the printed piece." (That's a no-brainer for direct mail, publications, and cereal boxes. But it's trickier for printed products that don't contain words, like wallpaper, vinyl flooring, and electronic circuits.)
•  "The print project must contain verbiage that allows prospects/customers to opt-out from further printed communications." (How do you opt out of receiving a cardboard box? There needs to be a distinction between something meant for paying customers and one meant for prospects.)
• "The paper or substrate must contain over 25 percent post-consumer waste for coated paper stock and 50 percent post-consumer waste for uncoated paper stock." (That will be tough for overseas paper mills because the U.S. is one of the few countries that distinguishes between pre-consumer and post-consumer waste.)
• "The paper or substrate must be produced Totally Chlorine Free (TCF) or Process Chlorine Free (PCF)."
• "The paper or substrate must be certified by a credible third-party chain-of-custody certifier, such as The Sustainable Forestry Initiative (SFI) or Forest Stewardship Council (FSC)." (Putting SFI on the same footing as FSC will not go over well with groups like Greenpeace and ForestEthics.)
• "The ink, coating, laminates and/or adhesives must emit no more than 2 percent volatile organic compounds (VOC) for sheet-fed printing, no more than 30 percent VOCs for heat-set web printing, no more than 10 percent VOCs for cold-set web printing and no more than five 5 percent VOCs for flexographic printing." (What about other printing processes, like inkjet and rotogravure? And does "emit" refer to what comes off the press or what escapes from the building?)
• "If a print project is 96 pages or less and is bound as a book, the book will be bound as saddle stitched rather than perfect bound." (Interesting. I don't recall seeing any discussion of saddle vs. perfect in articles about green printing.)
• "The printer who manufactures the print project must not have been fined for violations in the past five years from the Environmental Protection Agency (EPA), Occupational Safety & Health Administration (OSHA), or by state or federal regulators for environmental, health or safety issues." (I'm guessing a lot of the big multi-plant printers have received an OSHA fine at one of their plants in the past five years.)

I'm skeptical of well-meaning efforts to subsidize environmentally responsible behavior because such legislation is so open to abuse by businesses and legislators. (See black liquor tax credits, Son of Black Liquor, and Grandson of Black Liquor.)

But there's something to be said for trying to define what environmentally friendly printing is, even if the first draft is a bit rough. I wonder if some day environmental groups will press corporations about the inks, binding methods, and opt-out provisions they use in their printed materials instead of just focusing on the source of the paper.

Here is the text of the bill in its entirety:

To amend the Internal Revenue Code of 1986 to allow print buyers a credit against income tax for the completion of sustainable print projects.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE

This Act may be cited as the “Print Buyer’s Reduction in Taxes Bill of 2010 (PRINT).”

SEC.2. CREDIT AGAINST INCOME TAX FOR THE PRODUCTION OF QUALIFIED SUSTAINABLE PRINT PROJECTS

(a) In General – Subpart D of Section IV of subchapter A of Chapter 1 of the Internal Revenue Code of 1986 (relating to business related credits), as amended by this Act, is amended by adding at the end of the following new section:

“SEC. 45R. NEW SUSTAINABLE PRINT PROJECT CREDIT

“(a) GENERAL RULE.— For purposes of Section 38, the new sustainable print project tax credit determined under this section for the taxable year is an amount equal to the state sales tax paid by a print buyer for a qualified sustainable print project.

“(b) LIMITATIONS.—The credit allowed by subsection (a) for a single print buyer may not exceed 25 percent of the federal income tax owed by the print buyer for the taxable year.

(1) To qualify for the credit a print buyer must spend $100,000 or above on general print projects in the taxable year.

“(c) DEFINITIONS.—For the purposes of this section—

“(1) PRINT BUYER.—The term ‘print buyer’ means an organization that finds and manages outside resources such as printing, finishing, mailing and specialty printing; communicates specifications and expectations for print projects; purchases print projects; creates and maintains contractual agreements with print suppliers; ensures quality tolerances; and ensures that projects deliver on time at an acceptable price.

“(2) QUALIFIED SUSTAINABLE PRINT PROJECT.—The term ‘qualified sustainable print project’ means a job procured by a print buyer

“(A) the production of which is completed after the date of the enactment of this section,

“(B) which meets the criteria described in paragraph (d) and

“(C) can be certified according to the criteria described in paragraph (e).
“(3) SUBSTRATE.—The term ‘substrate’ means a primary or underlying material (such as paper, plastic, or cloth) on which other materials (such as ink, coating, paint, or treatment) are applied, or from which other materials are made.

“(4) HIGH CONSERVATION VALUE AREA.—The term ‘high conservation value area’ means—

“(A) areas containing globally, regionally or nationally significant concentrations of biodiversity values (e.g. endemism, endangered species, refugia); and/or large landscape-level forests, contained within, or containing the management unit, where viable populations of most if not all naturally occurring species exist in natural patterns of distribution and abundance, or

“(B) areas that are in or contain rare, threatened or endangered ecosystems, or

“(C) areas that provide basic services of nature in critical situations (e.g. watershed protection, erosion control), or

“(D) areas fundamental to meeting basic needs of local communities (e.g. subsistence, health) and/or critical to local communities' traditional cultural identity (areas of cultural, ecological, economic or religious significance identified in cooperation with such local communities).

“(5) HEAVY METALS.—The term ‘heavy metals’ means metals with high molecular weights that are of concern because they are generally toxic to animal life and human health if naturally occurring concentrations are exceeded.

“(6) POST-CONSUMER WASTE (PCW).—The term ‘post-consumer waste’ means the fiber recovered from papers that have been used for their intended end-use, where the waste-producing use did not invoice the production of another product.

“(7) COATING.—The term ‘coating’ or ‘coated’ means a covering that is applied to the surface of the substrate to enhance appearance, adhesion, wetability, corrosion resistance, wear resistance and/or scratch resistance.

“(8) LEGALLY HARVESTED.—The term ‘legally harvested’ means a tree meets the federal requirements put in place by the Lacey Act of 1900 which require a declaration of

“(A) the scientific name of the wood or wood product contained in the importation and,

“(B) the value and quantity of the wood or forest production being imported and,

“(C) the name of the country from which the wood was harvested.

“(9) TOTALLY CHLORINE FREE (TCF).—The term ‘totally chlorine free’ means virgin paper that is unbleached or processed with a sequence that includes no chlorine or chlorine derivatives.

“(10) PROCESS CHLORINE FREE (PCF).—The term ‘process chlorine free’ means recycled paper in which the recycled content is unbleached or bleached without chlorine or chlorine derivatives.

“(11) VOLATILE ORGANIC COMPOUNDS (VOC).—The term ‘volatile organic compounds’ means toxins that are commonly found in inks, coatings and adhesives in the printing process. VOCs emit dangerous toxic gases into the air.

“(12) SHEET-FED PRINTING.—The term ‘sheet-fed printing’ means a method in which individual pages of paper are fed into a printer, as opposed to continuous rolls of paper used on web presses.

“(13) HEAT SET WEB PRINTING.—The term ‘heat set web printing’ means a printing process in which ink is dried rapidly by forcing-air heating.

“(14) COLD SET WEB PRINTING.—The term ‘cold set web printing’ means a web offset printing process in which ink is allowed to dry naturally through evaporation and absorption.

“(15) FLEXOGRAPHIC PRINTING.—The term ‘flexographic printing’ refers to a machine printing process that utilizes rollers and cylinders with a flexible rubber-like surface that prints with the raised area, much like surface printing, but with much less ink. This means the ink dries quickly and allows the machine to run at high speed.

“(16) UV CURED INK.—The term ‘UV cured ink’ means ink applied to a printed sheet that is bonded and cured with ultraviolet light.

“(17) FILM LAMINATE.—The term ‘film laminate’ means a process where a thin film of laminate is sealed into the substrate.

“(18) SADDLE STITCHING.—The term ‘saddle stitching’ means to bind by stapling the printed piece through the backbone (or center fold). Pages lie flat when the printed piece is open. In general, the maximum number of pages is ninety-six (96) plus cover for saddle stitching depending on the paper stock.

“(19) PERFECT BINDING.—The term ‘perfect binding’ means sheets that are ground at the spine and held together with the cover by glue. Perfect binding is commonly used for catalogs and paperback books and it creates a spine that can be printed on. This process is more economical for higher quantities, in general the minimum number of pages needed for perfect binding is forty-eight (48).

“(20) DEDUPING.—The term ‘deduping’ means a process of removing duplicate entries from mailing lists, resulting in lower costs because it reduces the amount of postage and marketing collateral needed for direct mail campaigns.

“(21) RENEWABLE ENERGY.—The term ‘renewable energy’ means energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are naturally replenished.

“(22) RENEWABLE ENERGY CREDITS.—The term ‘renewable energy credits’ means tradable, non-tangible energy commodities in the United States that represent proof that 1 megawatt-hour (MWh) of electricity was generated from an eligible renewable energy resource (renewable electricity).

“(23) TAXABLE YEAR.— The term ‘taxable year’ means the twelve-month period used as the basis for computing tax on income received during that period.

“(d) SUSTAINABILITY REQUIREMENTS.—A qualified sustainable print project meets the sustainability requirements of this subsection if thirteen (13) of the fifteen (15) requirements below are employed by the printers and evidenced to the print buyer—

“(1) The materials used in the print project must be recyclable, and/or

“(2) The print project cannot include inks which contain heavy metals, such as metallics and fluorescents, scratch off devices, foils, plastic polystyrenes and/or polyesters and/or

“(3) The print project must contain verbiage that encourages the reader to recycle the printed piece, and/or

“(4) The print project must contain verbiage that allows prospects/customers to opt-out from further printed communications, and/or

“(5) The paper or substrate must contain over twenty-five (25) percent post-consumer waste for coated paper stock and fifty (50) percent post-consumer waste for uncoated paper stock, and/or

“(6) The paper or substrate must be legally harvested, and/or

“(7) The print project must not use paper or substrates from endangered forests or areas of high conservation value, and/or

“(8) The paper or substrate must be produced Totally Chlorine Free (TCF) or Process Chlorine Free (PCF), and/or

“(9) The paper or substrate must be certified by a credible third-party chain-of-custody certifier, such as The Sustainable Forestry Initiative (SFI) or Forest Stewardship Council (FSC), and/or

“(10) The ink, coating, laminates and/or adhesives must emit no more than two (2) percent volatile organic compounds (VOC) for sheet-fed printing, no more than thirty (30) percent VOCs for heat-set web printing, no more than ten (10) percent VOCs for cold-set web printing and no more than five (5) percent VOCs for flexographic printing, and/or

“(11) If a coating is applied to the print project, the coating must not be either a UV cured ink or a film laminate, and/or

“(12) If a print project is ninety-six (96) pages or less and is bound as a book, the book will be bound as saddle stitched rather than perfect bound, and/or

“(13) Print projects that are mailed via United State Postal Service

“(A) must contain the +4 extension for zip codes

“(B) must be processed for deduping or merge/purge

“(C) must have been updated in the last six (6) months for National Change of Address, and/or

“(14) The printer who manufactures the print project must not have been fined for violations in the past five years from the Environmental Protection Agency (EPA), Occupational Safety & Health Administration (OSHA), or by state or federal regulators for environmental, health or safety issues, and/or

“(15) The printer who manufactures the print project must use renewable energy (either directly using wind, solar and/or biogas, which is optimal) or by purchasing renewable energy credits (REC).

“(e) CERTIFICATION.—A project shall not be treated as a qualified sustainable print project unless the print buyer submits the relevant invoices and other documents listing the sustainable qualifications to the Internal Revenue Service (at such times and in such a manner as the IRS provides) specifying that the project meets thirteen (13) of the fifteen (15) requirements listed above.

“(f) OTHER RULES

“(1) STATES WITH NO SALES TAX.— In the case of a state with no sales tax the tax credit will be determined at the beginning of each taxable year by taking the average of the state with the lowest sales tax rate, and the state with the highest sales tax rate for the previous taxable year.

“(g) BASIS ADJUSTMENTS- If a credit is determined under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.

“(h) TERMINATION—This section shall not apply to any print project completed after December 31, 2016.”.

(b) CREDIT MADE AS PART OF GENERAL BUSINESS CREDIT.—Section 38(b)

(relating to current year business credit), as amended by this Act, is amended by striking “plus” at the end of paragraph (34), by striking the period at the end of paragraph (35) and inserting “,plus”, and by adding at the end of the following new paragraph:

“(36) the New print project sustainability credit determined under section 45R(a).”.

(c) DEDUCTION FOR CERTAIN UNUSED BUSINESS CREDITS.—Section 196(c) (defining qualified business credits) is amended by striking “and” at the end of paragraph (12), by striking the period at the end of paragraph (13) and inserting “,and”, and by adding after paragraph (13) the following new paragraph:

“(14) the New sustainable print project credit determined under section 45R(a).”.

(d) CLERICAL AMENDMENT.—The table of sections for subpart D of part IV of subchapter A of chapter 1, as amended by this Act, is amended by adding at the end the following new item:

“Sec. 45R. New sustainable print project credit.”.

(e) EFFECTIVE DATE—The amendments made by this section shall apply to print projects completed after ninety (90) days from the date of enactment of this Act.

Federal Subsidy For Green Printing To Be Proposed

A prominent print-buying organization is about to propose legislation that would provide U.S. government subsidies for “green” printing – an interesting idea that could lead to even more interesting debates.

Here’s an excerpt of a message that Suzanne Morgan, president and founder of Print Buyers Online and a well-known commentator on print-buying issues, sent Friday to PBO’s email subscribers:

"On July 19, 2010 at the ninth annual Print Oasis Print Buyers Conference in Washington, DC, Print Buyers Online.com will be unveiling legislation that will be presented to Congress starting on Wednesday, July 21 that can save your company hundreds of thousands of dollars a year or more on print. This legislation proposes that any print project that is bought in an environmentally sustainable way is eligible for refunds of state sales taxes by the Federal government.

"To determine the cost savings for your company, you only need to calculate the percentage of print jobs that meet sustainable standards (can be recycled, include 15% or more PCW, are printed on paper that is legally harvested, etc.) and then calculate the sales tax of those jobs, to appreciate the enormous cost-savings."

Any effort to define what constitutes sustainable printing that is eligible for a federal subsidy (let’s not mince words: a tax rebate is a subsidy) would kick up huge arguments among printers, manufacturers, print buyers, and environmentalists.

A requirement that the material be recyclable should favor paper – until the plastics-industry lobbyists jump in and start arguing that various plastic substrates are, at least in theory, recyclable.

Is paper with 15% post-consumer waste green if the other 85% comes from the clear-cutting of tropical rainforests? Should the new law follow the government’s purchasing standards, which consider sawdust to be post-consumer waste but unsold magazines to be pre-consumer waste? (Most other countries, by the way, don’t distinguish between pre-consumer and post-consumer recycled content.)

Almost everyone agrees that making paper with recycled pulp is great if it diverts waste from a landfill. But what if the result is upcycling – diverting low-grade waste paper from its most efficient use, such as making newsprint or cardboard, to the manufacture of high-quality papers? (Paper industry analyst Verle Sutton calls North American recycled newsprint mills “an endangered species” because recycled pulp prices have been bid up so high.)

Should virgin fiber come only from certified-forestry operations? If so, which certification standards are acceptable? Imagine the battle between the Forest Stewardship Council and the Sustainable Forestry Initiative over that one.

And what about carbon footprint? Should the law favor paper made at mills that use hydropower or biomass or products produced at wind-powered printing plants?

Must ink contain soy to be environmentally friendly, as some claim? Or are other inks even better because they contain higher levels of other renewable material, as others claim?

Even defining printed matter could be challenging. Wallpaper, linoleum flooring, T-shirts, and electrical circuits can all be printed. Procter & Gamble recently revealed that it prints an absorbent gel onto Pampers with Dry Max diapers. (I tried to find out what printing process was used but couldn’t get to the bottom of it.)

Ms. Morgan and PBO deserve kudos for trying to encourage environmentally friendly printing. If only we could all agree on exactly what that means.

For related articles, please see:

• I'm an environmental idiot! explains the problem with up-cycling.
• Students Lecture Al Gore on Green Printing
• The Great Forest Certification War describes a legal and PR battle between supporters of the Forest Stewardship Council and the Sustainable Forestry Initiative. 

The Boreal Forest Deal and the Sustainable Forestry Initiative

Some have questioned my contention that the Canadian Boreal Forest Agreement recognizes the legitimacy of the Sustainable Forestry Initiative forestry-certification standards, which some of the agreement's signers have criticized as inferior to the Forest Stewardship Council. (See Environmental Groups Make Surprising Concessions in Canadian Forest Deal.)

There was no mention of SFI in the press releases that were sent out yesterday, but the abridged version of the agreement (the full agreement is not publicly available) contains the following language:

Goal 1. World-leading Boreal “on-the-ground” sustainable forest management practices based on the principles of ecosystem-based management, active adaptive management, and third-party verification.

In achieving this goal, FPAC, FPAC Members, and ENGOs believe it is important to build on existing work (the standards in the existing three major certification programs) rather than build a new (fourth) set of standards from scratch. [A footnote adds: Canadian forest managers can certify their forest management practices to one of three internationally recognized forest certification programs: the Canadian Standards Association (CSA), the Forest Stewardship Council (FSC), and the Sustainable Forestry Initiative (SFI).] These standards of practice will be jointly developed by December 31, 2010, and implemented by December 31, 2012.

The objective is to develop a concise document that outlines the key principles and management approaches (from both a substantive and process perspective) that FPAC, FPAC Members, and ENGOs agree are required to achieve ecosystem-based management (EBM) in Canada’s Boreal Forests. In developing this document, the intent is to:

a) Base these standards of practice on the elements of each of the three existing certification programs (i.e., the practices used to apply the standards of each of the programs on the ground as evidenced by the current certifications) that best embody an ecosystem-based management approach, using as a reference point the on-the-ground application of the existing Forest Stewardship Council (FSC) National Boreal Standards;
b) Provide for verification of compliance with these standards of practice through third-party audits (e.g., as currently provided for as part of FPAC membership’s existing sustainable forest management (SFM) certification commitment);
c) Establish principles and procedures to govern the audits of such standards of practice based on best auditing practices in the Boreal:
i) The topics included in these principles and procedures will include (but not be limited to) the required qualifications of auditors, the selection of auditors, consultation, field sampling protocols, the time frames for addressing corrective action required, transparency of audit results, etc.; and
ii) The intent is that these principles and procedures be efficient and avoid audit duplications;
d) Recognize the role of formal and informal voluntary conservation areas within the managed landscape;
e) Base this work on the best available information;
f) Provide for continuous improvement through active adaptive management; and
g) Undertake this work in a manner that is efficient, cost-effective in both its development and implementation on forest tenures, and respectful of the auditing processes and procedures of the three certification programs, as well as in a manner that does not result in a premature process of standards revision. 

That doesn't mean that certification schemes won't be a point of contention among the organizations that signed the agreement. After all, ForestEthics has accused SFI of tax fraud and greenwashing, saying it is a "phony" scheme that benefits from tax-deductible contributions from "environmentally controversial companies" like Weyerhaeuser, which also signed the agreement.

Environmental Groups Make Surprising Concessions in Canadian Forest Deal

The landmark truce announced yesterday by Canadian forestry companies and green groups represents a new direction for the environmental movement.

It’s surprising enough that the former enemies signed a deal involving forestry practices and conservation for an area of the Canadian boreal forest larger than Texas.

Even more stunning is that radical environmental groups like Greenpeace and ForestEthics signed an agreement that calls for “policies and investments that improve the competitiveness of the Canadian forest sector” and “improved prosperity of the Canadian forest sector and the communities that depend on it.” That’s a big switch from contentions that no logging should occur in ecologically sensitive boreal (sub-arctic) forests.

The agreement also recognizes the legitimacy of the industry-backed Sustainable Forestry Initiative in addition to the rival Forest Stewardship Council. (See The Boreal Forest Deal and the Sustainable Forestry Initiative for more on this subject.) Greenpeace has urged its supporters to “look for the FSC label” when buying forest products, and the two groups sponsored a study that concluded only FSC “represents a viable system that delivers positive results on the ground and in the communities where it matters most” and therefore is “the only forest certification system that is broadly supported by conservation groups."

The nine environmental groups also committed to calling off any “do not buy” campaigns targeted at customers of the signatory forest-products companies. ForestEthics is perhaps best known for its successful guerilla-theater-style Victoria’s Dirty Secret campaign. More recent efforts involving the boreal forest have targeted Sears and Kimberly-Clark.

In return, the forest-products companies agreed to “the suspension of logging on nearly 29 million hectares [two-thirds the size of California] of Boreal Forest representing virtually all Boreal caribou habitat within company tenures.” Caribou habitat is often viewed as a rough proxy for boreal forests that are relatively undisturbed by human activity.

The 21 forestry companies (including AbitibiBowater, Kruger, NewPage, and Weyerhaeuser) also committed to working with the green groups and an independent panel of scientists to develop “best practices for biomass harvesting” and then to follow those practices, backed up by third-party audits.

A goal of the agreement is to make Canada “a world leader in conservation and protection of Boreal biodiversity through a mix of conservation measures, the completion of a protected areas network, and the implementation of third-party certification of sustainable forest management practices.”

The agreement offers hope that the environmental movement is growing up and learning to see the big picture. It makes far more environmental sense to work with relatively responsible companies in a well-regulated country like Canada than to cause the demand for paper and other forest products to shift to environmental nightmares like Indonesia.

How the deal will actually work in practice is not entirely clear. Yesterday’s news release, “highlights” document, and abridged description of the agreement left some key questions unanswered:

• Show me the money: Who will foot the bill for the studies, audits, and other activities called for in the agreement? And will the environmental groups receive any direct compensation in return for dropping the kinds of high-profile campaigns that can be good for fundraising?
• What will happen to forestry companies that log the Canadian boreal forest but did not sign the agreement? Will they, and their customers, face pressure to sign?
• Will other environmental groups go along with the agreement? Or will some claim it doesn’t go far enough and start new “do not buy” campaigns against the signatory companies?
• Will ForestEthics retire Candace the Caribou, the character who often appears at protests of boreal-forest logging? Or will she start appearing at rallies against the destruction of the boreal forest by the extraction of oil from Canadian tar sands?
• We know from that scholarly movie “Ghost Busters” that one sign of “a disaster of biblical proportions” is dogs and cats living in peace. Does that mean we should be worried when environmentalists and loggers hold hands, sing “Kum Ba Yah” and agree to bury the hatchet?

Related articles:

• Marcal Challenges the Green-ness of Greenpeace: A paper company accused Greenpeace of selling out by setting its standards for eco-friendly paper too low and for backing off on its efforts to protect Canada's boreal forest.
• The Great Forest Certification War: ForestEthics accused the Sustainable Forestry Initiative of tax fraud and greenwashing; SFI fired back.

The Great Forest Certification War

Now that the forest-certification movement is running out of steam, two groups involved in promoting sustainable forestry have responded by declaring war on each other.

ForestEthics fired the first shots a few days ago, filing complaints of both tax fraud and greenwashing against the Sustainable Forestry Initiative. It sent letters last week asking the IRS to revoke SFI's tax-exempt status and requesting that the Federal Trade Commission investigate SFI's "unfair and deceptive" marketing practices. ForestEthics claims that SFI's forestry-certification program is inferior to Forest Stewardship Council certification.

SFI responded today by calling the ForestEthics complaints "an affront to the tremendous efforts by foresters, businesses, governments, consumers, SFI and other standards groups to preserve and protect our forests for future generations."

“We should all be focusing our resources and efforts on supporting responsible forest management and fighting deforestation and illegal logging, not wasting energy on bickering among ourselves," SFI added. A United Nations report recently concluded that the once-rapid growth of forest-certification efforts has stagnated during the past three years, Dead Tree Edition reported last month.

I'm skeptical whether FSC, which has had its own credibility issues in places like Indonesia, is significantly superior to SFI, but I welcome comment on the subject. I think the most useful service Dead Tree Edition can offer at this point is extensive excerpts from the complaints and SFI's response. Note: The rest of this article consists entirely of statements from ForestEthics and SFI that do not necessarily represent the views of Dead Tree Edition:

ForestEthics' letter to the IRS (excerpt)
"Although it is approved as a 501(c)(3) tax-exempt organization, SFI is organized, governed, and operated more like an industry trade association that promotes its private “certification” label than a separate charitable organization dedicated to setting high standards for forest products. First, SFI’s purposes — certification of private forests for a limited number of large industrial timber and paper companies — do not lessen the burden of government because the government is not in the business of providing “certification” of forestry practices.

Second, SFI substantially serves the private interest of non-exempt SFI-certified timber and paper companies. SFI became exempt under IRC 501(c)(3), but SFI was incorporated by individuals affiliated with timber and paper companies and SFI’s by-laws assign timber and paper companies one-third of its director positions. SFI is, by its own admission, virtually completely funded by the timber and paper companies whose lands and operations SFI certifies. SFI’s environmental standards are substantially developed by persons with close ties to the forest companies subject to SFI’s certification standards. During the past several years SFI has continued to maintain close administrative ties to the American Forest and Paper Association, a 501(c)(6) trade association which created SFI in 1994. SFI also serves private interests because its forestry “standards” are vague, ambiguous, and grant wide discretion to the companies whose products are certified by SFI. These standards thus appear to provide too much latitude for forest landowners to serve their private interest in profitable forestry, rather than in the charitable endeavor of protecting the environment. In practice, SFI certification standards provide in many geographic areas of the U.S. little or no more added environmental protection than state and federal laws governing for-profit forestry.

Finally, we have a good faith basis to believe that SFI, a 509(a)(2) organization, may run afoul of the IRC requirement that a 509(a)(1) public charity must receive at least one-third of its financial support from “public sources” and that this one-third cannot be donated by “disqualified persons.” By its own admission, virtually all of SFI’s financial support (which was approximately $5 million in 2007) comes from the companies whose forests or products are certified by SFI. SFI refused to provide us with a breakdown of its contributors so we are unable to make a “disqualified person” analysis but it appears that SFI may be violating the IRC’s “disqualified” person rules as a result of its prosperous fundraising and relatively small universe of corporate donors.

SFI’s 501(c)(3) and 509(a)(2) status permits it to claim the mantle and tax benefits of a nonprofit public charity, thereby seeking to gain environmental and social credibility, and allowing its supporters to deduct their contributions. SFI’s 501(c)(3) status not only impacts taxpayers but works to the disadvantage of forest certification organizations that serve a public charitable purpose but must compete with SFI.

We request the IRS to investigate and, if appropriate, determine that SFI is not properly organized and operated as a tax-exempt charitable organization under Code sections 501(c)(3) and 509(a)(2).

ForestEthics' letter to the FTC (excerpt)
"The Washington Forest Law Center represents ForestEthics, a non-profit conservation organization based in Bellingham, WA, and San Francisco, CA, dedicated in part to promoting credible forest certification programs through consumer awareness and the marketplace. This complaint reports the “Sustainable Forestry Initiative, Inc.” (SFI),1 a forest “certification” system which we believe engages in several unfair and deceptive acts and practices on which corporate and individual lumber and paper consumers are relying. Hundreds of millions of dollars in “green” spending may be at issue. We ask the FTC to investigate this complaint and to seek appropriate declaratory and injunctive relief in the courts to require SFI to comply with federal trade law.

Alarmed by global warming and worldwide deforestation, wood and paper consumers today are increasingly demanding more environmentally-friendly forest products. Consequently, the marketplace for “green” forest products, which could soon reach $80 billion in four years, is cluttered with claims and labels that a forest product has been “certified” or was “sustainably” grown and harvested in an environmentally and socially sound manner. But if these claims are going to compete fairly in the marketplace, and if they are going to produce real on-the-ground improvement in forestry, it is essential that the FTC investigate and respond when claims of “sustainable” and “environmental” forest management rely on deception, confusion, vagueness, or ambiguity.

The SFI forest certification program was started in 1994 by the American Forest and Paper Association (AFPA), a Washington D.C.-based timber and paper trade association. Since 2007, SFI has represented itself as an “independent not-for-profit public charity.” SFI’s budget was over $5 million in 2007. The companies it certifies own 90% of private forestland in the U.S. and produce about 50% and 85% of wood and panel products, respectively, in the U.S. We believe the SFI forest product certification system competes unfairly and deceptively for several reasons.

Deceptive Label: SFI maintains at least one label on its products that is deceptive and misleading. SFI’s “Certified Fiber Sourcing” label implies that wood or paper bearing the label comes from SFI-certified forests. Yet, in fact, the SFI “Certified Fiber Sourcing” label provides no guarantee that any of the material was harvested from an SFI-certified forest.

Independent, Non-Profit Public Charity: In aggressive and well-funded national advertising, SFI and SFI-certified companies represent to lumber and paper purchasers and the general public that SFI is an “independent, not-for-profit public charity” directed and operated by a diverse and “independent” board of directors. These attributes are key to SFI’s campaign for environmental credibility and marketing. This claim is deceptive because SFI is funded almost entirely by the large timber and paper companies whose forests are certified by SFI and SFI receives virtually no general public financial support. Moreover, true to its origin as a program of the AFPA, SFI’s governance, administration, and standards-setting process is dominated by SFI-certified companies and individuals. While SFI has nonindustry board members, many of these individuals are affiliated with organizations that receive substantial financial support from SFI-certified companies. In the final analysis, SFI is not a standards-setting entity in which industry members participate; it is a heavily marketed industry-developed and funded “green” label that represents itself as an independent charitable organization.

Deceptive and Unverifiable Environmental Standards: SFI’s forest certification standards are deceptive and misleading. SFI’s standards deploylofty ecological terms but, in fact, they are vague, ambiguous, filled with qualifiers and loopholes.” On balance, they give forest managers discretion to manage their forest lands in ways that are inconsistent with SFI’s lofty environmental standards. To make matters worse, SFI certification lacks transparency: a member of the public or a competitor cannot find out what a landowner is doing (or not doing) in its forests and has access only to uselessly general audit summaries. Furthermore, SFI’s standards are enforced only by auditors which are landowner-paid consulting entities.

The Sustainable Forestry Initiative's statement

Washington, D.C. – From governments to conservation groups to foresters, the Sustainable Forestry Initiative has been globally recognized as a credible and effective forest management certification program. “The rapid growth of our program shows that more customers and consumers recognize the value of third-party forest certification, and it means we are making a difference on the ground,” said SFI President and CEO Kathy Abusow. “We are dedicated to finding ways to work together with all credible forest certification standards toward our common goal of expanding certification. That is especially important when you consider that 90 percent of the world’s forests are not certified at all.”

In light of that common goal, ForestEthics’ recent statements and activities “are an affront to the tremendous efforts by foresters, businesses, governments, consumers, SFI and other standards groups,to preserve and protect our forests for future generations,” said Abusow. “We should all be focusing our resources and efforts on supporting responsible forest management and fighting deforestation and illegal logging, not wasting energy on bickering among ourselves.”

Abusow pointed out that SFI “has been a fully independent non-profit organization since 2007 and our forest certification standard is developed through a transparent public process.” She added that SFI’s “labels and claims conform to government, consumer and audit requirements in the United States and globally.”

Here are some other facts about SFI:

• The group’s three-chamber Board of Directors represents environmental, social and economic interests equally. Board members include representatives of environmental, conservation, professional and academic groups, independent professional loggers, small family forest owners, public officials, labor and the forest products industry. No one sector can control SFI – Board actions must be approved by a minimum of 80% of those present.

• Last year, the Canadian Council of Forest Ministers issued a statement that read in part: “Canada is proud to have more certified forests than any other country. Governments in Canada continue to provide technical and policy support to the ongoing development of certification in Canada. The forest management standards of the CSA, FSC, and SFI all meet the above criteria. Customers can be assured that these forest certification standards are complementary to and demonstrate each Government’s sustainable forest management regime.”

• SFI-certified products are recognized by many leading green building rating programs in Canada, the U.S. and overseas. In North America, this includes the Green Globes™ building assessment and rating system, the American National Standards Institute’s National Green Building Standard (administered by the National Association of Home Builders) and the Built Green Society of Canada. SFI-certified products are also recognized under government procurement policies in Japan and the UK.

• The US Government Services Agency (GSA) recognizes SFI as well as FSC in their Solicitation for Offers requirement SFO Section 7.4 Wood Products (revised August, 2008). It states: “For all new installations of wood products, the Lessor is encouraged to use independently certified forest products. For information on certification and certified wood products, refer to the Forest Certification Resource Center, the Forest Stewardship Council United States, or the Sustainable Forestry Initiative.”

• The Conservation Fund, Conservation International and the American Bird Conservancy are just a few of the more than 1000 organizations involved in the SFI program.

• Several U.S. states, including Washington and Maine have weighed in with support of inclusive green building standards.

• TerraChoice Environmental Marketing recently recognized the SFI label as a credible eco-label in its Greenwashing Report 2009, saying that our program meets three key criteria – third party certified, publicly available standard and transparent standard development process. SFI (along with FSC) are among 14 labels that the group recognizes as “legitimate.”

• Tom Hinton, president and CEO of the 82,000-member American Consumer Council said last year, “We support the good work of SFI and applaud the positive and progressive things SFI is doing.., When it comes to environmentally friendly claims, consumers want to see the proof and not just the sizzle.”

The UN Economic Commission for Europe (UNECE), which represents 56 member states and involves more than 70 international professional organizations and other non-governmental organizations and The UNECE Timber Committee and Food and Agriculture Organization (FAO) European Forestry Commission released a report titled Forest Products Annual Market Review which found that:

• “In terms of numbers, the most significant [forest certification program] is the SFI Program in North America.”
• The rate of increase in global certified forest area slowed dramatically since 2006 (growing by only 1.3% to reach 325.2 million hectares in 2009). By May 2009, about eight percent of the world’s forests were certified (54% in Europe and 38% in North America.
• Green building initiatives are a mixed blessing for forest certification. “Green building initiatives standards giving exclusive recognition to particular forest-certification brands may help drive demand for these brands at the expense of wider appreciation of the environmental merits of wood.”

“SFI has seen tremendous growth and acceptance in the marketplace,” said Abusow. “I am proud that we have over 240 program participants and work closely with not just conservation groups, but also organizations like Habitat for Humanity. We have carefully expended our resources on educating businesses and consumers about the importance of sustainable forest management and producing and purchasing products sourced responsibly. ”

Certified Forestry Is In Trouble, U.N. Report Says

The certified-forestry movement is running out of steam, a United Nations report suggests.

"The pace of expansion of global certified forest area has slowed dramatically in the last three years," says the international agency's recently released Forest Products Annual Market Review, 2008-2009. The proportion of "industrial roundwood" coming from forests certified by such environmental organizations as the Forest Stewardship Council (FSC) has actually decreased recently, to 25.9%, it says.

"Certified forest area increased by around 50 million hectares a year between 2001 and 2005 – mainly due to a rapid increase in certified forest area in North America – then the rate slowed by half to 25 million hectares a year in 2006 and 2007. More recently the rate has stagnated even further, not exceeding 4 million hectares between May 2008 and May 2009." Certified forestry has actually lost some ground in North America and Europe, the U.N. report adds.

One culprit is that the sustainable-forestry movement is running out of low-hanging fruit: "Now that many of the largest state- and industry-owned lands in the developed world are already
certified, the certification movement faces the significant challenge of expanding in more difficult
areas" such as small forestry operations and developing countries.

Ignorance is another hurdle: "According to a recent survey, only 12% of US family forest owners have heard of forest certification."

From a financial standpoint, sellers of wood products often cannot justify the additional costs of sourcing from certified forests: "Generally, there is great reluctance among end-users to pay premiums for certified or verified legal wood products, a situation which places significant limits
on the ability of suppliers to charge more."

Only some fairly specialized markets have price premiums for certified products. In Europe, FSC-certified tropical wood from Africa and Brazil carries the highest premiums, 20% to 50% above the prices for non-certified products, the report says.

One growth area is chain-of-custody certifications, up 41% in the past year. Numerous printers and paper companies tout their chain-of-custody certifications as evidence of their green-ness without mentioning whether they actually use any certified fiber or paper.

The U.N. study does not address the correlation between certification and sustainable forestry. (See "Does FSC certification help the earth?" for more on this question.) There appear to be many sustainably managed forests that are not certified and some certified forests that are not sustainably managed.

The major forest-certification schemes need to overcome the perception that they are only for large land owners that can afford the administrative costs (or, in some countries, the bribery costs) of obtaining certification.

More on Maine and FSC

More details have come to us about the subject of "Does FSC certification help the earth?" (http://deadtreeedition.blogspot.com/2008/10/does-fsc-certification-help-earth.html). That describes the effort to have numerous small forestry operators in Maine receive Forest Stewardship Council certification without changing their forestry practices.

Three big makers of coated paper with mills in Maine -- NewPage, SAPPI, and Verso -- are sponsoring the effort, which is known as "landscape certification."

A Verso "Sustainability Report" says "we worked with government, environmental non-governmental organizations (ENGOs), customers and other interested stakeholders to explore opportunities to make certification of forestlands more accessible and affordable to small, private landowners. This effort, which includes identifying and evaluating landscape-scale information that can be used to satisfy the group compliance criteria of forest certification standards, will continue in 2008 with an ultimate objective of certifying 3 million new acres of forestland in the state to achieve the governor’s target of 10 million acres certified in Maine."

Does FSC certification help the earth?

A paper executive made an interesting admission recently to Dead Tree Edition regarding Forest Stewardship Council certification, which many environmental groups view as the gold standard for sustainable forestry.

The executive was describing an effort to get blanket FSC certification for many small forestry operations in Maine rather than having each go through a separate and expensive audit process. Sustainable forestry is common practice in Maine, but small family-run operations have found that the FSC process is stacked in favor of the big guys.

"How would these small operations have to change their forestry practices to get FSC certification?" DTE asked.

"Not at all. They're already doing it, " the executive answered.