WASHINGTON - The Softwood Lumber Checkoff program is under scrutiny after a U.S. federal court ruling found that the tax imposed may not be "lawful." The September announcement stems from a lawsuit filed against the U.S. Department of Agriculture by Resolute Forest Products Inc. in December 2014.
The September 9 ruling by U.S. District Court Judge James Boasberg orders the USDA to provide "a reasoned and coherent treatment" of its decision implementing an order to collect taxes on softwood lumber shipments in the United States, according to information provided by Resolute Forest Products. Documents on file show Resolute Forest Products (NYSE: RFP) (TSX: RFP) has questioned the validity of the program since its inception in 2012.
The statement notes, "according to the court, the government's explanation of its decision to exclude certain softwood lumber manufacturers from paying or voting on the tax 'strains credulity,' and the USDA was either 'hiding the ball' or else 'ill informed' about the number of companies it had exempted." The program exempts from tax those U.S. manufacturers and importers that ship less that 15 million board feet of softwood lumber a year. The first 15 MMBF are also exempted for those producers shipping larger amounts, as are exports of softwood lumber.
Plywood & Flooring Dropped from Hardwood Checkoff Proposal
Plywood, flooring and green mills would be removed and fees would be scaled back under a simplified Hardwood Checkoff program being proposed by sponsors.
The Softwood Checkoff program has been implemented since 2012. Administered by the Softwood Lumber Board, the collected money is used to maintain and expand softwood lumber markets, as well as develop new uses for the product. Funded programs include: the American Wood Council; Wood, Naturally; reTHINK WOOD, WoodWorks, Tall Wood Innovation, and the U.S. Tall Wood Building Prize Competition.
September's decision by Judge Boasberg remanded a previous ruling by a USDA administrative law judge which had upheld the checkoff tax. In reaching his decision, Judge Boasberg said that "Resolute is understandably upset by the agency's evasion" and that the defendants' interpretation of the law "is dubious for several reasons," a news release said.
The tax structure will remain in place while the case is still under review. Resolute's claim that the Softwood Checkoff violates the U.S. Constitution also is still under review. Headquartered in Montreal, Resolute Forest Products owns or operates approximately 40 pulp and paper mills and wood products facilities in the United States, Canada and South Korea.
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