Timber Mill Foreclosure Auction Postponed
by Kati O'Hare
Jul 12, 2012 | 2182 views | 0 0 comments | 6 6 recommendations | email to a friend | print

Hopes That 2012 Farm Bill Could Help Mill Navigate Forest Service Bureaucracy

MONTROSE – A foreclosure auction for Montrose-based timber mill Intermountain Resources has been postponed, but even with the extra time, the mill continues to face challenges that are preventing it from running at full capacity.

"The business continues to run," said Pat Donovan, the mill’s court-appointed receiver. "We are doing everything we can to keep jobs here, and to get logs into the mill. But we continue to face the same challenges."

Intermountain Resources has been trying to get back on its feet since going into receivership in May 2010, b has had to close its doors several times because its timber stockpile is not enough to keep the approximately 100 employees working.

PNC Bank, headquartered in Pittsburgh, Pa., was scheduled to foreclose on its collateral by holding an auction of the mills' equipment, machinery and receivables on July 12, but the sale has been postponed. The auction also was to include collateral from a Saratoga, Wyo., mill that Intermountain purchased from Louisiana Pacific in 2003.

The bank has not yet announced a new date for the auction.

Those associated with the two mills, including Donovan, are frustrated by their inability to obtain timber contracts to keep their businesses viable because of the current contract defaults.

"This wood needs to get out of the forest. It's fuel," Donovan said about the more than 4 million acres of dead trees from pine and spruce beetle epidemics in Colorado and surrounding states. "If you look at the money spent in the fires on the Front Range, it makes absolutely no sense."

When the housing market bubble burst and lumber demand plummeted, Intermountain Resources struggled to fulfill timber contracts at the contracted prices. Now in receivership, the mill is left with only its existing, high-priced contracts, and has no room for negotiating new timber purchases with the U.S. Forest Service.

"What they would have gotten for payment for the logs pales in comparison to what they have spent in firefighting," Donovan said. "And no one is focused on what could have been done to prevent and lessen the severity. I don't know why we aren't working harder than we are."

Despite efforts to reach the Forest Service for comments, questions regarding Donovan's assessment of the situation went unanswered. State lawmakers, however, are trying to address some of the issues regarding the nation’s forests in the 2012 Farm Bill.

"Many of the provisions in the House version of the 2012 Farm Bill under the forestry section would be very helpful in addressing the forest conditions that lead to catastrophic wildfires, as would similar provisions in the Senate version," Colorado Gov. John Hickenlooper wrote in a letter to the House Committee on Agriculture. "As a result, we strongly encourage that these proposals remain in the bill, survive any conference committee and are ultimately passed by the full Congress."

Among those proposals highlighted in his letter:

• Stewardship Contracting: This proposal would extend the authorization of stewardship contracting of goods, such as trees and other woody biomass, for services, such as removing the forest materials. This would allow the Forest Service the flexibility it needs to make the trees in the Rocky Mountain region more economical to remove and convert to beneficial uses, Hickenlooper said.

• Good Neighbor Authority: This provision would reauthorize and expand the program that allows state foresters to perform needed fuels-reduction treatments on federal forest lands that are adjacent to areas where similar treatments, on non-federal lands, are being conducted.

• Critical areas: This provision identifies critical areas in the country's forests that are at high risk for catastrophic wildfires, and then streamlines the review and action plans for addressing those areas.

• Strategic Planning: This provision has the Forest Service performing analysis on the conditions of the nation's forests and would require that it provide Congress with an action plan on how it will address fire threats, as well as plans for risk reduction.

The Farm Bill recently passed the U.S. Senate and is currently being reviewed by the House Agriculture Committee. 

A draft of that bill can be viewed at www.ag.senate.gov/issues/farm-bill.



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