NH Tackles Loss of Timber Tax From Shift To Less Logging With Carbon Credit Programs

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Paula Tracy photo

The Pittsburg Fire Station was packed last August with people wanting to know more about logging and carbon credits.

Logging in the Perry Stream Valley of the Headwaters tract in Pittsburg last summer. Charles Levesque photo


CONCORD – With the potential loss of hundreds of thousands of dollars in timber tax revenues for North Country communities and county government because of a shift from logging trees to saving them for carbon credits, lawmakers are beginning to turn their attention to finding replacement revenue.

Some municipalities are facing the prospect of raising taxes or cutting services.

Steve Ellis, a member of the Pittsburg Board of Selectmen, said the town received about 20 percent or $175,000 of its $2 million town budget last year from timber tax.

That was from a tract of land that was recently bought by a carbon credit company vowing to reduce cutting by 50 percent.

Instead of cutting the trees the focus is on growing them and getting paid better by investor companies hoping to reduce their carbon footprint as they move to zero carbon emissions goals. 

That means Pittsburg has a budget hole to fill now and into the future.

Legislative Action

On Tuesday, the House Science Technology and Energy Committee started toward a solution, and voted unanimously ought to pass an amended House Bill 1697, which would work to establish a state registry for lands that are enrolled in the newly emerging carbon credit markets and look to draft legislation for next year on a potential carbon tax.

“It’s a start,” said committee vice chair state Rep. Doug Thomas, R-Londonderry. “We know it is not a perfect bill but important enough for the timber industry to start a registry and to help the towns.”

It came at the same time Aurora Sustainable Lands, formerly known as Bluesource, the new owner of 60 percent of all the land in Pittsburg, pledged $120,000 as a one-time payment in lieu of taxes to stabilize the taxes of that town for one year.

That could be a one-time Bandaid preventing a big property tax jolt.

Executive Councilor Complains To AG

Meanwhile, Republican Executive Councilor Joe Kenney of Wakefield has sent a letter to the Attorney General’s Office alleging that Aurora violated certain terms of a state easement on the land paid for by over $40 million in federal and state funds more than 20 years ago which was designed to keep the 146,000-acre tract available for logging and recreation.

But it did not envision another way to make money from the land other than logging.

In the Jan. 25 letter, Kenney said: “I believe Aurora Sustainable Lands broke the original Connecticut Headwaters land easement agreement on two fronts: they did not report their name change to all interested parties and Aurora Sustainable Lands remortgaged this Connecticut Headwaters property under the Coos County registry of deed without notifying the state the promissory note of $400 million from the Prudential Insurance Co. of America is not invested solely for the purpose of use in New Hampshire, but also for investment purposes outside our state.”

E.J. Powers responded for Aurora by email: “We disagree with the assertions in this letter as none of our actions violated the easement requirements. We look forward to addressing these and other misconceptions with the NH Department of Justice very soon.

 “Specifically, we’d like to point out:  CRLT did not change its name.  The Fee Owner (CRLT) of the Forest did not change.  There is no requirement to report any ownership change in CRLT. The Easement does not require any notice of a mortgage.  In fact, Section 15 expressly exempts ‘grant of a mortgage’ from the notice requirement,” Powers said.

Attorney General John Formella did not address Kenney’s charges, but said last week his office is looking into the terms of the easement to see if Aurora is in compliance.

Shawn Jasper, commissioner of Agriculture Markets and Food, estimated in a Jan. 31 Market Bulletin column that 25 percent of municipal income in Coos County comes from the timber tax.

History of the Property

The first such experience for the state with carbon credits now comes with the Connecticut Lakes Headwaters Tract.

For the past century that land, the largest single privately owned tract in the state, was formerly owned by International Paper.

It had been primarily used for logging and recreation. 

The easement, crafted as a way 20 years ago to keep the land open, was intended to preserve those past uses.

The land now owned by Aurora has a “carbon-first” philosophy to grow trees not cut them and reduce by half the traditional amount of logging.

The company has invested $1.7 billion to acquire 1.6 million acres in the country, according to its website, and uses the existing carbon markets to generate revenue.

Other Bills

There are other bills on this issue in play in different House committees that may or may not be premature due to this new bill language.

One looks to create a 10 percent carbon tax on these tracts and another that looks to remove lands from the current use program.

House Bill 1709-FN establishes a yield tax of 10 percent on land used for carbon credits;  House Bill 1484-L, is relative to exclusions from the state’s current use program for such land practice. 

The sponsor of both bills is state Rep. Eamon Kelley, D-Berlin.

The amended bill which was voted ought to pass in committee Tuesday, originally related to a moratorium on carbon farming here for two years and was authored by state Rep. Arnold Davis, R-Milan.

Watching and Worrying

North Country leaders, like Coos County Administrator Mark Brady, said he is worried about the future of revenues from timber tax and the way of life these large tracts provide, yielding jobs, taxes and recreation opportunities.

The change in logging tracts becoming climate credit carbon sequester farms could lead to higher property taxes for taxpayers in the north, or reduced services, or both.

The Harvard Business Review explained in December 2023 that, “More than one third of the world’s 2,000 largest publicly held companies have declared net zero targets according to Net Zero Tracker, a database compiled by a collaboration of academics and nonprofits.” 

“Carbon credits are financial instruments where the buyer pays another company to take some action to reduce its greenhouse gas emissions, and the buyer gets credit for the reduction.

“As companies creep closer to their net zero target years, many have already begun purchasing carbon credits. The market for carbon credits is projected to grow 50-fold within a decade, from nearly $2 billion in 2022 to nearly $100 billion by 2030, and as much as $250 billion by 2050, according to Morgan Stanley,” the Harvard Business Review article states. 

Lots of Forest Land

New Hampshire is the second most forested state in the country behind Maine with more than 80 percent of the total landmass covered in trees.

Brady said the county is worried about the future of the region and he noted these are large, out-of-state corporations that are buying up the tracts.

In a Jan. 18 letter to Patrick Hackley, director of the state Division of Forest Lands, Brady wrote carbon farms could lead to “the Walmartization of forest management in New Hampshire where multinational hedge funds and sovereign wealth funds buy up forests globally and local control is ceded to those that do not understand or appreciate our way of life.” 

A ‘Good Neighbor’

Aurora officials say they plan to stand by the community and be a “good neighbor.”

Blake Stansell, the president of Aurora Sustainable Lands, said his company intends to abide by the existing easement that was drafted 20 years ago. 

Stansell said the company intends to support the many industries that rely on the Connecticut Lakes Headwaters Working Forest from loggers to snowmobile lovers who flock to the region where snow is reliable.

While the company has supported the existing OHRV use on the land, it did not support expansion of it at a fall meeting of a citizens’ oversight committee for the Headwaters Tract. 

Stansell noted the carbon issue predated his company’s involvement with the land.

He also noted that carbon credits existed on the parcel from the prior owner. In 2013 The Forestland Group placed the parcel in the California regulatory market but Aurora did not take ownership until 2022.

The USDA Forest Legacy easement was purchased by the state on the property in 2003 with the idea of protecting the land for traditional uses such as logging and recreation.

It was paid for by over $40 million in federal and state funds.

That deed went with the tract when International Paper sold to Lyme Timber, which originally purchased the land, assumed the easement and logged it until 2008. Lyme sold it to The Forestland Group, which enrolled it in the California Air Resources Board’s Cap and Trade Program.

Landvest is the land manager, as it was for The Forestland Group. When rumors were confirmed by the company last summer that it wanted to cut in half the traditional amount of logging, that sent local and state officials scrambling in much the same way they did when International Paper put the land up for sale.

State Oversight

Sarah Stewart, commissioner for the Department of Natural and Cultural Resources, said Aurora has submitted an operating plan required under the easement terms and a stewardship plan for the land which is being reviewed by the Division of Forest and Lands and Attorney General Formella.

Formella told the Governor and Executive Council last Wednesday that his office is reviewing the plans to see if that cutting framework is permissible under the language of the easement.

“We’re working hard on it,” Formella said. 

In a meeting with reporters at his office last Wednesday, Gov. Chris Sununu said the change in land use represented by the emerging carbon credit market is “very concerning” and his administration is watching.

While he said he views private lands as just that, that private landowners have rights to do what they want with their land, if there are easements the new landowner needs to abide by them.

“We are watching this very closely,” Sununu said. “We are a logging state. A lot of folks rely on those jobs. I think we do it smart. We do it with conservation in mind. To see more and more of these tracts of lands being bought up by these national groups, not local groups for the carbon credits. It sounds good, I suppose, environmentally but it has real repercussions to us locally. We are a very forested state, right? That’s a wonderful thing…if you are going to buy and preserve a forest for carbon credits and limit logging, you’d think you would do it in states which don’t have a lot of forests, but they are doing it here. So we’re keeping an eye on it.”

Also watching to be sure Aurora is being a “good neighbor” and reminding it of the reason they have the land is U.S. Senator Jeanne Shaheen, D-NH, who as governor helped forge the easement for that land and secure the funding with then-U.S. Senator Judd Gregg, R-NH.

Shaheen has been actively engaged with executives since the summer months when Aurora’s – then Bluesource’s – plans to drastically cut logging became known to the loggers.

Shaheen wrote letters encouraging dialogue and her staff is watching developments.

Kenney’s Deep Dive

Executive Councilor Kenney is taking a deep dive on the issue.

He testified in support of the bill related to current use tax last month and suggested the state establish “a diversified committee to review the ins and outs of carbon offsets and to report back with legislation to direct our future with regards to this activity.”

Kenney said such “companies coming into New Hampshire (often unregulated) to create private landowner contracts” could hold up land use for decades for the purpose of carbon offsets.

He called it “a threat to our timber and wood product industries. It is also a threat to local NH revenues in which small New Hampshire communities rely heavily on timber tax in some cases to balance their budgets. The carbon credit industry is an unchecked industry here in New Hampshire and beyond that has gone unnoticed.  An industry that just walked into New Hampshire with outside…investment companies who are calling the shots and changing our timber and management culture right before our eyes,” Kenney said.  

Kenney said New Hampshire takes pride in open space and land trusts.

“We are a travel and tourism state, blessed with many mountains with state and national forests.  The carbon offset industry wants to take advantage of our natural resources and what we have preserved as a state,” Kenney said.

He was also concerned about the lack of information.

“There is no state official who can give me the names and locations of who is participating in carbon tax credits with outside companies.  The information does not exist at Forest and Lands or the Department of Revenue,” he said.

Stansell of Aurora, in a letter to the House Science, Technology and Energy Committee last week wrote “as the current owner of this precious resource, we are committed to honoring the letter and the spirit of the conservation easement continuing timber harvesting and maintaining and enhancing its use and enjoyment by the public.”

Much At Stake

Brady said the “very ethos” of the region’s vast lands are at stake including everything that makes the North Country special like open access to snowmobiling, hunting, access to leased camps, mountain biking, OHRV recreation, birding, and moose watching. 

Shawn Hagan, regional director of Forest Operations for Aurora, wrote to the state saying there are plans in line to create habitat improvements for woodcock, a local game bird and other native habitat enhancements.

But Brady and Kenney are still worried about the future as is Selectman Ellis in Pittsburg.

“Is New Hampshire sovereignty in jeopardy due to outside companies dictating the terms of our forest industry?” Kenney asked.

Paula Tracy has been a reporter in New Hampshire for 30 years.

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