The U.S.-Canada Softwood Lumber Agreement:  How the Bush Administration Diverted $1 Billion to Timber Industry Trade Associations and Timber Industry-Dominated “Charitable” Organizations 

If you care about funding not-for-profit organizations that help protect both forests and sustainable forestry, then you should care about what the Bush Administration did with $1 billion of YOUR public money in the Fall of 2006.

The U.S.-Canada Softwood Lumber trade war has been going on for 25 years. The most recent phase of this war began in 2002 when, at the request of the timber industry, the Bush Administration agreed to impose 30% duties against Canadian lumber exporters on the grounds that the Canadians were subsidizing and “dumping” cheap timber on the United States.

But U.S. courts and international trade bodies (such as NAFTA and WTO) ruled that the stiff duties were illegal under United States and international trade laws and ordered the United States to terminate them and return all of the withheld duties to Canada, which amounted to about $5.4 billion. To settle this litigation, the Bush Administration, through U.S. Trade Representative Susan Schwab, made a deal with Canada, known as the Softwood Lumber Agreement (SLA). With respect to the $5.4 billion in illegally-withheld duties, the SLA provided that $4.4 billion would go to Canada and the United States could keep $1 billion.

Normally, the United States’ $1 billion from the settlement would have gone into the U.S. Treasury and to be spent only by Congress. But the Bush Administration wrote the deal so that the Administration could decide who received the United States’ $1 billion share without first going through Congress. To accomplish this, the Bush Administration came up with a very clever trick:  the United States would transfer all $5.4 billion to Canada and Canada would, in turn, “donate” $1 billion to Bush Administration-determined private entities in the United States.   

Through this end-run around Congress, the Bush Administration gave $500 million to the timber industry trade associations that originally sought the duties and $450 million to three non-profit organizations dominated by timber industry executives and timberland owners, including $200 million to the U.S. Endowment for Forestry and Communities—a new organization created especially to receive and spend these funds, $150 million to the American Forest Foundation, an organization that promotes the interests of small forest landowners, and $50 million to a cross-border, pro-timber industry lobbying group called “The Bi-national Council”. The final $100 million went to Habitat for Humanity to help build homes for those who cannot afford housing.

Conservation organizations—and you—should be extremely concerned about this transaction because, except for the $100 million Habitat for Humanity grant, this $500 million in public money could have been used to promote sustainable and environmentally-friendly forestry.  Rather, the Bush Administration diverted it to entities that are dominated by the politically powerful timber industry and which do not have any meaningful environmental representatives.   Imagine the threat to the environment posed by a $500 million “environmental” foundation dominated by an industry that has been responsible for such pervasive environmental damage throughout the United States.

The Washington Forest Law Center (WFLC) on behalf of the Sierra Club, Center for Biological Diversity and Conservation Northwest has led an effort through litigation and public inquiry to daylight the real story behind this unprecedented Bush Administration driven windfall. Was the public’s interest compromised on behalf of a huge timber industry driven give-away? Our highly respected conservation clients believe this enormous amount of money will now be used to promote environmentally-destructive timber practices across the United States. 

In an effort to get to the bottom of this extraordinary deal, we have enlisted the backing of congressional leaders including U.S. Senator Maria Cantwell to daylight how this billion dollar deal was put together without public or congressional oversight. We are still trying to determine if this deal violated the Constitution and laws. The Bush Administration has been fighting our efforts to gather information by refusing to make hundreds of documents available to the public. WFLC will continue to lead the battle on this important issue that has a profound impact on environmental protection, public dollars and perhaps most important, the rule of law.

Below is additional background information and press coverage of this issue:

Read the Media Coverage:

• Seattle PI:  "Forestry groups queried on U.S. funds" July 10, 2008, Robert McClure, P-I Reporter
• Seattle PI:  “The $1 Billion Timber Payday: Who Took A Cut?” April 29, 2008, Robert McClure, P-I Reporter
• Read Robert McClure’s blog entry, “How $1 billion timber deal affected consumers” Posted on Dateline Earth, May 1, 2008
• Listen to NPR’s coverage:  “Suit Targets Payout from Canadian Lumber Deal” Martin Kaste, All Things Considered, April 30, 2008
• The Sierra Club’s Executive Director, Carl Pope, blogs about the deal here: “Can't See the Forest for the Trees?” Taking the Initiative, April 30, 2008

The Lawsuit:

Click here to read the Freedom of Information Act complaint filed in federal court on behalf of our clients. This lawsuit challenges the failure of the U.S. Trade Representative (USTR) to timely and thoroughly respond to plaintiffs’ FOIA request in the manner mandated by FOIA. The FOIA request sought information from the USTR pertaining to the “meritorious initiatives” funded with $450 million of the proceeds of the U.S.-Canada Softwood Lumber Agreement.