BAKER CITY HERALD • THuRsDAY, JAnuARY 13, 2022 A5
LOCAL & STATE
Stewards of the land: With a long-term stewardship
contract set to expire next year, Malheur National
Forest officials are weighing what will come next
BY STEVEN MITCHELL
Blue Mountain Eagle
JOHN DAY — The 10-year
stewardship contract between
the Malheur National Forest
and Iron Triangle is widely
credited with saving John Day’s
last surviving lumber mill, cre-
ating hundreds of jobs and im-
proving forest health.
But it has also prompted
criticism from some who feel
the John Day-based logging
company has profited at the ex-
pense of smaller rivals.
Now, with the contract set
to expire early next year, fed-
eral forest managers are trying
to decide what form steward-
ship contracting on the forest
should take in the future.
A different approach
Stewardship contracts are
fundamentally different from
traditional timber sale con-
tracts.
According to Roy Walker,
a program manager with the
Forest Service, the federal
agency awards timber con-
tracts by identifying an area
with commercially marketable
trees, marking the boundaries
of the proposed timber sale
and estimating the amount
of merchantable wood in the
sale area.
Then, he said, the agency
evaluates the fair market value
of the timber and opens up a
bidding process to companies
that can meet bonding and
other requirements.
As the Forest Service ex-
panded its forest restoration,
fuels reduction and thin-
ning activities, Walker said,
it melded forest management
work, which often lacks com-
mercial value, with timber
sales.
Stewardship brings the two
together, allowing the Forest
Service to award the commer-
cial value that loggers would
ordinarily bid on to finance
restoration work on national
forest land.
In 2013, faced with the im-
minent closure of Malheur
Lumber, Grant County’s lone
sawmill and largest private em-
ployer, due to an inconsistent
and unreliable supply of tim-
ber, Malheur National Forest
officials decided to award a
long-term stewardship contract
to a single operator in a bid to
stabilize the situation.
The 10-year, $69 million
contract went to Iron Triangle,
the winner in a competitive
bidding process.
The contract, which was sig-
nificantly more long-term and
broader in scope than most
stewardship deals, accelerated
timber sales and increased the
pace of restoration work on the
Malheur.
Universally regarded as a
success in stabilizing the local
economy, the unusual contract
has won praise at the national
level. Its overarching goals were
to promote ecological resto-
ration and reduce wildfire risk
on 180,000 to 500,000 acres of
forest land while improving
economic vitality in Grant and
Harney counties.
Richard Hanners/Blue Mountain Eagle, File
Raw logs ready to be milled at Iron Triangle’s post and pole plant in Seneca. The plant is one example of investments made by the company to
carry out its 10-year stewardship contract with the Malheur National Forest.
commercial timber volume.
Instead of the current guar-
anteed 70%, he expects to de-
crease the share to between 30
and 50%, with allowances for
annual adjustments.
Pros and cons
Iron Triangle’s current deal is
what’s known as an integrated
resource service contract, a
mechanism that Trulock said
has both pluses and minuses.
For instance, Trulock said,
the Malheur is required to
commit appropriated dollars
up front at the appraised price
of timber for the duration of
the contract.
With 70% of the total vol-
ume of timber sales off the
Malheur going to the pro-
gram, Trulock said, that pro-
vides a high level of predict-
ability for the contractor while
also guaranteeing a steady
supply of logs for Malheur
Lumber’s John Day sawmill.
But it could also create a
problem for Malheur offi-
cials. With so much of their
discretionary timber revenue
committed to the steward-
ship contract, they could find
themselves strapped for funds
if unexpected circumstances
arose, such as congressional
budget cuts.
The contract’s long time
span and financial guarantees
have also made it possible for
Iron Triangle to invest in in-
frastructure, equipment and
workforce development.
That benefits the company
in obvious ways, but it also
provides assurance to Forest
Service officials that the com-
pany will be able to fulfill its
contractual obligations to meet
stewardship goals such as re-
ducing fuel loads in the forest,
preventing soil erosion and
Current contract
maintaining roads.
The Iron Triangle contract
When the Forest Service
expires in March 2023, and,
put the 10-year stewardship
just like last time, any new con- contract out for bid in 2013, it
tract will be awarded through was looking for something it
a competitive bidding process couldn’t get out of an old-fash-
open to all qualified operators. ioned, straightforward timber
But even though a decision
sale contract: It was looking for
is still a year out, Malheur Na- a partner that could get the cut
tional Forest Supervisor Craig out, do the stewardship work
Trulock said he’s already con-
and deliver a steady stream of
templating some changes in the logs to Malheur Lumber.
next stewardship deal.
Zach Williams of King
While he is leaning toward
Inc., a subcontractor of Iron
awarding another long-term
Triangle who works in oper-
contract, there will be less tim- ations, summed up the situa-
ber to go around this time. The tion this way:
agency expects a lower annual
“The government said, ‘We
timber harvest target — down want to induce investment,’”
from 75 million board feet to
Williams said. “There was a
between 50 and 55 million
reason for that, and that hasn’t
board feet per year.
changed. They’ve made tim-
Trulock said the next stew- ber sales (the old-fashioned
ardship contract will likely
way) for 100 years, and that’s
have a lower percentage of
why Malheur was going to
the Malheur National Forest’s close down.”
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Richard Hanners/Blue Mountain Eagle, File
Finished product ready to be shipped at Iron Triangle’s post and pole plant in Seneca.
Richard Hanners/Blue Mountain Eagle, File
These small-diameter logs were removed from the Malheur National Forest as part of a fuel-reduc-
tion project.
Perception of monopoly
There is a social dynamic
that goes along with the long-
term contract, one that has cre-
ated the perception of winners
and losers.
While he was not the super-
visor when Iron Triangle won
the contract, Trulock said peo-
ple occasionally tell him that
the Forest Service created a
monopoly in the community
with the deal — even though
the bidding process was open
to anyone who met the criteria.
And Iron Triangle is not
the only company making
money on the Malheur Na-
tional Forest.
Since September 2013, Wil-
liams noted, the forest has sold
405 million board feet of tim-
ber. Of that total, 231 million
board feet was sold to Iron Tri-
angle through the stewardship
contract, and the remaining
174 million board feet sold on
the open market.
Dave Hannibal with Gray-
back, a subcontractor on the
stewardship contract, said Iron
Triangle won the contract fair
and square. The complaints
about a monopoly, he feels, are
just sour grapes.
“People will always shoot at
those on top,” Hannibal said.
“The 10-year stewardship (con-
tract) was issued in fair compe-
tition. Whoever won it would
have been shot at.”
Still, some smaller operators
in the area say they would like a
bigger share of the timber com-
ing off the Malheur.
Tim Rude, the owner of John
Day-based Rude Logging, was
one of the contractors on the
original stewardship proposal
to work with Iron Triangle but
now operates his own timber
sales and others for various log-
ging companies, such as Boise
Cascade and Wood Grain.
Some of those sales are on
the Malheur, but he and his
22 local employees follow the
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What now?
In Trulock’s view, the 10-
year stewardship contract
has achieved the objectives it
strived for by all metrics that
the Forest Service has reviewed
over the past eight years. But
that doesn’t mean the next
stewardship contract has to be
a carbon copy.
“We stabilized the commu-
nity, stabilized the mill,” Tru-
lock said. “I can’t think of any
way that I would say this was
not a success. Would you re-
peat that, if the intent is to grow
a community? Would you do
it exactly the same way to grow
a community, and grow new
businesses? I don’t know. But I
think that’s the conversation we
need to be having.”
Malheur National Forest
officials plan to hold an infor-
mational meeting sometime in
the next few months to explain
how stewardship works and
discuss ideas for future stew-
ardship contracts.
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work, whether it be in Western
Oregon or Washington state.
“We go where we have to
to stay busy,” Rude said, “but
it would be nice to have local
work.”
Rude said multiple logging
contractors in Grant, Harney
and Baker counties are work-
ing out of the area but would
like to work locally.
“(Traveling for work) takes
our people out of the area,”
Rude said, “and it takes our
people away from their fam-
ilies.”
Malheur Lumber General
Manager Bruce Daucsavage,
who helped broker the contract
in 2013, said the gripes Trulock
hears in the community are
understandable. But he added
that, once people look closer at
the commitment required of
larger contractors such as Iron
Triangle — the investments,
expansions, risks, and capac-
ity necessary to implement the
scope and scale of work — the
arrangement begins to make
sense.
One of the things that came
up in the contract negotiations,
Daucsavage recalled, was that
Malheur Lumber would need
to spend $5 million to upgrade
the sawmill but would need
to see a return on that invest-
ment within a limited window
of time.
Iron Triangle and its subcon-
tractors, he said, had the tech-
nical expertise, the capacity,
and the equipment to carry out
the work that would ensure the
reliable timber supply the mill
needed to survive.
That is not to say a smaller
company could not have ful-
filled the criteria to get the con-
tract, Daucsavage added, but it
would have been a stretch.
In fact, it was a stretch for
Iron Triangle at the time.
Owner Russ Young said the
projects included in the con-
tract were beyond the scope
of anything the company had
done in the past and required
reliable equipment that would
allow them to ramp up and
produce on landscapes where
the harvest was upwards of 7
million board feet of timber on
a single task order with hard
deadlines.
“We were on the hook from
day one that says if you shall
not perform, you will be in
breach of contract,” Young said.
Iron Triangle declined to dis-
close how much money it has
spent to fulfill the terms of the
10-year stewardship contract,
but some of its investments are
on full display. One recent ex-
ample is the company’s post
and pole plant in Seneca, built
to process small-diameter logs
cut to reduce fuel loads on the
forest. The plant has 25 full-
time employees.
Altogether, according to in-
formation from the Malheur
National Forest, the steward-
ship contract has created or
sustained a total of 268 jobs at
Iron Triangle, its subcontrac-
tors and the national forest.
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