There are a number of important issues that the U.S. Congress will address this year, and topping the list is comprehensive energy reform.

Now that the election returns are in and the page on the calendar has turned to "2005", the question arises-as it does every year-what do we have to look forward to this year? A very general question? Yes. But in this case, I am referring to what issues will the U.S. Congress likely address this year, and what effect will they have on the forest, paper and wood products industry.

For such a very diverse industry such as ours-one that employs 1.3 million people and accounts for nearly seven percent of the United States' annual manufacturing output-nearly every piece of legislation affects us somehow. Homeland security legislation affects the way we handle and transport some of the chemicals and materials used in our manufacturing process. Government procurement guidelines are of growing interest to our industry, given the growing interest in green building and environmentally preferable purchasing.

Health Care reform, Pension reform and Social Security reform have a dramatic effect on the employees that manage our lands and run our mills. Likewise, major tax reform, high on the Bush Administration's agenda, affects every American, but also has the potential to vastly improve the forest products industry's competitiveness in the global marketplace.

One of our highest priority issues is one Congress has indicated it intends to take up almost immediately after convening-comprehensive energy reform.

Although the forest products industry has reduced its energy consumption by 17 percent in that last 32 years, energy remains the third largest operating cost for our industry, making up more than eight percent of our total operating costs. Although we are nearly 60 percent energy self sufficient, the industry does use natural gas, coal, fuel oil and purchased electricity to meet our energy needs.

In 2003, the industry spent nearly one billion dollars more for natural gas than it did for the same amount of natural gas in 2001, owing to a nearly doubling in the cost of natural gas over those two years. Rising natural gas prices also affected the amount we pay for the electricity we purchase as well as the cost of transporting our products from the forests to the mills, then back out to our customers.

We believe improved access to, and domestic supply of, natural gas needs to be a vital part of any energy legislation. There are significant reserves of natural gas in several parts of the United States that can be accessed in an environmentally-responsible manner. Congress needs to recognize that new technology is now available that can help identify and extract natural gas with minimal impacts on the environment.

Further, expansion of transportation and infrastructure to bring additional natural gas to consumers is essential. We will be working to encourage Congress to act responsibly to reduce the barriers to sitting and permitting of these facilities. Increasing supply and access will help bring the cost of natural gas down, not just for our facilities, but for all Americans.

Another important issue we expect to see come to a head is postal reform. A healthy U.S. Postal Service is essential to the forest products industry, as our printing, writing and packaging products account for a vast majority of the items that pass through the mail system. Therefore, postal reform is a vital issue to our industry, one which we expect will be among Congress' top priorities in 2005.

Congress has also indicated it intends to modernize and reform the Endangered Species Act this year to reduce conflict and litigation and better reflect emerging science on ecosystem management. Of particular interest to us are efforts to implement the "no surprises" rule which would place reasonable limits on the government's ability to impose additional measures in the future on already existing habitat conservation plans. As the owners and managers of 90 percent of the industrial timberland in the United States, the forest products industry has a vital interest in seeing the implementation of a more rational, commonsense approach to the protection of endangered species.

As you can see, we expect a very busy year in 2005. We are looking forward to working with our Senators and Members of Congress to promote a healthy environment where our companies can continue to thrive and provide the American people with the high-quality and affordable wood and paper products we have come to rely on and enjoy.

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