Kirkpatrick Praises Mill, Works To Repeal An Unfair Tax Credit

By Naomi Hatch
   “This is the kind of industry we want to bring to District 1,” said Congressman Ann Kirkpatrick while touring the Snowflake Catalyst Paper Mill. She explained that this mill has gone totally recycle, has a biomass plant connected and is a great example of going green. “This is a great renewable recyle facility. We can be leaders in Arizona in the matter of green.”
   Catalyst Snowflake Mill consumes more than 480,000 tons of recycled paper, keeping it from being put in landfills, is an energy self-sufficient facility that has the potential of selling excess electricity and has a farm that takes the waste.
   Catalyst is the second largest employer in Navajo County with 329 employees and supports approximately 300 additional jobs through suppliers. The company has been supportive of the communities in many ways, including the donation of land for the Northern Arizona Training Center.
   Kirkpatrick asked for support through mayors and councils in passing a resolution in favor of a bill she and Congressman Jeff Flake, a previous Snowflake resident, sponsored that would revoke the Black Liquor tax credit that gives unfair advantage to other mills.
   Taylor Mayor John Cole and Show Low Mayor Rick Fernau both agreed to give their support. Vice Mayor Kerry Ballard said the Snowflake Council passed a resolution of support at the June 23 town council meeting, and Town Manager Paul Watson gave a copy to Kirkpatrick.
   Although the Snowflake Mill is moving green it is being punished because it is now recycle and cannot take advantage of a tax loophole in the 2005 Highway Bill that created a 50-cent per gallon tax rebate that was intended it to be an incentive for businesses to mix fossil fuel with alternative fuel for vehicles.
   Production Manager Tom Fawcett explained that the Snowflake Mill previously utilized the black liquor process, which dates back to the 1930s, but when they went recycle, black liquor was gone. He explained the process, noting that it begins with white liquor that is a mixture of chemicals and wood chips where the fiber is broken down into a black soup, which is called black liquor. The process generates heat and steam to run the mill.
   Certain mills have found a loophole in the Highway Bill where they can add .01 percent diesel fuel, which allows a credit for replacing fossil fuels with biofuels to black liquor and qualifies them for the tax rebates. They will likely go back to producing black liquor without the diesel fuel when the rebate is gone.
   To this point the federal government has spent $6 billion to $10 billion on rebates, though only $61 million was originally budgeted. This gives a rebate of thousands of dollars a day and in some cases, mills could make more from the tax credit than they do from regular revenues.
   The “Mill Street News” explained that recently Boise Derrider announced a price drop from $550 a tonne to $430 a tonne delivered. Snowflake mill and other recyle mills cannot compete with this price.
   The Snowflake Mill has met other challenges, such as the purchase by Catalyst from Abitibi when the Department of Justice didn’t want a monopoly, requiring a different firm to purchase the Snowflake Mill than purchased other mills owned by Abitibi, and when Smurfit-Stone wouldn’t renew the contract and they had to shut down Machine No. 2, which resulted in a great expense to the mill and the loss of employees. They recently laid off approximately 100 employees due to the economic downturn.
   Snowflake Councilman Jason Whiting said he felt the money spent should be enough reason to repeal this.
   Mayor Cole said, “This is legislation that is undermining everything our country and our community stand for.”
   Kirkpatrick noted that once she explains this to her colleagues, they agree it has created an unfair playing field for recycle mills.
   Snowflake Mill General Manager John McKee said, “If we can get a level playing field, we will be here for a long time…We’re not asking for any kind of handout, we’re asking for the loophole to be closed.”
   McKee noted that similar legislation has been introduced in the Senate by Max Baucus (D-Mont.) and Chuck Grassley (R-Iowa).
   He said they are taking comments until July 10 and urged everyone to support the mill.
   There are sites on line that have a prewritten letter you can send. One site is www.ga3.org/campaign/liquor.
   An e-mail is being sent to paper mill employees and throughout the community asking area residents to send letters to altfuelscredit@finance-dem.senate.gov by July 10 with the hopes of adding credibility to the campaign.
   McKee said they are interested in finding a business to reside on the other side of the mill, but it must be compatible, such as the Renergy a biomass plant. He noted that Watson brought a solution, which is in the process of interviews at this time. He said there is also a possibility of expanding NATC and bringing in other training facilities. The mill has invested in the infrastructure, making it more desirable to another company.
   Catalyst is in the midst of a 10-day shutdown due to the cancellation of orders. The mill previously was running 10 days and shutting down five because of the economy.
   “The support of the community has been tremendous,” said McKee. “We’ve received nothing but support from the community.” He also thanked Kirkpatrick for getting the legislation drafted to close the loophole.
   Kirkpatrick will take the information she has gathered back to her colleagues in Washington. The Kirkpatrick/Flake bill is calling for the repeal of black liquor as a qualified alternative fuel by Oct. 1.