Potlatch 2004 Annual Audit Report-Final

Potlatch 2004 Annual Audit Report-Final

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Scientific Certification Systems, Inc. 2000 Powell Street, Suite 1350 Emeryville, CA 94608 Tel: 510.452.8000 Fax: 510.452.8001 http://www.scscertified.com FSC Certification Report for the 2004 Annual Audit of the: Idaho Forest Lands Owned and Managed by Potlatch Corporation Resource Management Division SCS Forest Conservation Program Under the Auspices of the Forest Stewardship Council Certificate Number: SCS-FM/CoC-00067N Awarded: March 20, 2004 Date of Field Audit: September 27-30, 2004 Date of Report: November 15, 2004 Certificate Awarded by: Scientific Certification Systems 2000 Powell St. Suite 1350 Emeryville, CA 94612 Contact: Dave Wager Page 1 2004 ANNUAL CERTIFICATION AUDIT OF THE NORTH IDAHO FEE TIMBERLANDS MANAGED BY THE POTLATCH RESOURCE MANAGEMENT DIVISION 1.0 GENERAL INFORMATION 1.1 FSC DATA Name and contact information for the certified operation: • Source name: Potlatch Corporation, Resource Management Division, Idaho Region • Contact person: Steve Smith, Resource Manager • Address: 805 Mill Rd., P.O. Box 1388, Lewiston, ID 83501 • Telephone: 208-799-1288 • Fax: 208-799-1707 • E-mail: shsmith@potlatchcorp.com • Certified products: softwood logs • Number of Acres/hectares certified: 670,00 acres ( 271,000 hectares) in northern Idaho • Nearest Town: Lewiston, Idaho • Biome: Temperate Needleleaf • Tenure: Private, fee simple ownership • Forest ...

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Scientific Certification Systems, Inc. 2000 Powell Street, Suite 1350 Emeryville, CA 94608 Tel: 510.452.8000 Fax: 510.452.8001 http://www.scscertified.com  
 FSC Certification Report for the 2004 Annual Audit of the: Idaho Forest Lands Owned and Managed by Potlatch Corporation Resource Management Division     SCS Forest Conservation Program Under the Auspices of the Forest Stewardship Council   Certificate Number: SCS-FM/CoC-00067N Awarded: March 20, 2004      Date of Field Audit: September 27-30, 2004 Date of Report: November 15, 2004     Certificate Awarded by:  Scientific Certification Systems 2000 Powell St. Suite 1350 Emeryville , CA 94612 Contact: Dave Wager
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2004 ANNUAL CERTIFICATION AUDIT OF THE NORTH IDAHO FEE TIMBERLANDS MANAGED BY THE POTLATCH RESOURCE MANAGEMENT DIVISION   1.0 GENERAL INFORMATION   1.1  FSC  D ATA   Name and contact information for the certified operation:    Source name: Potlatch Corporation, Resource Management Division, Idaho Region  Contact person: Steve Smith, Resource Manager  Address: 805 Mill Rd., P.O. Box 1388, Lewiston, ID 83501  Telephone: 208-799 1288 - Fax: 208-799-1707  E-mail: shsmith@potlatchcorp.com  Certified products: softwood logs  Number of Acres/hectares certified: 670,00 acres ( 271,000 hectares) in northern Idaho  Nearest Town: Lewiston, Idaho  Biome: Temperate Needleleaf  Tenure: Private, fee simple ownership  Forest Composition: Mixed conifer including: Douglas-fir, grand fir, hemlock, white pine, western redcedar, lodgepole pine, ponderosa pine Managed as: Natural Forest     1.2 General Background   This report describes the results of the first surveillance audit of Potlatch’s north Idaho certified forest operations, initially certified in March, 2004. This audit is was conducted according to FSC protocols and pursuant to the terms of the original forest management certificate awarded by Scientific Certification Systems (SCS-FM-00067N). All certificates issued by SCS under the aegis of the Forest Stewardship Council (FSC) require surveillance audits at frequencies no greater than yearly to ascertain ongoing compliance with the requirements and standards of certification. Additionally, SCS reserves the right for short-notice audits. No such short-notice audits have been conducted since issuance of this certificate.     
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1.3 Forest and Management System  As was the case at the time of the initial certification evaluation, Potlatch’s north Idaho forest estate is managed under silvicultural regimes that are compatible with the FSC definition of natural forest management. While even-aged management is the predominant silvicultural approach, the managed forest landscape—comprised collectively of the uplands and the riparian zones—controlled by Potlatch is one in which most of the structure and characteristics associated with native forest indigenous to north Idaho remains present.  There have been no significant changes to the land base comprising the fee lands that the Idaho RMD is managing. Furthermore, there have been no major changes to the management system employed in the Idaho Region of the RMD. See the 2004 Certification Evaluation Report Public Summary www.scscertified.com  for a more detailed description of the Potlatch Idaho Resource Management Division operation.  1.4  Environmental and Socioeconomic Context  Since the initial certification evaluation, there have been no significant changes in the environmental and socioeconomic context in which Potlatch RMD practices industrial forest management on their north Idaho forest estate. Of note, Potlatch personnel have undertaken more structured means of interacting with the Nez Perce and Coeur d’Alene tribes.  See the 2004 Certification Evaluation Report Public Summary www.scscertified.com for a more detailed description of the environmental and socioeconomic context.  1.5  Products Produced  Since the full evaluation roughly one year ago, there have been no changes in the products produced on the Idaho Region of the Potlatch Resource Management Division. Logs are generated from the harvest of approximately 10 species of commercial western softwoods, including: Douglas-fir, Grand fir, Western hemlock, Western red cedar, Lodgepole pine, White pine, and Western larch.  1.6  Chain of Custody Certification—Stump to Forest Gate As discussed in more detail later in this report, the 2004 annual audit included an examination of the chain-of-custody control procedures employed by Potlatch’s Idaho Division of the RMD to assure the integrity of the FSC certified log supply.  In brief, and aside from full documentation, there have been no significant changes in the Potlatch CoC procedures since the full evaluation that was conducted in mid-2003.  
 
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2.0 THE CERTIFICATION EVALUATION PROCESS 2.1 Assessment Dates  The field and office audit was completed on September 28-30, 2004. 2.2 Assessment Personnel For this surveillance audit, the team was comprised of the following personnel:  Dr. Robert J. Hrubes, Team Leader: Dr. Hrubes is Senior Vice-President of Scientific Certification Systems. He is a registered professional forester and forest economist with 29 years of professional experience in both public and private forest management issues. He served as team leader for the initial MRC Forest certification evaluation. Dr. Hrubes worked in collaboration with SCS to develop the programmatic protocol that guide all SCS Forest Conservation Program evaluations. Dr. Hrubes has led numerous SCS Forest Conservation Program evaluations of North American (U.S. and Canada) industrial forest ownerships, as well as operations in Scandinavia, Chile, and Japan. He also has professional work experience in Brazil, Germany, Guam (U.S.), Hawaii (U.S.), and Malaysia. Dr. Hrubes is the principal author of this audit report .   Dr. Michael Keyes, Senior Auditor: Dr. Keyes is the Senior Auditor for Scientific Certification Systems. He is a forest ecologist with over 20 years of experience working with forest issues in the United States and Latin America. He has done extensive work in agro-forestry and tropical forest systems as an academic researcher in Mexico and Costa Rica, as well as conducting resource evaluations for the World Bank. Dr. Keyes holds degrees from the University of Washington and UC-Berkeley.  2.3 Assessment Process Pursuant to SCS/FSC protocols, the annual audit process was comprised of the following components:   Pre-audit communications, particularly with respect to Potlatch’s action plan for addressing the Corrective Action Requests attached to the award of certification  Preparation of a labor budget and work order to conduct the audit; authorization by Potlatch  Review of written materials made available to the audit team prior to and during the field audit  Completion of a 4-day field audit in which 2 of the 3 units comprising the Idaho Region of the Resource Management Division were selected for visits  Consultation with a selected sample of stakeholders  Offices and Sites Visited During the Audit:   For this surveillance audit, the team elected to engage in the following activities:   Opening discussions in Lewiston, at the headquarters office  Page 4
 
 Field visit to the St. Joe Area  Field visit to the Palouse Area  Follow-up interviews and exit briefing in Lewiston.  The opening discussion in the Lewiston office covered the following topics:  2004 Activity Summary Report  Response to CARs  Tribal interactions  Variable retention  Gopher control  Road assessment program  Old growth inventory  Nutrient management  Planted stand initiative  Watercourse buffers  Public use policy  Citizen Advisory Committee  Stump to mill gate chain of custody control  Public use management Staffing changes   After the conclusion of the Lewiston-based discussions (around mid-day), the auditors drove to the St. Joe Area office in St. Maries and held a very brief group discussion with Norm Linton and his staff. Following that, the auditors traveled to the Panhandle Resource Management Unit Forest (RMU) with Kevin McHail to examine some recent timber harvests that served as field trials for variable retention (VR) cutting prescriptions. We were joined on site by Contract Supervisor, Dick Burch. In addition to viewing the VR trials, the field visits focused on SMZ Class II buffer practices and green retention in more standard final harvests.  On Wednesday morning, the team visited the Fernwood RMU of the St. Joe Area, accompanied by Area Manager Linton and other field personnel such as Unit Manager Jeff Wolter, Contract Supervisor Larry Wright and Unit Forester James Mackey. The focus of the field visits was on green retention, significant versus non-significant Class II SMZs, flagging of Class II SMZs, vegetation control in young planted stands, and road system management.  On Wednesday, late morning, the auditors traveled to the Palouse Area office and held a brief discussion with Area Manager Dan Jones and his staff. Upon conclusion of the office discussion, the auditors conducted field visits to two of the RMUs within the Palouse Area: the Elk River RMU and the Potlatch RMU. At both locations, the audit team was accompanied by Potlatch field personnel (e.g., Elk River RMU Manager Pat Pendell and Potlatch RMU Manager Al Heimgartner) as well as Area Manager Jones. The focus of the field stops was on green retention in final harvests, modification of harvesting design in high public use areas, public use management, stream zone  Page 5
 
management, salvage operations, harvesting in a Boy Scout Camp. At the end of the day, the auditors transited back to Lewiston.  On Thursday morning, the audit team began deliberations in the Lewiston office, interspersed with follow-up interviews with key headquarters staff such as Terry Cundy,  For next year’s surveillance audit, the Clearwater Area will be included in the itinerary.  Potlatch Employees Interviewed During the Audit:   Steve Smith Terry Cundy Brian Moser Dan Miller George Brulotte Dan Jones Norm Linton Jim Mallory Brant Steigers Mike McAllister Rob Taylor Kevin McHail Dick Burch Jeff Wolter Larry Wright James Mackey   Al Heimgartner Pat Pendell Kathy Mattson   Stakeholder Consultation:   As part of this surveillance audit, the audit team made contact with a selected cross section of stakeholders, focusing this year primarily on state and federal agencies and the two neighboring tribes. All of these interviews were conducted over the telephone, primarily on Thursday morning, September 29 th . Additionally, the audit team interviewed one logging contractor in the field.  Stakeholder Position/Affiliation Interviewed by    Nolan Noreen Idaho Division of Lands Telephone    Robert Barkley Idaho Division of Lands Telephone    Larry Ross USFS Palouse District Telephone    Doug Gober USFS Northfork District Telephone    Larry Dawson USFS Supervisor’s Office Tel. (no reply)    Bruce Kinkead Coeur d’Alene Tribal Forestry Telephone    Kevin Cannell Nez Perce Tribal Forestry Telephone    Roy Lawson Lawson Logging Field interview         
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2.4 Guidelines/Standards Employed  This annual audit was conducted using two sets of standards or considerations:   The FSC Principles & Criteria, as augmented by FSC Rocky Mountain Regional Standard;  Since this is a surveillance audit, and per FSC protocols, the audit team did not attempt to evaluate Potlatch against the full scope of the standard. Over the course of five successive surveillance audits, it is expected that the full scope of the standard is considered.   The corrective action requests (CARs) that were stipulated at the time of award of certification in April 2004.  3.0 RESULTS, CONCLUSIONS, CARS AND RECOMMENDATIONS   3.1 GENERAL DISCUSSION OF FINDINGS   Based upon the information gathered through field reconnaissance, personnel interviews and stakeholder consultation, as well as the review of supporting materials, it is the SCS audit teams conclusion that Potlatch’s continued certification under the FSC is warranted. The policies, approaches and perspectives on resource management that were in place during the initial certification audit were readily discernable in this surveillance audit. While there have been some staff changes over the past year, the senior management team is unchanged as is the company’s commitment to its FSC certification.  The predominant focus of this surveillance audit was Potlatch’s plans and actions for addressing the CARs that were issued along with award of certification. In that this surveillance audit took place only six months after the formal award of certification, the specified dates for closing out the CARs have not yet arrived, with the exception of one CAR. Thus, our focus was on the general approach and pace of Potlatch’s response, mid-course. In this regard, the audit team is generally quite comfortable with the direction and pace of Potlatch’s response to the CARs, as we detail in Table 1, below.  Quite significantly, Potlatch has adopted a very systematic and effective approach for addressing and closing out the Corrective Action Requests that were stipulated at the time of award of certification. We are very positively impressed with the manner that Potlatch has developed Action Plans for closing out the CARs and the manner in which these Action Plans have been integrated into the company’s Environmental Management System (EMS). Positive manifestations of this approach include:   Regular and focused consultation with SCS, initiated by Potlatch, between award of certification and the first surveillance audit; consultation designed to confirm that the Action Plan is taking the company in a direction that SCS believes will likely to lead to closure of the CARs within the specified time frames. During  Page 7
 
the summer of 2004, Potlatch provided SCS with draft Action Plans to review and this was followed up with two teleconference calls.  By integrating the Action Plans into the EMS, they will be subject to both internal and external EMS/ISO 14001 auditing, above and beyond the FSC-related auditing that is being conducted by SCS.  However, and as detailed in Table 1 below, the adequacy of the specific manner in which Potlatch is approaching some of the CARs is not consistently apparent to the auditors. Particularly, where Potlatch has combined several CARs into one set of action plans under the heading of a single CAR in the Action Plan, it is difficult for us to ascertain with comfort that, in fact, all of the requested actions are being adequately addressed. And in some cases, it is our conclusion at this point in time that these combined action steps are not going to assure adequate response to some individual CARs. Such an example, as detailed below, is CAR 2003.9.  Variable Retention Silviculture:   We wish to provide some focused feedback, from the FSC perspective, regarding Potlatch Idaho RMD’s investigation into variable retention silviculture. First, the fact that Potlatch senior administrative and field personnel are investigating this “cutting edge” approach to even-aged final harvests iscommendable, in and of itself. Second, it is our viewpoint that adoption of VR, with appropriate modifications for forest conditions of north Idaho, would be very compatible with the general thrust of the FSC Rocky Mountain Regional Standard, and more specifically responsive to key indicators found within Principle 6. And even more specifically, adoption of VR in some locally appropriate form would certainly help to demonstrate conformance to and contribute towards the closure of CAR 2003.8. As such, we encourage senior management to continue with the VR initiative/investigation. Acceptance by all field units of the appropriateness of engaging this new approach and finding ways to move even further away from the old and harsher approach to regeneration harvesting will require clear direction from Lewiston.  Gopher Control:   In both the Day 1 opening discussions in Lewiston and subsequent discussions at the Palouse Area office, Potlatch personnel clearly conveyed to the audit team their conclusions that non-chemical control of gophers is not feasible. A report, Gopher Control Status Report for Pierce RMU, authored by Paul Gravelle, was submitted to and was reviewed by the audit team. This report details the efforts at using trapping and smoke bombs to control gophers in young planted stands. Control efficacy was unacceptably low for both methods, but particularly for smoke bombing. As such, the auditors were informed that Potlatch wished to proceed with the derogation process in order to use strychnine, with the intent that use be allowed by June, 2005.  It is our sense that Potlatch can credibly demonstrate that it has explored non-chemical approaches and that they have the evidence regarding efficacy and cost that should  Page 8
 
provide a credible basis upon which FSC will hopefully grant a derogation for strychnine. But the case needs to be made pursuant to FSC protocols. Most notably, the derogation applicant needs to provide evidence of support from within the three FSC chambers: environmental, social and economic. Most importantly, Potlatch will need to provide evidence that it has consulted with members of the environmental community and that there is some support from within that chamber for the use of strychnine under defined and controlled conditions.  As was conveyed orally during the audit week, we strongly encourage Potlatch to vet the gopher/strychnine issue with either the entire Citizen Advisory Committee (CAC) or at least the members of the CAC that represent environmental/conservation organizations. Securing the support of those particular representatives of the environmental community should likely be considered an obligatory first step in demonstrating adequate support from within the environmental chamber for the proposed derogation.  The auditors are aware that SCS Program Director Dave Wager is working with Brian Moser in the compilation of the derogation request. SCS will continue to advocate for the granting of the derogation, but Potlatch is advised that it ultimately is a decision that rests with Secretariat staff and a Board sub-committee in Bonn, Germany.  Chain of Custody:   The auditors held a brief discussion with Mike McAllister during the day 1 opening meeting at which time we were informed that there have been no significant changes to the certified CoC procedures for the scope covered by the Idaho RMD—from stump to log yard gate. Mr. McAllister provided the audit team with a printed summary of certified log deliveries for the period January 1, 2004 to September 28, 2004. Of the receiving destinations, only Potlatch’s Clarkia log yard and St. Maries Complex maintain CoC control of the logs, once delivered by the RMD. These certified log deliveries will be conveyed to SCS Director of Chain of Custody, Dr. Wolfram Pinker, for reconciliation purposes at the time of the next CoC surveillance audits of these two facilities.  In summary, with respect to the portion of the supply change under the control of the Idaho RMD, the audit team concludes that there is continued conformance to the FSC certification requirements.  Stakeholder Comments:  Generally, stakeholder comments were quite positive. State forest practice personnel confirm “good” conformance to the FPA; Potlatch personnel demonstrate a solid working knowledge of the forest practice regulations and the personnel we interviewed “seldom” see negative reports or violations.  With respect to tribal affairs, Potlatch’s interactions with the CDA tribe are much more regular and substantive as compared to the Nez Perce tribe. CDA personnel deal on a
 
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more regular basis with personnel based in Potlatch’s St. Maries office. The recent increase in Potlatch’s efforts to interact with the tribal forestry staff was positively noted.  The Nez Perce representative that we spoke with acknowledged receipt of information sent by Potlatch concerning planned activities, but he said that he was too busy to act on the information. While he acknowledged that he doesn’t really expect it, the NP representative expressed a desire that Potlatch do more active archeological inventory work.  Discussions with Forest Service personnel did not reveal any significant issues, positive or negative. One district ranger made positive note of Potlatch’s public use management approach.  3.2 GENERAL DISCUSSION OF STATUS OF CORRECTIVE ACTION REQUESTS  Table 1, below, lists the corrective action requests (CARs) issued in conjunction with the award of certification in April 2004 (all of which were open at the commencement of the surveillance audit), the SCS audit team’s assessment of Potlatch’s response to the CARs, and the disposition of the CARs as a result of actions that have been taken, to date, by Potlatch.  As a result of this first surveillance audit, the audit team has closed four CARs (2003.3, 2003.13, 2003.14, and 2003.17) and kept the remaining CARS open, to be examined at the next surveillance audit. Some of the remaining open CARs will be due at the time of the 2005 surveillance audit while others are not due until the 2006 surveillance audit.  TABLE 1: SUMMARY, CURRENT STATUS OF THE 2003 POTLATCH CORRECTIVE ACTION REQUESTS  CAR 2003.1: During the year following award of certification, Potlatch RMD-Idaho Division must build upon the work initiated in response to Major CAR 2003.1 , through ongoing consultation and collaboration with the Nez Perce and Coeur d’Alene Tribes. This consultation should address actions taken to manage, mitigate and restore salmonids and water quality. Such consultations should also document the identification of other resources of concern to these Tribes and actions taken to increase the likelihood that these resources are not threatened or diminished. As part of the first annual audit after award of certification, documentation must be provided that details the actions taken in response to these consultations and how these actions are to be incorporated in subsequent annual plans for harvesting activities.  Company Action/Auditor Observation: Road segments proposed by Potlatch have been sent to tribal organizations; likewise for proposed harvest areas. Initial meetings have been held with reps from both CDA and NPT. Stakeholders confirm progress on stream mitigation for salmonids and water quality. And information is being shared. Meeting minutes will be posted on the EMS web-site. SOP procedures now posted to the web. There is a new protocol to document tribal concerns on specific sites in the SAP system.  Generally, the 8-step action plan for this CAR looks to be adequate. We note the following observations:  The written communications, such as the data about planned activities, may not be going to the most appropriate individuals on the tribal forestry staffs  Page 10
 
 Potlatch needs to continue to affirmatively explore different ways to interact more substantively with NPT Status at the conclusion of this surveillance audit: This CAR is not yet due and, as such, is being kept open with the expectation that it can be closed out as part of the 2005 surveillance audit, provided that Potlatch follows through on its Action Plan.  CAR 2003.2: In conjunction with actions taken in response to CAR 2003.1, Potlatch RMD-Idaho Division must:  Document the intensity and content of interactions with tribal representatives, including the sharing of planned locations of site disturbing activities such as timber harvesting  Document tribal input or nominations regarding HCVF on the Potlatch forest estate Document responses to Potlatch’s planned locations of site disturbing activities received from Nez  Perce and Coeur d’Alene tribal representatives.  Document appropriate management actions taken in response to this consultation. Company Action/Auditor Observation: Meeting minutes, email communications and posted SOP procedures are appropriate. SCS suggests that all interactions between Potlatch field and office staff and native American groups be formally documented with a complete file of such interaction to be maintained by Terry Cundy. Presently, T. Cundy is maintaining a file of communications only for which he is personally involved.  Status at the conclusion of this surveillance audit: This CAR is not yet due and, as such, is being kept open with the expectation that it can be closed out as part of the 2005 surveillance audit, provided that Potlatch follows through on its Action Plan.   CAR 2003.3: Within 3 months of award of certification, a Potlatch RMD-Idaho must develop a Standard Operating Procedure (SOP) that defines the scope of, and addresses procedures for, assessing social impacts. This additional SOP must be incorporated into the Potlatch EMS and other SOPs related to site, annual, and long-term forest management planning including land sales. The CAR will be cleared when the content of the SOP is reviewed by SCS and it has been fully incorporated into the Division’s Environmental Management System. Company Action/Auditor Observation: Potlatch has developed a 4-step action plan to address this CAR. The Planning SOP has been augmented with a socio-economic assessment section (Section 10) that was shared with the audit team. This augmented SOP includes a SIA assessment form as well as the results of a social impact risk assessment that has been completed.  It is the audit team’s conclusion that a SIA mechanism is now in place and operational. On this basis, we conclude that closure of the CAR is warranted, subject to follow-up review (during subsequent surveillance audits) of the manner in which the protocol is used, over time.  Status at the conclusion of this surveillance audit: This CAR is being closed as a result of this surveillance audit. However, the manner in which the SIA form and protocol is being utilized will be a focus of the next surveillance audit.   CAR 2003.4: Within 2 years of award of certification, Potlatch RMD-Idaho must enhance its assessment of environmental impacts associated with forest operations by:   Assessing age class or development class (i.e., forest structure) distributions within discrete planning units (e.g., watersheds) and for the Potlatch ownership as a whole  Comparing age/development class distributions to an objective definition of the natural forest of the region based on the best available scientific information  Page 11