Edited by Ted
Cushman
Contents:
Canadian Standoff: New Twists but No
Solutions in Lumber Trade Spat
Megabuilder Takes Heat Over Gag
Clause
DOE Aims for Simpler Energy Code
Innovation: Air Placement of
Gravel
Offcuts
Canadian Standoff: New
Twists but No Solutions in Lumber Trade Spat
Feelings are running high on both sides of the border in the
seemingly endless trade dispute between Canada and the United
States Commerce Department, following a December U.S. proposal
to eliminate import fees in favor of a quota system, which
Canada turned down in January. After heated debate within
Canada, incoming trade minister Jim Peterson told his U.S.
counterparts that he was willing to keep talking, but that
there was "no support in the provinces" for the U.S. quota plan
as it stood.
New rulings on the case from World Trade Organization (WTO) and
North American Free Trade Agreement (NAFTA) review panels
offered no immediate relief, either from trade restrictions or
from the market uncertainty caused by the dispute. WTO and
NAFTA panels both ruled against Canada on certain legal
technicalities, but press headlines announcing a U.S. victory
exaggerated the meaning of the rulings: In reality, both
decisions left room for maneuver for both sides. If proven, the
panels said, the U.S. allegation of unfair subsidies could
justify penalty fees; but neither body endorsed the U.S.
contention that low stumpage fees charged to Canadian firms for
cutting trees in provincial government forests undercut fair
market rates, provided an unfair advantage to Canadian firms,
or posed a risk to the U.S. lumber industry (the specific
claims at the heart of the U.S. case).
And the U.S. has already suffered a clear loss in the WTO court
on the issue of the "Byrd Amendment," a key factor in the
dispute. The Byrd Amendment provides that countervailing and
antidumping duties like the ones collected on Canadian wood
imports must be awarded to companies facing unfair competition
from imports. In the case of Canadian softwood, that would mean
handing over to U.S. lumber companies the $1.6 billion already
collected on incoming Canadian lumber shipments. But the WTO
ruled in August that the law violates U.S. treaty obligations
and set a deadline for repealing it, which passed without U.S.
action. Canada, the European Union, and a number of Asian and
South American nations have asked the WTO for authorization to
retaliate with sanctions against U.S. trade. The U.S. deal
would have sidestepped this issue by giving half of the money
already collected back to the Canadian firms that paid it in,
while getting Canadian agreement that the U.S. could hand the
other half over to U.S. companies.
The mixed rulings make it a gamble for either country to
continue the legal battle. Accordingly, both sides took steps
in January to defuse the situation by backing down in key
areas. Canada's British Columbia province announced that it was
revamping the process it uses to set stumpage fees charged to
sawmills for harvesting trees from publicly owned forest lands,
the core issue that drew the U.S. penalties in the first place.
B.C. currently sets fees with a complex system that takes a
number of factors into account (including the protection of
vulnerable companies and the jobs they represent); only about a
tenth of B.C.'s forest resource is sold at open auction, the
process the U.S. says would establish fair market pricing. Now
B.C. plans to expand auctions to cover 20% of the offered
resource and to use auction prices as a guideline for setting
the rest of its stumpage fees.
The U.S., for its part, announced that it has recalculated the
penalties applied to Canadian lumber, as ordered by a NAFTA
review panel, and would cut the duties in half.
But neither move will take effect immediately. In the meantime,
the political and economic effects of the trade dispute show no
sign of easing. While the dispute is not major news in the
United States, it is making big waves in Canada, where
resentment is building against what one columnist termed the
U.S.'s "bully tactics." The U.S. offer exposed splits among
Canada's provinces: British Columbia saw the deal as an
acceptable way to get the argument over with, but other
provinces thought the new quota system might freeze their
logging industries out of a fair shot at the cross-border
market.
Lumber companies also disagreed over the plan: Lignum Lumber
president Jake Kerr called the proposal "a disaster for
idealists but a victory for pragmatists," according to a CBC
report, but Tembec CEO and Free Trade Lumber Council chairman
Frank Dottori told the New York Times, "The Canadian industry
is getting mugged, and it is fighting over who will get mugged
first, instead of fighting the mugger."
What about the consumer? Whoever mugs whom on the producer
side, it's consumers who pay in the end, noted University of
Victoria economics professor G. Cornelis Van Kooten in a 2002
paper. A quota, a U.S. import fee, or a Canadian government
charge, said Van Kooten, has the same ultimate effect:
"Restrictions on softwood lumber trade will benefit producers
on both sides of the border, as well as Canadian consumers, all
at the expense of U.S. consumers." Artificial scarcity that
drives wood prices above their natural level allows even
Canadian producers to post better profits, he argued, and a
quota system would actually be the best arrangement for
Canadian mills — if they could work out how to divide the
market among the provinces.
U.S. consumers have not missed this point, and in the United
States, builders as well as lumber dealers are on record
opposing both the Commerce Department's countervailing duties
and the proposed quota system. Calling the U.S. proposal
"essentially a hidden tax on American home buyers and
consumers," NAHB president-elect Bobby Rayburn said, "This plan
to subsidize domestic lumber producers by restricting
legitimate competition in the marketplace runs contrary to the
interests of consumers and the national economy." A Home Depot
representative told a NAFTA panel in 2003 that instead of
buying domestic lumber, Home Depot would pay the higher price
for Canadian wood: U.S.-produced lumber would not meet the
company's quality standards.
Rayburn backed up that point, saying, "Imports do not replace
domestic production. We can't significantly increase lumber
production or lumber mill employment in the U.S., because we
don't have any more trees available." Rayburn urged the
Canadian government to "pursue its legal challenges through to
their conclusion."
Back to
Top
Megabuilder
Takes Heat Over Gag Clause
If a builder wants to avoid bad publicity, one seemingly
simple idea is to put language in the sales contract saying the
buyers agree not to trash-talk the builder in public. But in
Houston, Texas, that direct approach has backfired for big
builder KB Home. Last month, columns in the
Houston
Chronicle took the company to task for telling homeowners
to, as the headline put it, "Buy a House and Shut Up." "Which
would you rather have," asked
Chronicle columnist Rick
Casey, "the American dream of owning a home, or your right to
free speech? KB Home offers you the choice."
Casey drew attention to language buried deep in the purchase
and sale agreement that prohibits homeowners from putting any
sign on their property other than a "for sale" sign. The
wording specifically prohibits signs disparaging KB Home, but
that's just the beginning: The section goes on to protect all
home builders on the planet from the home buyer's ire, reading:
"No Owner may use any public medium such as the 'internet' or
any broadcast or print medium or advertising to similarly
malign or disparage the building quality or practices of any
homebuilder...."
A few days later, a follow-up from Casey said that KB Home had
seen the error of its ways. Casey said company executive Larry
Oglesby, in KB's Austin, Texas, offices, had told him that in
Texas at least, KB was "willing to redo the language on any
community going forward and remove it."
In any
case, KB's contract has already failed a legal test in Texas
because it conflicts with the U.S. Constitution's First
Amendment protections for freedom of religion, speech, and the
press. In the 2003 case of Brammer vs. KB Home Lone Star, Texas
Court of Appeals Chief Justice W. Kenneth Law cut rowdy
homeowners Andrew and Yolanda Brammer plenty of slack, shooting
down as "an unconstitutional prior restraint" a lower court
order that the pair not use "television, public meetings,
internet, and/or any broadcast or print medium to complain,
disparage, or defame Plaintiff's construction quality or
business practices." Acknowledging that the Brammers had signed
a contract with the same words, the court said that it's not
clear whether Texas law allows anyone to bargain away free
speech rights at all — but if so, enforcing any such
deal, by U.S. Supreme Court precedent, "requires clear and
convincing evidence that the waiver is knowing, voluntary, and
intelligent." Law was not ready to believe that in buying their
home, the Brammers knowingly gave up a basic civil right.
Those rights don't extend to covering egregious abuses —
for instance, Justice Law upheld the part of the order creating
a "buffer zone" between protesters and company offices, based
on testimony that Andrew Brammer had followed customers around
KB property shouting insults through a bullhorn and had
intimidated a sales agent by blocking her car and pointing the
bullhorn into the window. But even the buffer zone was strictly
limited in Law's decision, and the Brammers were allowed to
continue public protests.
Defending the company's reputation against protest or bad press
is more than a theoretical problem for KB Home, which has been
a target of several websites dedicated to homeowner horror
stories. Mainstream press coverage has also been unkind:
Business Week's April article "Shoddy Construction in
the Building Boom?" started and ended with anecdotes about
KB-built houses that suffered structural failure. The Wall
Street Journal focused an August 2003 story on the
company's effort to squelch protest from homeowners in a KB
development built on a former military bombing range. But
whether it's national coverage by Business Week or a
neighborhood leaflet campaign evidently doesn't matter to the
courts. First Amendment rights apply to everyone, and as the
law now stands, homeowners upset about issues ranging from
drywall cracking to unexploded ordinance are still free to say
whatever they please on the Internet — contract or no
contract.
Back to
Top
DOE Aims for Simpler Energy
Code
The
International Energy Conservation Code,
successor to the
Model Energy Code, comes up for
revision every three years. Change proposals in the current
cycle face final action by the International Code Council's
voting members in May 2004. Instead of more provisions and
tighter requirements, however, the building officials with
voting privileges will be considering a Department of Energy
(DOE) rewrite that is intended to be "result-neutral." In fact,
early drafts of the measure eased requirements for buildings in
some locations.
In papers posted at www.energycodes.gov, DOE experts explain
their thinking. They argue that a strict energy code
accomplishes little if it's too complicated to understand or
enforce. The current document, they contend, complicates the
design process and even creates "perverse incentives" for
design changes that increase a building's energy consumption.
Their recommendation: Drastically simplify the code's
prescriptive and performance alternatives, emphasizing ease of
use and practicality instead of strict requirements, and
eliminating trade-offs that are beneficial in theory but
counterproductive in practice.
DOE's proposal revises climate zones and reduces their number,
placing many states entirely in a single zone. It also
eliminates window-area restrictions and window-to-wall ratio
calculations. Trade-offs of one building element against
another are implemented by letting builders demonstrate
numerically that a building would perform better with an
alternative design than it would if built to the prescriptive
requirements.
In the early public comment phase and during ICC hearings in
Nashville last September, some insulation levels and window
U-values were tweaked upward from the DOE proposed levels. But
the essence of DOE's proposal survived the public process, and
the modified version that will face a vote in May is still far
simpler than the code most builders currently live with. The
deadline for final public comment is in April.
Back to
Top
Innovation: Air
Placement of Gravel
What weighs a ton and a half on the truck, a ton and a half
in the trench, and nothing in between? A yard of gravel and
sand moving through the hose of Richard Dunlop's and Robert
Griffin's invention. Dunlop, a concrete contractor with three
decades of experience, and Griffin, a process engineer from the
oil industry, teamed up to develop a machine that could
revolutionize the placement of backfill — and relegate
dump trucks to the stone age.
The pair spent six years and scrapped four prototypes before
perfecting a reliable and affordable model. But the results are
worth it, say Dunlop and Griffin: Their company,
Air Pumped Sand & Gravel, can now
place 60 tons of gravel a day with one gravel pump mounted
on a two-axle truck, one skid-steer bucket loader, and two
men (one to load stone into the machine and one to work the
hose). The site contractor's employee carries the hose and
blows the fill into place, while Griffin minds the
truck.
Intended to revolutionize backfill
placement the way concrete pumping equipment transformed
hillside concrete delivery, Richard Dunlop's and Robert
Griffin's compressed-air equipment can place 15 or more yards
of gravel an hour to any spot within reach of a 200-foot
hose.
Griffin says the blowing machine is self-regulating: "There's a
hopper, a compressor with a pressure tank, and a big rotating
wheel that mixes the stone into the airstream, with controls
the driver can set. And we bring a Bobcat to load the hopper.
Once all the settings are right and the stone is flowing, the
driver becomes the Bobcat operator for the rest of the
day."
Unlike the hydraulic pulsing action of a concrete pump, Air
Pumped's machine lifts the rock with a continuous stream of
flowing air. Like the proverbial truckload of canaries, the
stone amazingly adds no weight to the hose — a worker can
pull a 150-foot hose full of flying rock around the site with
one hand.
In the hill country near Los Angeles, just backfilling behind
high retaining walls could keep the company's two machines
busy. But they also have lots of work placing slab sub-bases
for new school buildings while scaffolding still surrounds the
fresh walls, and on remodels where access is limited.
"Our hose fits through a 4-inch hole," says Griffin. "We went
in once through an air-conditioning duct to place a gravel base
for a new slab on grade inside an existing hospital. Cutting
open the wall and bringing in gravel with bucket loaders would
have taken eight weeks. We did the job in one day."
Back to
Top
Offcuts
A ballot initiative to overturn Washington State's
complex ergonomic workplace regulations has gathered enough
signatures to be placed before voters this fall,
reports the
Puget Sound Business Journal. Washington
adopted the most detailed and restrictive ergonomics rule in
the nation in 2000. Builders and other employers question its
scientific basis and say the cost of compliance is bad for the
state's economy. State officials say the rules will prevent
common injuries associated with lifting and other physically
stressful work, and will more than repay their cost by reducing
healthcare expenses.
Pulte Homes has bought 500 acres at the Civano
sustainable development near Tucson, Ariz., and has
plans to build 1,500 homes, local papers report. Civano has
struggled to reconcile financial realities with an agenda of
earth-friendly and unconventional building systems,
site-generated renewable energy, health-conscious design and
materials, and neighborhood-centered planning. After a year
negotiating how to meet green standards with production
building methods, Civano organizers and Pulte both say they see
the deal as a positive sign for the future of sustainable
building.
An explosion in home teardowns in Chicago-area suburbs
is prompting towns to impose a special fee on teardown
permits, with proceeds going to fund affordable home
construction, reports the Chicago Tribune. Departing
Illinois governor Rod Blagojevich signed a measure authorizing
such "teardown taxes" last year, and Arlington Heights is now
considering a permit fee of $7,500 per scrape. In 2003, 80
homes averaging $270,000 in value were razed to make way for
new homes that typically cost $750,000 or more. In Highland
Park, a recently adopted teardown tax is funding a
six-townhouse project with units offered at prices from
$135,000 to $200,000.
Georgia congressman Johnny Isakson is pushing a measure
to provide tax credits to landowners who protect their property
from development with conservation easements, reports
the Atlanta Journal-Constitution. By allowing
landowners to recover value from environmentally sensitive
parts of a property, tax incentives for conservation can make
low-impact development of other parts of the property feasible,
while preserving green space and wildlife habitat.
Private-sector set-asides in Georgia surpassed publicly
conserved land acreage for the first time in 2003, capping a
20-year trend, says the Journal-Constitution.
Arizona's Pima County can legally require builders to
make new homes wheelchair accessible, the Arizona
Court of Appeals has ruled. Advocates for the disabled hope
that will pave the way for a Phoenix city "visitation
ordinance" requiring wide entry doors and other wheelchair
accommodations in new homes, whether the buyer is
wheelchair-bound or not. Builders object to the cost and
paperwork of one more regulation, reports the Arizona
Business Gazette, but advocates say accessible design is
worth the cost because it will allow people to stay in homes as
they age, or in case of illness or injury.
The National Home Builders Association may take its
International Builders Show to Chicago in 2007 and
2008, rather than return to Atlanta, according to the
Atlanta Business Chronicle. The prospect has alarmed
Atlanta officials, and the Georgia World Congress Center says
it is considering legal action against NAHB if the association
does not fulfill its agreement with the center.
A case pitting free speech against economic interests
has reached the Colorado Supreme Court, says the
Denver Post. Lawyers for developer W.O. Brisben
Companies say that Eric Krystkowiak caused them $16 million in
losses by speaking to the planning commission of Colorado
Springs in opposition to an apartment complex the company
wanted to build near Krystkowiak's home. They say he was bound
by an agreement that they forged with the Colorado Springs
Neighborhood Association not to oppose the project. In throwing
out the Brisben lawsuit on First Amendment grounds, lower court
justice Gregory Hobbs noted that the Colorado Springs City
Council, not Krystkowiak, had stopped the project, a choice he
said was within the council's discretion.
Supporters of a city impact fee that would pay for a
sewer system extension shut down a committee meeting
of the Indianapolis City Council on December 2, according to
the Indianapolis Star. The committee, anticipating a
change from Republican to Democratic control in January,
started the meeting by voting to table the measure. Owners of
outlying homes with no sewer service erupted when the committee
said it would not listen to their views.
Back to
Top