Got Your Christmas Tree Permit Yet?

Spend Matters welcomes a post from our Lead Analyst, Thomas Kase.

Right now, sitting on the Federal Register -- to be managed by the Department of Agriculture -- is a proposed set of rules addressing a new Christmas Tree Promotion, Research, and Information Order. Note that this is not April 1st!

At Spend Matters we like risk management and compliance when needed as much as anyone. But do the proposed rules, covering "new Christmas tree information collection requirements" really make sense to anyone outside our government? As background, the monetary value of this industry is relatively small, below $500 million per year. Roughly 19 million fresh cut trees are sold in the US each year, with nearly 2 million being imported -- with Canada unsurprisingly making up 99.72 percent of imports. Keeping the small size of the industry in mind, if this small sector can swing federal involvement, imagine what industries with bigger lobbyist budgets can do?

Reading the Federal Register, there is actually a fair amount of unintended humor to be found on their site: "this proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. It is not intended to have retroactive effect." First of all, we wonder how you actually review Christmas trees, but it is nice to know that all of us out there with a prior history of using Christmas trees can sleep soundly at night. Under the proposed rules "producers and importers of fresh cut Christmas trees would pay an initial assessment of $0.15 per tree, which would be paid to the proposed Christmas Tree Promotion Board (Board)" -- we also wonder if the (thankfully unpaid positions) Christmas board members will be called 'elves' or 'little helpers', with the chairman's title naturally being Santa Claus? Less humorously, with the success record of other government programs in mind, these fees (aka taxes) might be expected to increase rapidly.

Oddly, three years after the collection of assessments begin, producers and importers will hold a referendum to determine if Christmas tree producers and importers favor the continuation of this program -- a sunset period should be part of most laws, so far so good, but it looks like even the tree industry isn't convinced that a law to drive this activity will work. The report states that their prior voluntary efforts have failed, and now at least some of their lobbyists have turned to Washington for assistance.

As an insight into the minds of bureaucrats and companies looking for federal protection, let's take a look at the purported "need" driving these regulations: the Christmas tree industry "faces increased competition and changing consumer habits" -- clearly news to all inside the Beltway. The evidence being that from 1965 to 2008, the market share of fresh Christmas trees in the U.S. declined by 6 percent. Yes, 6 percent -- shocking, shocking! In comparison, the market share of artificial trees increased by a factor of 7 over the same time period. Clearly consumers have expressed their preference for low maintenance mass-produced trees (something that willful consumers have done for well over 100 years) starting with German feather-based manmade trees in the 1800s to the peculiar aluminum Christmas trees that hit the market nearly 60 years ago. Those were first made by Modern Coatings, a Chicago company.

Jokes aside, this kind of legislation prompts the question of what's next, protectionism for the toy/shoe/apparel/consumer electronics/you-name-it industry? Mercantilism is an age-old game, but we had hoped that history had shown to all that this is not productive.

It would be nice with an administration in place that is actively involved in getting our economy back on its feet, rather than cook up new regulations. If something as blatantly silly as this survives the legislative process and winds up on the Federal Register -- what else can we cut from the Federal books? Doing this would also save some trees in the process -- even if the archival version of the Federal Register is printed on calf skin.

- Thomas Kase

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