Washington State House of Representatives Office of Program Research	BILL ANALYSIS
Natural Resources Committee

HB 2398

Brief Description:  Establishing contract harvesting of timber on state trust lands.

Sponsors:  Representatives Buck, Doumit, Eickmeyer, Rockefeller, Jackley, Woods, McDermott and Haigh; by request of Department of Natural Resources.

Brief Summary of Bill

$The Department of Natural Resources is authorized to sell logs from state forest lands through a contract harvesting process.

$The contract harvesting account is created for handling receipts from contract harvesting sales.

Hearing Date:  1/22/02

Staff:  Bill Lynch (786‑7092).

Background:

The Department of Natural Resources sells timber from state forest lands by putting tracts of timber up for bid.  The department will cruise the tract, establish an appraised value for the timber, and this value becomes the minimum bid for the timber sale.  The successful bidder who is awarded the contract generally has three years to harvest the timber from the sale.

The department is not authorized to contract with someone to harvest and process the timber so that the department can sell sorted logs.  It is suggested that the department may be able to take advantage of the timing of sales better, reduce pre‑sale costs, and move sales faster if they have this additional authority.

Summary of Bill:

The Department of Natural Resources is directed to establish and implement contract harvesting when it can increase revenues for the trust beneficiaries and increase environmental protection.  "Contract harvesting" is defined as a situation in which the department contracts with an individual to harvest timber on state forest lands and process the timber into logs sorted by department specifications.  The department then sells the individual log sorts.

The Board of Natural Resources is directed to determine whether any special appraisal practices are necessary for logs sold by the contract harvesting method, and if so, adopt them.  When considering adopting special appraisal practices, the board must consider and adopt procedures to rapidly market and sell log sorts that fail to receive the required minimum bid at auction.  The board must also establish policies and procedures for the department to evaluate and select contract harvesters.

The contract harvesting revolving account is created in the custody of the State Treasurer.   Appropriations are not required for expenditures from the account, but the account is subject to allotment procedures.  All receipts from the gross proceeds of the sale of logs from contract harvesting must be deposited into this account.  Expenditures may only be used for paying the costs of contract harvesting sales, and may only be authorized by the Commissioner of Public Lands or the commissioner's designee.  Interest generated by the account must be credited to the account.

After the gross proceeds from the sale of logs from a contract harvesting sale are deposited into the contract harvesting revolving account, the harvesting costs are deducted from the gross proceeds and kept in the account.  The final receipt of gross proceeds on a contract sale must be kept in the account until all required costs for that sale are paid.  The net proceeds from the sale are paid to the State Treasurer for distribution in the appropriate trust accounts after the authorized deductions are made.

The contract harvesting revolving account cannot exceed $1 million.  Moneys in excess of $1 million must be disbursed to the trust beneficiaries in accordance with existing procedures.  If the department terminates the use of contract harvesting sales, any existing funds in the contract harvesting revolving account must be returned to the resource management account and the forest development account in proportion to each account initial contribution to the establishment of the contract harvesting revolving account.

Appropriation:  A total of $500,000 is appropriated to the contract harvesting revolving account for the biennium ending on June 30, 2003.  The sum of $250,000 is taken from the resource management cost account, and $250,000 is taken from the forest development account.

Fiscal Note:  Requested on January 21, 2002.

Effective Date:  Ninety days after adjournment of session in which bill is passed.