WSR 98-22-017

PROPOSED RULES

DEPARTMENT OF ECOLOGY

[Order 98-19--Filed October 23, 1998, 3:03 p.m.]

Original Notice.

Preproposal statement of inquiry was filed as WSR 98-16-084.

Title of Rule: Forest practices rules and regulations to protect water quality, chapter 173-202 WAC.

Purpose: Incorporate by reference revisions to forest practices rules to better protect resources. Current forest practices rules are not providing adequate protection for salmon and other public resources. Resource agencies face many new resource protection challenges, including current and proposed listings of salmonids under the federal Endangered Species Act (ESA) and water quality-limited waters under the federal Clean Water Act (CWA).

At its September 22, 1998, [meeting] the Forest Practices Board approved the following goals for this rule package:

1. To provide compliance with the Endangered Species Act for aquatic and riparian-dependent species;

2. To restore and maintain riparian habitat on state and private forest lands to support a harvestable supply of fish;

3. To meet the requirements of the Clean Water Act for water quality on state and private forest lands; and

4. To keep the timber industry economically viable in Washington.

The Forest Practices Board and ecology are planning to conduct rule making on a comprehensive package of new and revised rules. Called the "forestry module," TFW has identified the need to revise forest practices rules (Title 222 WAC) in order to better protect public resources. TFW participants have been negotiating issues covered by this proposal, but have not reached consensus. Should consensus be reached during this rule-making process, the proposal may be modified to include their recommendation as an alternative.

Other Identifying Information: The Forest Practices Board filed a companion preproposal as WSR 98-16-099 and a rule-making proposal as WSR 98-21-015. See Purpose above.

Statutory Authority for Adoption: RCW 90.48.420, 76.09.040, and chapter 34.05 RCW.

Statute Being Implemented: Chapter 90.48 RCW.

Summary: Adopt by reference modifications to forest practices rules (Title 222 WAC) to better protect public resources. Rule categories: Riparian protection for fish-bearing and nonfish-bearing streams; water typing; wetlands; Class IV-Special; SEPA guidance; roads; slope stability; forest chemicals; monitoring; adaptive management; watershed analysis. See Purpose above.

Reasons Supporting Proposal: Modifications to rules are needed to better protect Washington's public resources. See Purpose above.

Name of Agency Personnel Responsible for Drafting: Doug Rushton, 300 Desmond Drive, Lacey, WA 98503, (360) 407-6180; Implementation and Enforcement: Dick Wallace, 300 Desmond Drive, Lacey, WA 98503, (360) 407-6489.

Name of Proponent: Department of Ecology, governmental.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: The proposed rule includes the following forest practices rules that would be adopted by reference:

Revises the water typing system used to identify fish-bearing and nonfish-bearing streams so that more adequate protection is provided for fish habitat.

Provides a five-year forest practices permit for landowners who have completed watershed analysis or who have submitted an application for a road maintenance and abandonment plan that will take longer than two years to implement.

Adds shorelines of the state to the Class IV-Special list and gives SEPA guidance for the applicant to follow.

Expands the Class IV-Special SEPA trigger for unstable slopes, gives SEPA guidance, and adds twenty-four definitions related to unstable slopes.

Revises riparian management zone requirements for eastern and western Washington, and includes options for possible buffer widths.

Presents options for variable buffer widths for aerial application of pesticides and adds best management practices to the Forest Practices Board (FPB) manual.

Adds best management practices related to roads to the FPB manual; revises requirements for road location and design, relief drainage structures, water crossing structures, and road maintenance and abandonment.

Expands adaptive management requirements by formally establishing the Cooperative Monitoring, Evaluation, and Research (CMER) Committee of TFW and charging them with implementing adaptive management based on scientific findings; encourages cooperative opportunities for working with the board.

The purpose and anticipated effects for these rules include improved water quality and fish habitat, as well as better overall protection of public resources while maintaining a viable forest products industry. See Purpose above.

Proposal Changes the Following Existing Rules: The proposed rule amendment of chapter 173-202 WAC incorporates by reference changes to the forest practices rules related to water quality.

A small business economic impact statement has been prepared under chapter 19.85 RCW.

Small Business Economic Impact Statement

Proposed Forest Practices Rules (Title 222 WAC)

Implementing the Forestry Module

Proposed for coadoption by Forest Practices Board and Department of Ecology

October 12, 1998

Part 1: Background Information and Rule Proposal

The Forestry Module: The Forest Practices Board is charged with establishing rules to protect the state's natural resources while maintaining a viable forest products industry. Forest practices rules that pertain to water quality are coadopted by the Department of Ecology.

The Forest Practices Board and the Department of Ecology are considering making changes to the rules that would implement recommendations that timber, fish and wildlife (TFW) participants were negotiating since November 1997, called the forestry module. TFW is comprised of six caucuses: Federal agencies, Indian tribes, state agencies, counties, the environmental community, and the timber industry. The environmental caucus withdrew from the negotiations in September 1998, but the other five caucuses are continuing to work on a forestry module agreement.

The board accepted TFW's goals¹ for the forestry module on September 22, 1998:

1. To provide compliance with the Endangered Species Act for aquatic and riparian-dependent species on nonfederal forest lands;

2. To restore and maintain riparian habitat on nonfederal forest lands to support a harvestable supply of fish;

3. To meet the requirements of the Clean Water Act for water quality on nonfederal forest lands; and

4. To keep the timber industry economically viable in the state of Washington.

¹ Progress Report from TFW to the Forest Practices Board by Jane Lamensdorf-Bucher, TFW Administrator, August 12, 1998.

Initial Draft of Proposed Rules: This initial draft is a proposal to revise the forest practices rules to implement the forestry module. The draft rule frames the range of options for new state-wide forest practices rules:

These proposed rules are based largely on content of the current TFW negotiations that occurred from November 1997 to September 10, 1998². The proposed rules are a starting point for the permanent rule adoption process while the five TFW caucuses finish negotiations and prepare rule recommendations. It is anticipated that if and when consensus is reached, the TFW rule recommendations will fall largely within the range of these alternatives.

² The environmental caucus officially withdrew from the negotiations on September 10, 1998. The remaining five caucuses are continuing to negotiate the remaining issues.

An agency adopting administrative rules is required by the Regulatory Fairness Act (chapter 19.85 RCW) to analyze disproportionate impacts of the rules on small businesses. This small business economic impact statement (SBEIS) summarizes the analysis conducted in order to comply with the Regulatory Fairness Act requirements for a major component of the initial draft proposed rules, the riparian management zone requirements.

Rule Categories: The following categories of forest practices rules are expected to be included in the final forestry module proposal: Riparian protection for fish-bearing and nonfish-bearing streams, SEPA guidance related to these rules, water typing, wetlands, Class IV-Special forest practice designations, roads, slope instability, pesticides, small landowner issues, enforcement, monitoring, adaptive management, and watershed analysis.

Summary of the Proposed Rules: The riparian management zone (RMZ) proposed rules include separate requirements for western and eastern Washington (WAC 222-30-020 (3), (4)³. The rules are summarized as follows:

³ For actual rule language including several different options, please see Proposed Forest Practices Rules for Implementing the Forestry Module, August 12, 1998, pp. 23-29.

In western Washington, RMZs include:

One hundred foot wide no-harvest and no-ground-based-yarding-equipment zone along fish-bearing waters;

Provision for an alternate plan proposal for harvest within the one hundred foot zone;

Additional seventy-foot zone having a certain number of trees per acre (options of ten and forty are given).

A fifty foot wide no-harvest and no-ground-based-yarding-equipment zone along nonfish-bearing perennial streams plus certain other requirements OR a 2/3 site potential tree height zone.

A thirty foot no-ground-based-yarding-equipment zone along nonfish-bearing seasonal streams OR a 1/2 site potential tree height zone.

Because RMZ width requirements are still being negotiated, the following assumption has been made for this SBEIS: In western Washington, RMZ buffers are one hundred seventy feet along all Type 1-3 waters, and along Type 4 and 5 waters that [are] less or equal to 20% slope. This is likely to overestimate the acres taken up by riparian management zones, because not all streams contain fish up to 20% and because the one hundred seventy foot width does not take into account the fact that some management will take place particularly in the outer zone. Current RMZ rules require twenty-five to one hundred foot buffers along westside streams. No RMZs are required on nonfish-bearing streams under current rules unless required on a site-specific basis, i.e., for unstable slopes. The acres for the proposed rules and the existing rules were calculated and subtracted in order to determine the net impact of the proposed rules.

In eastern Washington, RMZs include:

One hundred foot wide or a distance equal to a site potential tree height, whichever is greater, no-harvest and no-ground-based-yarding-equipment zone along fish-bearing waters;

Provision for an alternate plan for harvest within the one hundred foot zone to address forest health and fire prevention;

A fifty foot wide no-harvest and no-ground-based-yarding-equipment zone along nonfish-bearing perennial streams plus certain other requirements OR a 2/3 site potential tree height zone.

A thirty foot no-ground-based-yarding-equipment zone along nonfish-bearing seasonal streams OR a 1/2 site potential tree height zone.

Because RMZ width requirements are still being negotiated, the following assumption has been made for this SBEIS: In eastern Washington, buffers are one hundred feet along all Type 1-3 waters, and along Type 4 and 5 waters that are less or equal to 20% slope. This is likely to be an overestimate of the impacted acres because not all streams are fish bearing up to a 20% gradient and some management may occur within the one hundred feet. Current RMZ rules require thirty to three hundred foot buffers along eastside fish-bearing streams. No RMZs are required on nonfish-bearing streams under current rules unless required on a site-specific basis. Impacted acres were calculated for both proposed and current rules and subtracted in order to determine the net impact of the proposed rules.

Earlier SBEIS for Proposed Water Type Rules: The Forest Practices Board and ecology began the effort to adopt more effective forest practices rules in November 1996 when the water type emergency rule was adopted. The board accepted TFW's recommendation that the definitions used to determine water types reflect current knowledge about fish use and habitat. The water type emergency rule ensures that riparian rules are being applied to fish-bearing streams. The board and ecology proposed this same rule language as a permanent rule on June 18, 1997, and filed an SBEIS at the same time⁴. Certain parts of that study are included in this SBEIS. The Forestry Module proposed rules include a revised water typing system that provides additional protection to fish-bearing streams.

⁴ Carruthers, C. 1997. Small Business Economic Impact Statement for the Proposed Forest Practices Rule Amendments on Water Typings. Hereafter referred to as the SBEIS on the Water Type Rules.

Part 2: Regulatory Fairness Act (Chapter 19.85 RCW)

Requirements: The Regulatory Fairness Act requires preparation of an SBEIS for proposed rules affecting more than 10% of any one industry. An agency that is adopting administrative rules is required to analyze the compliance costs of the proposed rules. The SBEIS must compare the cost of compliance for small businesses with the costs of compliance for large businesses.

If there is a disproportionate economic impact on small businesses in comparison with large businesses, the act requires that the economic impacts be reduced or that the agency provide reasonable justification for not doing so. Mitigation measures must be both legal and feasible. The act says that to obtain information for the SBEIS, an agency may survey a sample of affected business. Whenever possible, a committee should be appointed under RCW 34.05.310(2) to assist in the accurate assessment of the costs of a proposed rule. (RCW 19.85.030, [19.85.]040).

This SBEIS has been prepared with the assistance of a committee representing concerned stakeholders.

For the Forest Practices Board and ecology's proposed rules, the relevant questions from the Regulatory Fairness Act are:

What are the compliance costs for large and small forest businesses should they decide to harvest timber? and

Do the proposed rules disproportionately impact small businesses as compared to large businesses?

What legal and feasible measures are needed to mitigate disproportionate impacts on small businesses?

In order to conduct the SBEIS to fulfill the requirements of the Regulatory Fairness Act, we have made some basic assumptions and designed a two-phased analytical process.

Two-Phased Analysis: This SBEIS is the first phase of the economic analysis; it focuses on riparian protection requirements because existing data could be used to calculate buffer acreage. This could be analyzed within the limited amount of time available prior to the board and ecology formally proposing the rules.

It is anticipated that the Forest Practices Board and ecology will supplement the initial draft proposed rules with a more comprehensive proposal based on TFW's final negotiations. If TFW does not reach consensus or make a rule recommendation, then the board and ecology will move forward to prepare a supplemental rule proposal. At that time, the second phase of the SBEIS, a more comprehensive analysis of the proposed rules, will be prepared. Also during the course of the rule-making process, the board and ecology will prepare the cost-benefit analysis required for significant legislative rules (RCW 34.05.328).

The study design of the SBEIS is consistent for both phases. The limited time window to file the proposed rules also makes it difficult to conduct an empirical analysis in Phase 1. However, in Phase 2, the SBEIS will analyze a revised version of the proposed rules and use empirical methods in the economic analysis. While we don't expect any significant changes in the conclusions of the analysis between the two phases, the accuracy and reliability of the analytical results will be significantly improved. The key differences of these two phases are outlined as following:

Phase 1:

Focuses on riparian protection requirements.

Uses GIS data at the aggregate level.

Uses analytical data derived from the SBEIS on the Water Type Rules.

Phase 2:

Will include other protection requirements in the revised version of the proposed rule.

Will use GIS data at a detailed level.

Will use individual ownership data that has been newly gathered from county records for the sample analysis to identify small businesses.

Will base most of the analyses on empirical data and first-hand information.

Potentially Affected Industries: The Regulatory Fairness Act defines "industry" as all of the businesses in this state in any one four-digit standard industrial classification (SIC) as published by the United States Department of Commerce (RCW 19.85.020). The SIC code assigned to an industry is based on the primary business for any given company. Only one SIC code is assigned to an individual business. SIC code 0811, "Timber Tracts," identifies some large and small forest businesses, but it only contains about one hundred fifty names and therefore does not provide adequate representation for these groups.

All forest landowners and businesses holding timber cutting rights are required to be in compliance with the proposed forest practices rules if their forest parcels contain any type of water defined by the rules. These landowners, timber rights holders or other land-based businesses represent different industries. Many of them are not registered as business owners although this does not exclude them from doing business or investing in land assets. They may also register for future businesses when timber and other commodities pertaining to land become commercially available. Therefore, these businesses are the rule complying community. The industries they represent are affected industries. The affected industries are identified in Appendix 1.

Small Businesses Versus Large Businesses: The Regulatory Fairness Act defines a "small business" as one that has fifty or fewer employees. The analysis of Phase 1 this SBEIS is based on data in the water type SBEIS which states:

"The definition of small and large business in the Regulatory Fairness Act does not fit forest sectors well. Size is defined by the number of employees: A company that has fifty or fewer employees is "small." Impacts on these small businesses have to be compared to the "largest 10% of the businesses." In other words, the small companies must be compared with the top 10% of companies. In forestry, individuals who own forested land may not act like a "business" until they harvest timber. Furthermore, published data on employment for individuals and companies is unavailable for many companies in the affected sectors. This document relies on both the existence and absence of data to define which companies are small and which companies are in the largest 10% of the companies affected. Companies for which employment data is available are ranked based on that data. If no data on employment is available, this document assumes that those individuals and companies that are not listed as industrial and those companies with no UBI number are likely to be small."⁵

⁵ Carruthers, op. cit., p. 6.

Although a few small forest businesses have large landholdings, the vast majority of small businesses have very small landholdings. The average landholding for small forest businesses for Washington and Oregon is about eighty-three acres.⁶ A 1994 United States Forest Service study estimated that one hundred landowners have ownerships greater than 5,000 acres, and their combined holdings equal about 65% of the acreage.⁷ These landowners account for only 0.25% of the total nonindustrial private forest (NIPF) landowners. The same survey revealed that there are approximately 1,000 landowners with ownerships greater than 500 acres. There are approximately 15,000 landowners with ownerships greater than fifty acres. Finally, there are approximately 76,000 landowners with ownership less than fifty acres. Most of the landowners targeted are the landowners with more than fifty acres, but less than 5,000 acres. In Phase 2, small businesses will be identified and grouped based on data gathered from the county records.

⁶ Johnson, R., R. Alig, E. Moore, and R. Johnson. 1997. NIPF Landowners, View of Regulation. Journal of Forestry, January 1997: 23-28.

⁷ Birch, T.W. 1996. Private forest-land owners of the United States, 1994. USDA Forest Service Resource Bulletin NE-Review Draft: Data Tables: west.

The 10% largest businesses are likely to be those integrated forest product firms and they will be identified in Phase 2. In Phase 1, the regulatory impact on the 10% largest industrial businesses is estimated by adjusting the average industrial impacts using derived data from the SBEIS on the water type rules.

Compliance Costs for Businesses: Given the requirements for riparian management zones in the proposed rules, forest businesses would incur costs for complying with the rules when they decide to harvest their timber or sell their land assets because they would have to leave wider buffers along fish-bearing and nonfish-bearing streams. Such costs could be a loss in revenue, a loss in asset, or higher operation costs. In addition, these costs might trigger some other financial difficulties for small business owners and expose them to higher business risks. Even if the land is currently used for recreation or other nontimber uses, the business opportunities for the assets are reduced due to the regulatory constraints. The fair market values of these assets are lower although these paper losses may not be realized in the long term. Whether the regulatory impact is a real loss or a paper loss depends on the management goals, processes and decisions of the businesses. A recent survey shows that businesses' management decisions are significantly affected by expected regulations.⁸

⁸ Johnson, R., R. Alig, E. Moore, and R. Johnson. 1997. NIPF Landowners' View of Regulation. Journal of Forestry, January 1997: 23-28.

Since forest related assets have a long management cycle, the regulatory impacts will take place over a long period. The present value of loss in asset is used as an indicator for regulatory impacts. In other words, the regulatory impacts are the difference between today's market value of a land asset with the proposed rules and today's market value without the proposed regulation. The basic assumption is that all businesses reserve the rights for best use no matter what their current uses are. This gives a maximum estimation of regulatory impact. We have also estimated the probabilities of small businesses being impacted during a certain period.⁹

⁹ See Appendix 7 and Exhibit 4 for details.

Involvement of Concerned Stakeholders: The Regulatory Fairness Act requires the SBEIS to include a description of how the agency will involve small businesses in the development of the rule. While TFW negotiations have not been held in a public forum, key stakeholders have participated in the process. Also, the Forest Practices Board has received regular status reports at its public meetings, which include opportunities for public comment.¹⁰ The board and ecology conducted the thirty-day review required by the Forest Practices Act from August 14 to September 14, 1998, and more than thirty-five written comments were received.

¹⁰ November 12, 1997, February 11, 1998, April 2, 1998, May 13, 1998, and August 12, 1998. All meetings were held in Olympia, Washington. Some were broadcast statewide on TV Washington.

Part 3: Economic Impacts on Small and Large Businesses

The process of the economic assessment includes three steps:

1. Determine if the preparation of an SBEIS is needed to meet the requirements of the Regulatory Fairness Act.

2. If the SBEIS is needed, then determine if there is a disproportionate economic impact on small businesses as a group in comparison with the top 10% of the large businesses. This will help determine if mitigation is needed.

3. If the proposed rule has disproportionate impact on small businesses and mitigation is required, then identify the distributional impacts and probabilities of being impacted among the small businesses with different sizes and management objectives to provide information for the design of appropriate mitigation measures.

Study Design:

Empirical Approach Versus Survey Approach: Two major categories of studies may be used for conducting an SBEIS assessment: The survey approach or empirical approach. A survey approach can include a broad dimension and usually has a quick result. But certain biases may affect the accuracy, validity and reliability of the results. Empirical studies need more detailed data and information and provide more accurate, valid and reliable results. But the empirical approach is usually time consuming and needs more resources. It also heavily depends on data quality. This study primarily uses the empirical approach while incorporating some insights from recent surveys and studies.

Sampling: The primary impact of the proposed rules on businesses is riparian buffers and buffer related land use constraints. There are three major factors that determine the intensity of the impact:

Stream density

Land location

Size of landholding

Stand condition and age class distribution

The sample elements should reflect the above factors. The ideal sample elements would be individual business owners required to comply with the rules. Stratified sampling design should be used for ownership groups with different sized landholdings. However, such individual ownership identities for small business groups are not available from the existing GIS database. To best identify the characteristics of individual businesses under the constraints of our available resources, we randomly selected samples of one square mile sections from private forest lands. The samples were collected separately for eastern Washington and western Washington since the proposed rules are different for these two geographical areas. The sample units and the process of randomization ensure that the characteristics of stream density and land location are well represented. The average impacts of large businesses and small businesses should be well represented by such a design.¹¹

¹¹ See Appendix 3 about determination of sample sizes.

The samples will be further processed to identify individual ownerships by manually checking county records in Phase 2. These individual businesses will be identified and impacts of the proposed rules will be assessed through photo interpretation, map analysis and value assessment. The data obtained will be used to analyze the distribution of regulatory impacts among small businesses with landholdings of different size.

The sampling is designed to capture the impact of large industry businesses as a group. It is not intended to capture the distribution of regulatory impacts among large industrial businesses because no mitigation measures, which might need information about distribution of regulatory impacts, are required by law for large businesses. In Phase 1, the regulatory impacts for the 10% largest industry businesses are estimated by adjusting the average industry impacts using derived data from the SBEIS on the water type rules. In Phase 2, the 10% largest industrial businesses will be identified and the regulatory impacts on them will be estimated.

Data: A complete list of data, process of preparation, and map and photo interpretation will be listed as appendix in Phase 2.

Determining the Need for an SBEIS: According to the Regulatory Fairness Act, an SBEIS is required if the proposed rules affect 20% of all industries or more than 10% of any one of the affected industries. The potentially affected industries are listed in Appendix 1. For the industry "Timber Tracts" (SIC code 0811), as long as any type of water as defined in the rule is present on the land, the business owners will be required to comply with the proposed rule. We estimated that 57% of the NIPF lands will be affected by the proposed rule.¹² Since all large businesses will be affected by the proposed rules, given the natural density of Type 1 to 5 streams, it is certain that far more than 10% [of] business in the industry will be affected by the proposed rules, although some small businesses may not be affected at all due to the size of their landholding.¹³

¹² Appendix 4 provides an estimate of impacted acreage which is 57% of the total sampled acreage.

¹³ The percentage of affected businesses will be determined after identifying ownerships in the samples in Phase 2.

Identifying Disproportionate Impacts:

Primary Sources of Disproportionate Impacts: Due to the differences in geographic/physical features of landholdings and differences in management and finance between large and small businesses, the proposed rules could have a disproportionate impact on small businesses.

Disproportional impacts result primarily from a combination of factors such as stream density, and location and size of landholding. Other factors such as financial status of the owners and economy of scale also contribute to the disproportionate impacts on small businesses.

1. Disproportionate Share in Buffer: Unlike large industrial businesses, some small forest businesses may not be affected by the proposed rules while others may share more skewed impacts from the rules. Due to the small size of landholdings, a parcel may be located between streams and not be impacted by the proposed rules. In other words, there is a disproportionate impact among the small businesses. As Exhibit 1 shows, the small business B is not impacted because no stream runs across this parcel. While other small businesses (A, C and D) have a relatively larger percentage of buffer in their parcels (shaded area) compared to the large land owner (L). These small businesses are likely to be impacted more severely compared to their larger counterparts. For the same reason, the impacts of economically inaccessible acres due to buffer requirement are also skewed for small businesses.

Exhibit 1: Distributional Impacts: Small versus large business.

The same buffer area will be required by the rules. Three small businesses will have the same number of acres in buffer as the large business. However, since small business B is not impacted, the percentage of acres in buffer for the other three small businesses will be higher that [than] that of the large business.

2. Economic Inaccessibility: Another primary source of disproportionate impact of the proposed rules on small businesses is economic inaccessibility. The required buffers will make some of forest acres economically inaccessible because of fragmentation caused by buffers. This impact is likely to take place on small forest parcels.

Exhibit 2 illustrates a hypothetical example of economical inaccessibility. A portion of the parcel C is physically separated by the buffer area (area E). Obviously, small parcels are more likely to be separated by the buffer and the part separated by the buffer might become inaccessible economically due to the small size. Depending on the cost of crossing the buffer, part or all of the value of land area E will no longer be available to the business.

Exhibit 2: Disproportionate Impacts: Lack of economic accessibility.

A buffer area can cut part of a forest off from the road. If the value of the timber in the separated area is too low to cover the cost of appropriate stream crossing, the acres become economically inaccessible. In this hypothetical example, the black line is the road, gray area is the buffer. Small business C's forestland is cut off by the buffer and acres in area E may become economically inaccessible. This is not the case for the large business to the scale of economy.

Estimating Disproportionate Impacts:

1. Estimated Small Businesses Who Are Not Impacted: All forest businesses are required to comply with forest practices rules.¹⁴ As Exhibit 3 shows, some small businesses will not be impacted by the proposed rule at all while others may share disproportionate impacts. For those who are impacted by the rules, some of them will be impacted when the rules become effective while others may not be impacted for a long term if they decide not to harvest timber. The best way to do this is to identify ownerships of each individual parcel in the samples and exclude those parcels without streams. This will be done in Phase 2. In Phase 1, information from samples and derived information from the SBEIS on the water type rules are used to estimate the portion of NIPF land that is not subject to the proposed rules. We estimated that about 47% of small businesses are not impacted by the proposed rules because no streams run through their land parcels. Appendix 4 provides a detailed procedure and the results of estimation. The estimated result will be revised as we obtain data from county records in Phase 2. ¹⁴ Forest practices permits are not required for those landowners whose acreage is equal to or less than two acres.

Exhibit 3: Regulatory Impacts on Small Businesses.

2. Acres in Buffers: One of the primary disproportionate impacts of the proposed rules is the percentage of acres in buffers. Appendix 5 lists the riparian management zone (RMZ or buffers) requirements in the proposed rules for private forest lands for both western Washington and eastern Washington respectively. Since the requirements are different between the two geographical areas, the sampling procedures were performed separately and the results are summarized for eastside and westside.¹⁵ The acres in buffers by ownership group have been estimated by regions. The data is obtained from GIS sampling. The total forest acres of impacted small businesses have been adjusted by excluding the acres of small businesses who are not impacted by the proposed rules. The total acres in buffers of the 10% largest businesses was estimated based on the adjustment of the sample data for the industry. Appendix 5 provides the detailed information about the estimating procedure and estimated results.

¹⁵ Appendix 3 provides the details, see Exhibit A3-2.

3. Estimating Economically Inaccessible Acres: To determine economically inaccessible acres requires GIS analysis and identifying ownership of individual parcels through collecting county tax records.¹⁶ To get a reasonable estimate of the number of economically inaccessible acres in Phase 1, we have made an inference from the data collected from the new samples and derived data from the SBEIS on the Water Type Rules. The estimating procedure and estimated results are described in Appendix 6.

¹⁶ Inaccessible acres will be determined based on county tax records and interpretation of GIS samples in Phase 2 of this SBEIS.

4. Findings: Disproportionate Impacts: Disproportionate impacts for small businesses have been identified and Exhibit 4 provides a summary of the results about the findings. These results will be further refined in Phase 2 as we obtain more detailed data about each individual owner. The impacted acres will be further interpreted for their potentials for commodities and evaluated for their market values. The final regulatory impacts will be expressed as losses in assets although we use acreage as a proxy for assets in Phase 1.

The findings suggest that mitigation measures are needed for the proposed rules because disproportionate impacts of the proposed rules have been identified and small businesses have a higher burden in complying with the rules compared to the 10% largest counterparts.

Exhibit 4: Disproportionate Impacts of the Forestry Module Proposed Rules.

Estimating Net Impacts of the Proposed Forestry Module Rules:

1. Impacts of the Existing Forest Practices Rules: The major impacts of the existing rules include the requirements for buffers and the inaccessible acres caused by buffers. The requirements of buffers of the existing rules for private forest lands are different for both western Washington and eastern Washington.¹⁷ The separated GIS samples were used to estimate the impacts of acres in buffers of the existing forest practices rules by region. The results are summarized by regions and given in Exhibit 5.

¹⁷ Washington Forest Practices Board. 1995. Washington Forest Practices. Department of Natural Resources, Olympia, Washington.

We have used the same procedure to estimate the acres in buffers by ownership group for both the proposed forestry module rules and the existing forest practice rules. While the wider buffers will substantially increase the acres in buffer areas, which implies that more timber in these areas is not harvestable, the assumption for estimating economically inaccessible acres has little change with the proposed rules. The geographic distribution of streams and the ownership boundaries are major factors that determine the inaccessibility of forest acres. While the wider buffers may increase some costs of accessing the acres separated by the buffers, such costs are not substantial compared to the losses of timber values due cut-off by buffers. Therefore, we assume that the wider buffer requires higher costs to build bridges and roads, compared to the medium costs for the existing rules.

Exhibit 5: Impacts of the Existing Forest Practices Rules.

2. Net Impacts of the Forestry Module Proposed Rules:

Exhibit 6 provides an estimate of the net impact of the proposed rules over the existing rules.

Exhibit 6: Net Impacts of the Proposed Forestry Module Rules.

Assessing Distribution of Disproportional Impacts:

The Size of Landholdings and Ownership Objectives: While the average impact of the proposed rule on small businesses is that about 21% of their lands will be constrained for business activities such as timber harvest. The distribution of the regulatory impact is very different among groups of small businesses with different sizes of landholdings and land-use objectives.

The size of landholdings are [is] also correlated to land use objectives. The objectives of land use for small businesses are very different. Some primarily use land for recreation and some use land for producing commodities such as timber. Also, some others use land as an asset class for investment. Due to multiple functions of forestlands, many businesses have multiple and dynamic objectives for their lands from time to time.

The different objectives and sizes of landholdings affect factors of management decisions and the response to business environment such as regulations. Whether or when a small business is impacted by the proposed rules is dependent upon their decisions on land use and the size of their landholdings (Exhibit 7). In general, smaller businesses are more likely to be a land user with recreation as the objective, while larger businesses tend to be timber producers and tree farmers. But many businesses have multiple objectives of land use.

Exhibit 7: Small Business Management Objectives and Average Sizes of Landholdings.

Distributional Impacts: Forestland has a long term management cycle, and the average rotation for NIPF forestland is about 50 - 60 years.¹⁸ Whether timber is matured by a certain year is dependent on rotation, age distribution and size of landholding. Therefore, given the rotation and age distribution, the size of landholding will be a primary factor in making decisions about timber harvest. The larger the landholding, the more consistently forest harvest will take place somewhere on the ownership. Consequently, larger NIPF businesses are impacted by the proposed rules more consistently. On the other hand, the smaller the land parcel, the higher the percentage of land that will be impacted by the rules, although they are impacted less frequently.¹⁹ Exhibit 8 describes the general data and trends of the distributional impacts among small forest businesses with different sizes of landholding.

¹⁸ Lippke, B. And B. Bare. 1997. Viability of the Non-industrial Private Forestry Sector in Washington State.

¹⁹ See Appendix 7 for details about the estimation of distribution impacts among NIPF small businesses.

The disproportionate impacts of the proposed rules on small businesses can vary greatly. While the regulatory constraints impact a larger percentage of land for businesses with smaller parcels, it is less intensive in terms of frequency. Businesses with smaller parcels or nontimber objectives may be less likely to be impacted by the proposed rules for the long term if they never decide to harvest timber. This is often the case. However, when they are impacted by the rule, the impact is more intensive. Therefore, the responses to regulation can be different due to the difference in size of landholding and management objectives. Smallest businesses tend to be less sensitive to the regulations.²⁰ This reflects the fact that these businesses are more recreation-oriented and are less likely to be impacted due to the smaller size of their landholdings.

²⁰ See Lippke's analysis of Johnson et. al. survey (1997) in Lippke, B. And B. Bare. 1997. Viability of the Non-industrial Private Forestry Sector in Washington State.

Exhibit 8: Distributional Impacts Among Small Businesses by Size of Landholding.

Management goals are also an important factor to interpret the impact of the proposed rules on small businesses. A recent survey for small forestry businesses in western Washington and Oregon revealed an interesting fact. When asked how much incentive should be paid for improving wildlife habitat, on average, respondents classified as timber producers demand the greatest incentive payment ($120 per acre per year) followed by respondents classified as multiobjective owners ($107).²¹ Businesses with recreation objectives and other nontimber objectives demand the least incentive payment ($69 and $66 respectively).

²¹ Kline J. And R. Johnson. 1998. U.S. Forest Service, PNW Research Station, Forestry Sciences Laboratory.

Part 4: Mitigation Measures

If a rule has a disproportionate impact, mitigation is required. The mitigation must be legal and feasible in meeting the objectives of the statutes on which the rule is based.

Small landowner landscape plans may be a viable alternative for obtaining more value from the buffers while not impacting the functions being protected. One such option may be committing to a longer rotation for timber harvest so that certain important riparian functions are more likely to [be] provided. These plans could have an emergency exit clause that would allow the small business to deal with family emergencies (such as estate taxes), as long as the longer term of the plan is still valid.

The current rules already provide for some reduction of compliance costs. First, a further exemption is provided if a structure is on the parcel and trees are within 1.5 tree lengths of the structure. These tree[s] are exempt from the rule for safety reasons. Additionally, timber harvests on parcels under two acres do not require forest practices permits.

Exempting small businesses from part or all regulatory requirements is not feasible for these rules because, unlike the owl or murrelet rules recently adopted by the board, all businesses that have streams would be impacted at the time they choose to harvest or sell their property. The small number of small businesses impacted by the owl or murrelet rules justified an exemption from those rules.

Since mitigation measures must be both legal and feasible, they must fit within the authority of the Forest Practices Board and ecology. A system of alternative plans for small businesses is an example. Compensation for small businesses has been discussed in the negotiations, but the Forest Practices Board does not have authority for compensation. This type of mitigation would need approval from the legislature.

Part 5: Conclusions

The SBEIS analysis has been conducted to comply with the Regulatory Fairness Act requirement for the proposed forest practice rules.

1. The proposed rules will cause a disproportionate impact on small businesses. The average impact for small forestry businesses is about 42% higher than that of 10% of largest industrial businesses.

2. The impacts among small businesses are very different. While the impacts on a few largest NIPF businesses are close to that of the 10% largest industrial businesses, most of the small businesses have a higher percentage of their land which is constrained for harvest by the proposed rules. The percentage increases as the size of landholding decreases.

3. Although the smaller parcels have the higher percentage of land in buffers, which implies potential loss in assets, the businesses of these parcels are less likely to harvest timber on their lands because

More businesses in this group have recreation-related objectives which imply giving up or delaying timber harvest.

It is not economically feasible to harvest a smaller parcel frequently.

Therefore, it may take a long time for these small businesses to realize the losses in their assets.

4. Small forestry businesses with timber producing objectives are most likely to be affected by the proposed rules. They will be impacted in both the short term and long term.

5. While smallest or recreational businesses might be less impacted by the proposed rules in the near term, they will be impacted in the long term if they decide to propose a forest practice operation or sell their property.

6. Legal and feasible measures are to be developed to mitigate disproportionate impacts or reduce compliance costs.

Part 6: Public Comment Opportunities

The Forest Practices Board and the Department of Ecology are conducting a full public review of the proposed rules as required by the Administrative Procedure Act (APA) (chapter 34.05 RCW). Joint public hearings that meet APA as well as the State Environmental Policy Act (SEPA) requirements will be held statewide. Hearing dates and locations will be announced with the publication of the draft environmental impact statement. To be notified about hearings, send your name and mailing address to the board at the address listed below.

In the interim, the board takes public comment at each of its meetings which are usually held at the Natural Resources Building, 1111 Washington Street S.E., Olympia. Upcoming regular quarterly meeting dates are: November 10, 1998; February 10, 1999; May 12, 1999; August 11, 1999; and November 10, 1999.

Written comments on the proposed rules may be sent to the board and ecology c/o: Judith Holter, FPB Rules Coordinator, Department of Natural Resources, Forest Practices Division, P.O. Box 47012, Olympia, WA 98504-7012, phone (360) 902-1412, fax (360) 902-1784, e-mail forest.practicesboard@wadnr.gov.

The anticipated adoption date for these rules has not yet been set.

Appendix 1: Potentially Affected Industries

Appendix 2: Small Businesses and NIPF Landowners

In Phase 1, NIPF landowners are assumed to be small businesses. Those NIPF businesses with two or less acres are excluded because they are not required to apply for a forest practices permit. In addition, most of these smallest businesses are residential or recreational users rather than business owners. Some small businesses do not have a UBI (universal business identification). But this does not exclude them from doing business in the future when timber is mature.

Although a few small businesses have large landholdings, the vast majority of NIPF businesses have very small landholdings. The average landholding for small forestry businesses for Washington and Oregon is about eighty-three acres.²² Given the total acres of NIPF lands, we estimated that there are about 54,000 businesses in Washington. The Washington Farm Forestry Association estimates that there are about 30,000 small landowners in Washington.²³ The USDA Forest Service 1994 study estimated that there are about 76,000 landowners who own from one to forty-nine acre parcels. Exhibit A2-1 shows the distribution of these businesses by size of landholding from two hundred thirteen sample data in the SBEIS on the Water Type Rule.

²² Johnson, R., R. Alig, E. Moore, and R. Johnson. 1997. NIPF Landowners, View of Regulation. Journal of Forestry, January 1997: 23-28.

²³ Personal Communication with Nels Hanson, WFFA.

Exhibit A2-1: Small Business Distribution by Size of Landholding.²⁴

²⁴ Data source: Carruthers, C. 1997. Small Business Economic Impact Statement for the proposed Forest Practices Rule Amendments on Water Typing. This table will be recalculated based on new sample data from county records in Phase 2.

A 1994 U.S. Forest Service study estimates that about one hundred landowners have more [than] 5,000 acres and their combined holdings equal about 65% of the total NIPF acreage. Our data shows that for the larger "small" businesses, the regulatory impact on them is close to large businesses.²⁵ Given a fifty year rotation and $10,000 income per acre from harvesting mature timber, about one hundred acres are harvestable annually, and revenue from the harvest is about $1 million. Considering the seasonality of forestry, some of these large businesses (>5,000 acres) are likely to hire 50 or more permanent and seasonal employees, and should be identified and excluded from the small business group. However, since their ownership boundaries are not identifiable in the GIS database, our sample element, although large enough (six hundred forty acres) to well represent the land-based small businesses, did not exclude a few large NIPF businesses. Therefore, the group average impact of small businesses might be understated in Phase 1. The small businesses will be grouped after individual ownerships are identified in Phase 2. In Phase 1, NIPF businesses are assumed to be small businesses.

²⁵ See Exhibit 6 of the main document.

Appendix 3: Determine Sample Sizes for SBEIS

Since the proposed rules have different requirements for private forest lands in western and eastern Washington, and the ownership compositions are also different in the two geographic regions, sample size determination is performed for both western and eastern Washington separately. Samples will be analyzed separately for the two areas and the total economic impacts will be pooled to determine if disproportional impacts exist for small businesses.

1. Statistical Procedure to Determine Sample Sizes

Population for samplings is all private forest lands in Washington. These lands are regulated by the proposed rule. What we are interested in is the difference in regulatory impacts between large and small businesses.

Suppose that

_S .= The proportion of assets of small business owners that will be lost due to the proposed rule

_L .= The proportion of assets of large business owners that will be lost due to the proposed rule

_S - _L .= True disproportional economic impacts on small businesses

P_S .= The estimated proportion of assets of small business owners that will be lost due to the proposed rule

P_L .= The estimated proportion of assets of large business owners that will be lost due to the proposed rule

P_S - P_L .= The estimated disproportional economic impacts on small businesses

Assume that no disproportional economic impacts exist on small business owners, then

Ho .= _S - _L .= 0

We can test for equality of _S and _L with a test statistic given by the difference of P_S - P_L in sample proportions divided by an estimated standard error. The variance of P_S - P_L is

² .= [_S (1 - _S)/A_S .* n] .+ [_L (1 - _L)/A_L .* n]

Where:

n .= sample size

A_S .= Asset proportion of small land owners

A_L .= Asset proportion of large industrial land owners

Z .= [(P_S - P_L) - (_S - _L)]/ has approximately a normal distribution.

Then, Z_/2 .= 1.96 <.= Prob[P_S - P_L]/}> .= Z_/2 .= 1.96 ( .= 0.05) will give a 95% confidence level.

Then we can solve above equation for sample size n.

2. Sample Sizes

We used information from the SBEIS for the water type rules as a base to determine P_S and P_L. Considering the proposed rules include water types 1 to 5, P_S and P_L will be much larger. We assume that P_S and P_L are twice as large as those of the water type rules. As a result, we have

P_S .= 20% and P_L .= 5.5%

Given the asset proportion for both large and small land owners (A_S and A_L), we can estimate sample size n.

Based on DNR's GIS database and using forestland acreage as a proxy asset indicator, then we have

A_S .= 0.37 and A_L .= 0.73

The sample size n is estimated to be ninety-four for western Washington. In other words, ninety-four one square mile sections were selected from private forest lands in western Washington based on the random sampling procedure.

DNR's GIS database contains no ownership information for private forest lands in eastern Washington. United States Forest Service FIA database ownership information²⁶ is used to determine sample size in eastern Washington.

²⁶ Bolsinger et al, 1997. Washington's Public and Private Forests. U.S. Forest Service. PNW-RB-218.

We have

A_S .= 0.73 and A_L .= 0.27

The sample size is estimated to be seventy-three for eastern Washington. In other words, seventy-three one square mile sections were selected from private forest lands in eastern Washington based on the random sampling procedure. Exhibit A3-1 shows the geographic locations of randomized samples.

Exhibit A3-1: Locations of Randomized Samples

3. Summary of Samples

Exhibit A3-2 provides a summary of samples related to the population.

Exhibit A3-2: Summary of the samples.*.

Appendix 4: Estimating Impacted Small Businesses

The population to which the samples apply includes all private forest lands. Since some businesses will not be affected by the proposed rules because no streams run through their lands, we need to exclude the acres owned by these businesses. The best way to do this is to identify ownerships of each individual parcel in the samples and exclude those parcels with no streams. Since it is impossible to obtain the ownership information before the anticipated filing of the proposed rules, the following procedure is used in Phase 1 to estimate the total acreage of small forestry businesses who are not impacted by the proposed rules.²⁷

²⁷ The total acreage of small businesses who are not impacted by the proposed rules will be determined based on county tax records and interpretation of GIS samples in Phase 2 of this SBEIS.

Assume that there is not skewed distribution of streams across all land ownerships and the higher percentage of acres in buffers for impacted small forestry businesses is due to ownership boundaries. Suppose x acres are owned by businesses who are not impacted by the rules. We have

[B_NIPF/(A_NIPF - X)]/[B_IND/A_IND] .= P_NIPF/P_IND .= R

Where:

B_NIPF .= Total acres in buffers of small businesses who are impacted by the rules

A_NIPF .= Total acres of small businesses

B_IND .= Total acres in buffers of industrial businesses

A_IND .= Total acres of industrial businesses

P_NIPF .= Percentage of lands in buffers of impacted small businesses

P_IND .= Percentage of lands in buffers of industrial businesses

R .= Ratio of relative impact--Impacted small businesses versus industrial businesses

Data about acres in buffers and total acres by ownership groups have been obtained from the GIS samples for the proposed rules. The ratio of relative impact between ownership groups was derived from the data of the SBEIS on the water type rules. The percentage of acres in buffers for those impacted small businesses is 1.11 times of the percentage of those industrial businesses. This indicates the ratio of relative impact of impacted small businesses versus industrial businesses is 1.11 or 111%.

The total acreage of lands owned by the small businesses who are impacted under the proposed rules is estimated to be 19,736 acres or 57% of total NIPF lands. The total acreage of NIPF businesses who are not impacted by the rules is estimated as 16,485 acres or 43% of NIPF lands. The total NIPF lands are 34,132 acres.

Appendix 5: Estimating Impacts of Acres in Buffers

One of the major impacts of the proposed rules is the requirements for buffers. Exhibit A5-1 lists the requirements of buffers for private forest lands in both western Washington and eastern Washington. Since the requirements are different between the two geographically distinguished regions, sampling procedures were performed separately and the results are summarized by regions (Appendix 2).

We have used the following procedure to estimate the acres in buffers by ownership group. The data is obtained from GIS sampling. The total forest acres of impacted small businesses have been adjusted by excluding the acres of small businesses who are not impacted by the proposed rules.

P_i .= B_i/A_i

Where:

P_i .= Estimated percentage of acres in buffers for ownership group i resulting from the forestry module rules

B_i .= Acres in buffers for ownership group i resulting from the forestry module rules

A_i .= Total forest acres of businesses in group i who are impacted by the forestry module rules

i .= IND or NIPF representing industrial forestland owners and nonindustrial private businesses respectively.

Exhibit B1 shows the data used and the estimated results from the GIS samples. The total acres in buffer for small businesses due to the proposed rules is estimated as 3,546 acres or about 18% of impacted NIPF forest lands in the samples. The total acres in buffer due to the forestry module rules for industrial businesses in the samples is estimated as 5,834 acres or about 16% of the forest lands under industrial ownership in the samples.

Exhibit A5-1: Impacts of the Proposed Rule: Acres in buffers.

Appendix 6: Estimating Impacts of Lack of Accessibility

Economically inaccessible acres are calculated by GIS analysis and by identifying ownership of individual parcels on county tax records.²⁸ To get a reasonable estimate of the number of economically inaccessible acres in Phase 1, we have made an inference from the data collected from the SBEIS on the Water Type Rules. The population to which the samples applied in the Water Type Rules SBEIS included all private forest lands with Type 4 and 5 waters in Washington. The population of the sample of the forestry module proposed rules includes all private forest lands which have water types 1, 2, 3, 4, or 5. As more water types are included, stream density under the regulation increases. The increase in stream density raises the probability of cutting a parcel into pieces which may become economically inaccessible. We have used the following procedure to estimate the economically inaccessible acres by ownership group.

²⁸ Inaccessible acres will be determined based on county tax records and interpretation of GIS samples in Phase 2 of this SBEIS.

E_i .= _i .*A_i and,

_i .= F_i.*[M_i/N_i]

Where:

E_i .= Estimated economically inaccessible forest acres of ownership group i resulting from the forestry module rules

_i .= Estimation factor of inaccessible acres under the proposed forestry module rules

A_i .= Total sample acres of ownership group i

F_i .= Percent of economically inaccessible portion per acre of ownership group i resulting from water type rules

M_i .= Stream feet per acre of the private forest lands of ownership group i under the proposed forestry module rule

N_i .= Stream feet per acre of the private forest lands of ownership group i under the water type rules

i .= 10% largest industrial owner or nonindustrial private businesses respectively.

Exhibit A6-1 shows the data that we used and the estimated results. The total inaccessible acres of small businesses due to the proposed rules is 591 acres or about 2.99% of the total lands of impacted small businesses in sample. The total inaccessible acres due to the proposed rules for 10% largest industrial businesses is twenty-six acres or 0.72% of the total forest lands in the sample.

Exhibit A6-1: Impacts of the Proposed Rule: Economically inaccessible acres²⁹.

²⁹ Estimated based data from Water Type Rules SBEIS (Carruthers, 1997), US FIA data about ownerships of forest lands in eastern Washington, DNR GIS samples, and the assumption of linear relation with stream miles.

Appendix 7: Distributional Impacts Among Small Businesses

The objectives of land use for small forestry businesses are very different. While some of them use land for recreation primarily, some of them use land for commodities such as timber. Also some others use lands as an asset class for investment. Due to multiple functions of forestland, many businesses have multiple and dynamic objectives for their lands. The objectives are sometimes correlated to sizes of landholdings and affect management decisions. Whether or when a small business is impacted by the proposed rules is dependent upon their decisions on land use and the size of their landholdings.

While the average impact of the proposed rules on small businesses is that about 21% of their lands will be constrained for business activities such as timber harvest, the distribution of the regulatory impact is different among groups of small businesses of different sizes of landholdings and land use objectives.

1. Distribution of Impacts by Owner Size: The distribution of regulatory impacts among small businesses is different from largest industrial businesses. Although in general small businesses have a larger percentage of their lands under regulatory constraints, the wide-spread standard deviation indicates the impact is far from homogeneity which characterizes their large industrial counterparts. Exhibit A7-1 illustrates such distribution using the data from the SBEIS for the water type rules. A similar distribution chart will be provided in Phase 2 of this SBEIS for the proposed forestry module rules.

2. Estimated Regulatory Impacts by Size of Landholding of Small Businesses: The smaller the size of the landholding, the larger the percentage of acres in buffers as long as there is a stream crossing the parcel. We have used the following procedure to estimate the regulatory impacts on groups of businesses with different sizes of landholding.

H_i .= .*G_i and,

.= W/V

Where: H_i .= Estimated impact of the proposed rules on small businesses with landholding of size i, expressed as percentage

_i .= Adjusting factor

G_i .= Estimated impact of water type rules on small businesses with landholdings of size i, expressed as percentage

W .= Estimated impact of the proposed forestry module rules on small businesses, expressed as percentage

V .= Estimated impact of the water type rules on small businesses, expressed as percentage

The estimated results are listed in Exhibit 7 of the main text. In Phase 2, these numbers will be reestimated using empirical data after the individual businesses are identified on county tax records.

3. Estimate the Probabilities of Being Impacted

The procedure used to estimate the probabilities of being impacted by size of landholding is adopted from Lippke and Bare.³⁰ The regulatory impacts we estimated have been used instead of the assumption of 20% regulation constraints.

³⁰ See Lippke, B. And B. Bare. 1998. Supplementary Comments on the "Viability of the Non-industrial Private Forestry Sector in Washington State" Under Regulatory Uncertainty.

We assume that five acres are necessary for economic harvest potential. We can use the following procedure to calculate the probability that a business will be impacted if it decides to harvest mature forest in a given period. In other words, we can estimate the likelihood that the business will be impacted in that period.

P_i .= [1- (H_i)^M]

Where:

P_i .= Estimated probability of small businesses (with landholding of size i) who will be impacted by the proposed rules in a given period

H_i .= Estimated impact of the proposed rules on small businesses with landholding of size i (expressed as percentage)

M .= Mature timberland expressed as numbers of economic harvestable plots (each plot has 5 acres).

We have estimated the probability of being impacted for five groups of small businesses for the periods of ten years and fifty years. The estimated results are provided in Exhibit 8 in the main text.

A copy of the statement may be obtained by writing to Judith Holter, Forest Practices Board, Rules Coordinator, Department of Natural Resources, Forest Practices Division, P.O. Box 47012, Olympia, WA 98504-7012, phone (360) 902-1412, e-mail forestpractices.board@wadnr.gov, fax (360) 902-1784.

Section 201, chapter 403, Laws of 1995, applies to this rule adoption. Considered to be a significant legislative rule.

Hearing Location: Natural Resources Building, Room 172, 1111 Washington Street S.E., Olympia, WA, on May 19, 1999, at 3:00 p.m.

Assistance for Persons with Disabilities: Contact Forest Practices Board Secretary by May 1, 1999, TDD (360) 902-1125.

Submit Written Comments to: Doug Rushton, Water Quality Program, P.O. Box 47600, Olympia, WA 98504-7600, fax (360) 407-6426, by May 21, 1999.

Date of Intended Adoption: May 28, 1999.

October 21, 1998

Daniel J. Silver

Deputy Director

OTS-2642.1

AMENDATORY SECTION (Amending Order 97-46, filed 3/30/98, effective 4/30/98)

WAC 173-202-020  Certain WAC sections adopted by reference. The following sections of the Washington Administrative Code existing on ((March 13)) October 12, 1998, are hereby adopted by reference as part of this chapter in all respects as though the sections were set forth herein in full:

WAC 222-08-035--Continuing review of forest practices ((regulations)) rules.

WAC 222-10-020--SEPA policies for certain forest practices within 200 feet of a Type S Water.

WAC 222-12-010--Authority.

WAC 222-12-040--Alternate plans.

WAC 222-12-045--Adaptive management.

WAC 222-12-046--Cumulative effect

WAC 222-12-070--Enforcement policy.

WAC 222-12-090--Forest practices board manual.

WAC 222-16-010--General definitions.

WAC 222-16-030--Water typing system.

WAC 222-16-035--Wetland typing system.

WAC 222-16-050 (1)(a), (1)(d), (1)(e), (1)(h), (1)(i), (l)(j), (3)(b), (3)(c), (3)(d), (3)(e), (3)(f), (3)(n), (3)(o), (3)(p), (4)(c), (4)(d), (4)(e), (5)(b), (5)(c), (5)(d), (5)(e), (5)(f), (5)(h), (5)(n), (5)(o)--Classes of forest practices.

WAC 222-16-070--Pesticide uses with the potential for a substantial impact on the environment.

WAC 222-20-015--Multiyear permits.

WAC 222-20-020(6)--Application time limits.

WAC 222-22-010--Policy.

WAC 222-22-020--Watershed administrative units.

WAC 222-22-030--Qualification of watershed resource analysts, specialists, and field managers.

WAC 222-22-040--Watershed prioritization.

WAC 222-22-050--Level 1 watershed resource assessment.

WAC 222-22-060--Level 2 watershed resource assessment.

WAC 222-22-070--Prescription recommendation.

WAC 222-22-080--Approval of watershed analysis.

WAC 222-22-090--Use and review of watershed analysis.

WAC 222-22-100--Application review prior to watershed analysis.

WAC 222-24-010--Policy.

WAC 222-24-020 (2), (3), (4), (5), (6), (8), (13)--Road location and design.

WAC 222-24-025 (2), (5), (6), (7), (8), (9), (10)--Road design.

WAC 222-24-030 (2), (4), (5), (6), (7), (8), (9)--Road construction.

WAC 222-24-035 (1), (2)(c), (2)(d), (2)(e), (2)(f)--Landing location and construction.

WAC 222-24-040 (((1), (2), (3), (4)))--Water crossing structures.

WAC 222-24-050--Road maintenance.

WAC 222-24-060 (1), (2), (3), (6)--Rock quarries, gravel pits, borrow pits, and spoil disposal areas.

WAC 222-30-010--Policy--Timber harvesting.

WAC 222-30-020 (2), (3), (4), (((5))) (6), (7)(a), (7)(e), (7)(f), (8)(((c)))--Harvest unit planning and design.

WAC 222-30-025--Green-up: Even-aged harvest size and timing.

WAC 222-30-030--Stream bank integrity.

WAC 222-30-040--Shade requirements to maintain stream temperature.

WAC 222-30-050 (1), (2), (3)--Felling and bucking.

WAC 222-30-060 (1), (2), (3), (5)(c)--Cable yarding.

WAC 222-30-070 (1), (2), (3), (4), (5), (7), (8), (9)--Tractor and wheeled skidding systems.

WAC 222-30-080 (1), (2)--Landing cleanup.

WAC 222-30-100 (1)(a), (1)(c), (4), (5)--Slash disposal.

WAC 222-34-040--Site preparation and rehabilitation.

WAC 222-38-010--Policy--Forest chemicals.

WAC 222-38-020--Handling, storage, and application of pesticides.

WAC 222-38-030--Handling, storage, and application of fertilizers.

WAC 222-38-040--Handling, storage, and application of other forest chemicals.

[Statutory Authority: RCW 90.48.420, 76.09.040 and chapter 34.05 RCW. 98-08-058 (Order 97-46), § 173-202-020, filed 3/30/98, effective 4/30/98. Statutory Authority: RCW 90.48.420, 76.09.040, [76.09.]050 and chapter 34.05 RCW. 98-07-026 (Order 97-41), § 173-202-020, filed 3/10/98, effective 4/10/98. Statutory Authority: RCW 90.48.420 and 76.09.040. 94-17-011, § 173-202-020, filed 8/8/94, effective 9/8/94; 93-11-062, § 173-202-020, filed 5/13/93, effective 6/13/93; 93-01-091 (Order 92-51), § 173-202-020, filed 12/16/92, effective 1/16/93. Statutory Authority: Chapters 90.48 and 76.09 RCW. 92-14-098, § 173-202-020, filed 6/30/92, effective 8/1/92. Statutory Authority: Chapter 76.09 RCW. 88-22-030 (Order 88-19), § 173-202-020, filed 10/27/88. Statutory Authority: RCW 76.09.040. 87-23-017 (Order 87-5), § 173-202-020, filed 11/10/87, effective 1/1/88; 83-15-045 (Order DE 82-37), § 173-202-020, filed 7/19/83; Order DE 76-32, § 173-202-020, filed 7/13/76.]

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