The Department of Natural Resources (DNR) manages 5.6 million acres of state-owned land, which includes forestlands; aquatic lands; and state trust land that provides revenue to help pay for construction of public schools, universities, and other state institutions, and funds services in many counties. The Commissioner of Public Lands (Commissioner) is a separately elected statewide official and the administrator for the DNR. The Commissioner chairs the state's Board of Natural Resources, which sets policy for the management of state lands and also the Forest Practices Board, which regulates forest operations.
Generally, valuable materials that are derived on state forestlands and state-owned aquatic lands may be sold, and the funds from those sales must be used in certain ways:
The Department of Natural Resources (DNR) may enter into contracts for payment for ecosystem services projects on all public lands managed by the DNR, according to terms and conditions acceptable to the DNR, in order to generate revenue by providing ecosystem services that directly or indirectly benefit humans or enhance social welfare. Contracts may last for up to 125 years. Ecosystem service projects are projects that provide benefits that the public enjoys as a result of natural processes and biodiversity. Ecosystem services include carbon sequestration and storage, air and water filtration, climate stabilization, and disturbance mitigation.
Proceeds from contracts must be deposited into the appropriate account in the State Treasury and distributed in the same manner as money derived from the sale of valuable materials under current law. Proceeds from contracts on state forestlands must be deposited into the Forest Development Account. Proceeds from the sale of ecosystem services derived from state-owned aquatic lands must be deposited into the Aquatic Lands Enhancement Account.
The DNR may:
Ecosystem service projects must result in no net decrease in agricultural production for agricultural lands and no net decrease in the decadal sustainable harvest volume and operable forestland acres on state lands and state forestlands within the sustainable harvest unit. Additionally, ecosystem service projects must result in a net increase in future sustainable harvest volume on forested state trust lands within the sustainable harvest unit. Payment for an ecosystem services project, contract, or agreement may not limit or impair the exercise of tribal treaty and reserved rights, existing tribal access to lands managed by the DNR, or preexisting agreements between tribes and the DNR.
The DNR must publish notice of intent to enter contract negotiations on its website within 90 days preceding the commencement of negotiations. The DNR may conduct additional advertising that it determines is in the best interest of the state.
Upon execution of a contract, the DNR must report the term of the contract and projected revenues to the Board. Before entering into a sale of ecosystem services credits, the Board must set a minimum payment and approve contract terms valid for at least 180 days. The Board may reestablish the minimum payment at any time. The DNR may set the final payment, which must be based on current market prices.
The DNR must submit a report to the Legislature and the Office of Financial Management by December 1, 2024, that includes: (1) information on payment for ecosystem service projects entered into or committed to by the DNR, including type of projects, the number of acres involved, and projected revenues; and (2) any challenges or barriers encountered by the DNR in the process of attempting to implement carbon offset or payment for ecosystem service projects and recommendations to address those challenges and barriers.
Definitions are provided for the following additional terms:
As compared to the original bill, the substitute bill:
(In support) Lands that are managed by the Department of Natural Resources (DNR) provide critical ecosystem services like habitat and carbon sequestration, but also provide important building materials and agricultural products that humans need. This bill will allow the DNR to tap into new revenue streams to provide money to schools and the trust beneficiaries, to support salmon recovery, and to help mitigate impacts from a rapidly changing climate. The DNR will continue to support working forests. Currently, the DNR is limited in its ability to sell carbon credits under the Climate Commitment Act. Carbon projects can help prevent the conversion of forestlands to other non-forest uses. This is a thoughtful, proactive approach to help rural communities generate revenue. State lands provide ongoing benefits to wildlife by keeping ecosystems intact ensuring healthy elk and deer populations that are so important to the ways of life of the state's tribal nations. There should be an amendment that ensures that the DNR's projects will not impede tribal treaty rights. Offsets are less expensive than allowances and are a source of innovation. There is an increasing demand for offsets and as a result they have a higher value coming to market. Land use and forest practices should be responsive to science. Forest carbon projects come in various shapes and sizes, and can be done in a way that benefits the trust beneficiaries. Landowners can lengthen rotations with more thinning. Some areas could benefit from ecosystem projects along diverse landscapes. Language should be added from Senate Bill 5688 to allow the Department of Ecology to support the DNR. The devil is in the details. Nature-based and forest-based credits are emerging and fast-growing markets. New jobs will be created. The bill provides a clear role for the Board of Natural Resources (Board) to establish minimum payments. It is difficult to achieve climate targets without a system in place. Ecosystem service projects and sustainable timber economy are not mutually exclusive. This is a way to compensate rural communities for the ecosystem services that they provide. Maintaining healthy ecosystems also contributes to human health benefits. With this bill, the DNR will have the same ability as the private sector to sell credits in voluntary markets. There are no downsides to this bill.
(Opposed) The bill requires the Board to abdicate its responsibilities by transferring authority to the Commissioner of Public Lands (Commissioner), and gives the DNR sweeping new authority. Rural communities rely on revenue generated from state-owned forestlands. Wood is the only reliably sustainable building material. There is concern that this bill will result in job loss in the timber and milling industries, reduce revenue to junior taxing districts, and negatively impact investments in local companies. Trustees and the public have not had a chance to review this policy. Not enough work has been done to ensure that this policy will not result in reduced timber harvest. If less timber is harvested there will be a need to import wood to meet our construction needs, resulting in even more carbon emissions, possibly from countries that do not share our values. Please get this complicated policy right. This bill is fraught with pitfalls. The DNR's modeling and knowledge is insufficient to fully assess all of the impacts of this legislation. It is important to think globally but act locally. The most effective climate solutions include local action. Washington is ahead of the game, but this bill does not lead toward the cohesive strategy that is needed. Allowing such long lease terms potentially allows prime timberland to be taken out of production for a century. Lease terms of 125 years could also be used by a future Commissioner or staff to prevent harvesting and management strategies.
(Other) Counties are the beneficiaries of revenues generated on state lands. The money goes to support schools, emergency services, and other important services. Counties support the intent of the legislation. Any legislation on this topic must guarantee added value, increased revenue, no net decrease in timber harvesting, and that revenue from ecosystem services projects does not substitute for timber revenue.
No new changes were recommended.
(In support) This bill will provide additional authority to make money for state beneficiaries on the state lands managed by the Department of Natural Resources (DNR). The bill passed out of the House Agricultural and Natural Resources Committee with bipartisan support, which shows there is recognition that this bill will help make money for beneficiaries and help with the DNR's management of climate change impacts. The DNR is competing on an uneven playing field with the private sector. In addition, the DNR cannot sell carbon credits, which limits their ability to comply with Climate Commitment Act goals. The bill provides the DNR with the same ability to sell carbon credits in the private market as private sector companies. The existing restrictions on these activities mean less revenue for the state and for beneficiaries. This bill helps the state get one step closer to what the Climate Commitment Act envisions and will help put the DNR on an even playing field with private sector and nonprofit organizations.
The DNR has many acres of state lands that have burned and cannot reforest due to funding limitations. This bill would enable the DNR to have the private sector restore these lands. The carbon market will pay to help restore forest lands. These projects will support a variety of projects in critical habitats. These projects will result in increasing the yield on these lands in terms of timber and agricultural production. There are critical sideboards on this bill that have the approval of stakeholders. Climate offsets help control costs and boost participation in carbon markets. This is an opportunity to develop new projects. There is a wide variety of ecosystem services that could be used through the bill. This will support additional revenue to the trusts and will also benefit the environment. This gives the DNR options to maximize revenue for beneficiaries.
(Opposed) This bill should not be advanced without appropriate due diligence to understand the impacts. Many communities rely on timber to help meet affordable housing needs and to support their timber-based economies. Everyone wants to see more carbon captured in forests; however, the state should not sacrifice the needs of beneficiaries to meet this goal. There is no urgency to getting this bill passed now. There are many details to get worked out. The bill will cause problems for trust land-funded programs, including Substitute House Bill 1044 on school construction heard today, because of how it will impact revenue streams from trust lands.
Long-term wildlife management and sustainable harvest limits have been reached after years of work. This bill will have a negative impact on rural economies and create additional encumbrances on state lands. The DNR policies have left some people with no place to work. Trillions of dollars have been left on the table due to the strict environmental rules imposed by the state. Alternatives are needed to regulate and address climate change. The DNR timber harvests support the production of veneer and materials adequate timber harvests to enable this business to survive. The amount of timber harvests keep declining, and there has not been sufficient lumber available to support the industry. More consultation is needed with the industry on this bill.
(Other) There is support for the bill's broad ideas about adding trust value and increasing revenue for trust beneficiaries, but there is limited interest in the proposal if this will reduce trust revenues. The bill was introduced late in the process, and stakeholders have not had opportunities to engage with the DNR; however, this is an important conversation.