WSR 00-13-115

PROPOSED RULES

DEPARTMENT OF REVENUE


[ Filed June 21, 2000, 11:54 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 00-08-108.

Title of Rule: WAC 458-40-650 Timber excise tax -- Timber quality codes defined.

Purpose: Provide taxpayers with the description of different qualities of timber species for valuation purposes. The quality codes are based upon species and standard industry specifications for log grade.

Statutory Authority for Adoption: RCW 82.32.300 and 84.33.096.

Statute Being Implemented: RCW 84.33.091, 82.32.060, and 84.33.077.

Summary: The rule contains two tables of quality codes for multiple species of trees. These two tables represent the western and eastern areas of the state. Each table breaks out the quality codes by timber species and log grade specifications. The rule is being amended to reflect changes in the market and quality of certain log species. Cedar, black cottonwood and hardwoods are identified under a single quality code and red alder under two diameter based quality codes.

Reasons Supporting Proposal: Red cedar is being reduced to one quality code to reflect the quality available in the market. Red alder is being reduced to two quality codes that better represent the more homogenous nature of red alder logs from young growth forests. Black cottonwood and other hardwoods have been combined because of similar, lower values than red alder and the small amounts being harvested.

Name of Agency Personnel Responsible for Drafting: Ed Ratcliffe, 1025 Union Avenue, #400, Olympia, WA, (360) 570-6126; Implementation and Enforcement: Gary O'Neil, 2735 Harrison N.W., Building 4, Olympia, WA, (360) 753-2871.

Name of Proponent: Department of Revenue, governmental.

Agency Comments or Recommendations, if any, as to Statutory Language, Implementation, Enforcement, and Fiscal Matters: No comments or recommendations are submitted.

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

Explanation of Rule, its Purpose, and Anticipated Effects: WAC 458-40-650 provides two quality code tables for multiple species of trees. These quality codes are used to help delineate the value of the harvest in the stumpage value tables. RCW 84.33.091 requires the department to make allowances in the stumpage value tables for the quality of the timber. The two quality code tables represent the western and eastern areas of the state. Each table provides a quality code based upon the timber species and the log grade specifications. The rule is being amended in large part to reflect changes in the market. We propose for red cedar to report under one quality code rather than four quality codes. One quality code for red cedar better reflects the quality of the red cedar available in the market and eases administrative burdens upon both the taxpayer and the department. The scarcity of old growth cedar in Washington has changed the importance of log diameter in regards to value. This market change results in a greater administrative burden upon both the harvester and the department to determine information that is no longer a primary key for setting prices for cedar. We propose that red alder no longer be reported with other hardwoods. We also propose that red alder report under two quality codes rather than three. The two quality codes for red alder better represent the more homogenous nature of red alder logs from young growth forests. We propose that black cottonwood and other hardwoods be combined and report under a single quality code. These hardwoods should be combined because of similar, lower values than the red alder and report under only one quality code because of the small amounts being harvested in Washington.

The reduction in quality codes for black cottonwood, hardwood and red alder reflect the difficulty in maintaining multiple quality codes that represent true value in the ongoing market. The current quality codes were not reflecting the current pricing breaks in quality for such timber and adding an unnecessary administrative step for the taxpayer. In order to simplify reporting and administration of these quality codes, the number of quality codes for these hardwoods were reduced.

The anticipated effects of changes made in the rule is that better values will be more simply calculated under the changes made to the tables and harvest adjustments.

Proposal Changes the Following Existing Rules: Harvest adjustments and quality codes within the tables are amended. See Explanation of Rule above.

No small business economic impact statement has been prepared under chapter 19.85 RCW. A small business economic impact statement is not required when a legislative rule is being adopted under RCW 34.05.328.

RCW 34.05.328 applies to this rule adoption. These are significant legislative rules pursuant to RCW 34.05.328 (5)(a)(i).

Hearing Location: Department of Revenue, Conference Room, Target Place Building, No. 4, 2735 Harrison Avenue N.W., Olympia, WA, on August 15, 2000, at 10 a.m.

Assistance for Persons with Disabilities: Contact Ginny Dale no later than ten days before the hearing date, TDD 1-800-451-7985, or (360) 570-6176.

Submit Written Comments to: Ed Ratcliffe, Department of Revenue, P.O. Box 47467, Olympia, WA 98504-7467, fax (360) 664-0693, e-mail edr@dor.wa.gov, by August 15, 2000.

Date of Intended Adoption: September 15, 2000.

June 21, 2000

Claire Hesselholt

Rules Manager

Legislation and Policy Division

OTS-4124.1


AMENDATORY SECTION(Amending WSR 96-02-054, filed 12/29/95, effective 1/1/96)

WAC 458-40-650
Timber excise tax -- Timber quality codes defined.

The timber quality code numbers for each species of timber shown in the stumpage value tables contained in this chapter are defined as follows:

TABLE 1 -- Timber Quality Code Table

Stumpage Value Areas 1, 2, 3, 4, 5, and 10

Species Quality Code Number Log grade specifications1

Douglas-fir
1
Over 50% No. 2 Sawmill and better log grade, and 15% and over Special Mill, No. 1 Sawmill, and better log grade.
Douglas-fir 2 Over 50% No. 2 Sawmill and better log grade, and less than 15% Special Mill, No. 1 Sawmill, and better log grade.
Douglas-fir 3 25-50% inclusive No. 2 Sawmill and better log grade.
Douglas-fir 4 Less than 25% No. 2 Sawmill and better log grade.
Western Redcedar and Alaska-Cedar 1 ((Over 30% No. 2 Sawmill and better log grade, and 15% and over Special Mill, No. 1 Sawmill, Peeler and better log grade.)) All log grades.
((Western Redcedar and Alaska-Cedar 2 Over 30% No. 2 Sawmill and better log grade, and less than 15% Special Mill, No. 1 Sawmill, Peeler Land better log grade.
Western Redcedar and Alaska-Cedar 3 5-30% inclusive No. 2 Sawmill and better log grade.
Western Redcedar and Alaska-Cedar 4 Less than 5% No. 2 Sawmill and better log grade.))
Western Hemlock, True Firs, Other Conifer, and Spruce 1 Over 50% No. 2 Sawmill and better log grade, and 5% and over Special Mill, No. 1 Sawmill and better log grade.
Western Hemlock, True Firs, Other Conifer, and Spruce 2 Over 50% No. 2 Sawmill and better log grade, and less than 5% Special Mill, No. 1 Sawmill and better log grade.
Western Hemlock, True Firs, Other Conifer, and Spruce 3 25-50% inclusive No. 2 Sawmill and better log grade.
Western Hemlock, True Firs, Other Conifer, and Spruce 4 Less than 25% No. 2 Sawmill and better log grade.
Ponderosa Pine 1 Less than 10 logs 16 feet long per thousand board feet Scribner scale.
Ponderosa Pine 2 10 or more logs 16 feet long per thousand board feet Scribner scale.
Lodgepole Pine 1 All log grades.
Red Alder ((and other hardwoods)) 1 ((Over 50%)) 40% and over No. 3 Sawmill and better log grades.
Red Alder ((and other hardwoods)) 2 ((10-50% inclusive)) Less than 40% No. 3 Sawmill and better ((other hardwoods)) log grades.
((Red Alder and other hardwoods 3 Less than 10% No. 3 Sawmill and better log grades.))
Black Cottonwood and other hardwoods 1 ((35% and over Peeler log grade.)) All log grades.
((Black Cottonwood 2 Less than 35% Peeler log grade and 15% and greater No.1 Sawmill and better log grade.
Black Cottonwood 3 Less than 15% No. 1 Sawmill and better log grade.))
Chipwood 1 All logs that comply with the definition of chipwood in WAC 458-40-610 (((18)(d))).
Piles 1 All logs that comply with the definition of piles in WAC 458-40-610 (((18)(g))).
Poles 1 All logs that comply with the definition of poles in WAC 458-40-610 (((18)(h))).

1 For ((detailed descriptions and definitions of)) information on approved log scaling((, grading rules,)) and ((procedures)) grading methods see WAC 458-40-680.

TABLE 2 -- Timber Quality Code Table

Stumpage Value Areas 6 and 7

Species Quality Code Number Log grade specifications|
Ponderosa Pine 1 Less than 10 logs 16 feet long per thousand board feet Scribner scale.
Ponderosa Pine 2 10 or more logs 16 feet long per thousand board feet Scribner scale.
All conifers other than Ponderosa Pine 1 All log sizes.
Hardwoods 1 Sawlogs only.
Small logs 1 All conifer logs that comply with the definition of small logs in WAC 458-40-610 (((18)(e))).
Chipwood 1 All logs that comply with the definition of chipwood in WAC 458-40-610 (((18)(d))).
Piles 1 All logs that comply with the definition of piles in WAC 458-40-610 (((18)(g))).
Poles 1 All logs that comply with the definition of poles in WAC 458-40-610 (((18)(h))).

[Statutory Authority: RCW 82.32.330, 84.33.096 and 84.33.091.      96-02-054, § 458-40-650, filed 12/29/95, effective 1/1/96.      Statutory Authority: RCW 82.32.300 and 84.33.096.      95-14-084, § 458-40-650, filed 6/30/95, effective 7/31/95.      Statutory Authority: RCW 84.33.091, 84.32.300 [82.32.300] and 84.33.096.      94-14-048, § 458-40-650, filed 6/30/94, effective 7/1/94; 92-14-083, § 458-40-650, filed 6/29/92, effective 7/1/92; 92-02-067, § 458-40-650, filed 12/31/91, effective 1/1/92.      Statutory Authority: RCW 84.33.091 and chapter 84.33 RCW.      88-14-032 (Order FT-88-2), § 458-40-650, filed 6/30/88.      Statutory Authority: Chapter 84.33 RCW.      87-14-042 (Order 87-2), § 458-40-650, filed 6/30/87; 87-02-023 (Order 86-4), § 458-40-650, filed 12/31/86.]

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