by

Elaine E. Oneil

A thesis submitted in partial fulfillment of the
requirements for the degree of

Master of Science

University of Washington
2003

Program Authorized to Offer Degree: College of Forest Resources

University of Washington
Abstract

Impacts of the forest and fish rules on small forest landowners in eastern Washington:
some key consequences from riparian zone case study analysis

by Elaine Ellen Oneil

Chairperson of the Supervisory Committee: Professor Bruce Lippke
Director, Rural Technology Initiative

In June 2001, the Washington State Forest Practices Board adopted changes to its regulations to meet the requirements of the Clean Water Act and the Endangered Species Act. The new regulations, known as the "Forest and Fish Rules" include significant restrictions on timber harvest in riparian areas across the state. The stated intent of the rules in eastern Washington is to provide for restoration of riparian function while allowing activities that can ameliorate risks associated with fire, disease, and insects within riparian zones. In order to better understand how these new rules might affect eastern Washington small forest landowners, simulations of forest stand development and economic outcomes were modeled for nine case studies located in Okanogan, Pend Oreille, Stevens, and Whitman counties.

For each case study, treatment scenarios were simulated over a 90-year growth period using the Forest Vegetation Simulator (FVS) growth models and the Landscape Management System (LMS). Simulations of multiple harvest options and treatment regimes for both upland and riparian management units for each case study were compared to assess potential economic outcomes. By comparing the FFR to a 'baseline' of the "permanent rules" in effect immediately prior to June 2001, a measure of the incremental impact of the new legislation was determined. Four riparian area management scenarios were evaluated under the FFR rules including a no harvest option, harvest in the outer zone only, a single harvest entry in the inner zone, and multiple harvest entries in the inner zone.

Analysis indicates that the economic losses for case study simulations, when compared to the baseline, range from a 0 to 49% reduction in discounted cash flows. In many instances economic losses can become gains if the landowner qualifies for and chooses to participate in a state funded compensation program called the Forest Riparian Easement Program (FREP). While FREP may address economic considerations if adequately funded, it does not provide incentive for stewardship activities such as removal of excessive fuel loads or control of insect damage. In cases where forest health or economic considerations cannot be addressed within the current FFR parameters, alternate plans are allowed. Alternate plans that address fire risk and insect attack from Mountain Pine Beetle (Dendroctonus ponderosae Hopkins) while providing for riparian functional requirements were also examined.

**Here's a link to the PDF version of this Thesis

Table of Contents

List of Figures

List of Tables

Glossary

Acknowledgments

The author wishes to acknowledge Rural Technology Initiative at the University of Washington, College of Forest Resources for their support of this project. Thanks to Prof. Bruce Lippke, Larry Mason, Kevin Zobrist, Don Hanley and Dave Briggs for their valuable input and feedback. Thanks to Jim McCarter, Kevin Zobrist and Luke Rogers for their technical support. Thanks to the silviculture lab for feedback and encouragement. Bob Playfair provided a thoughtful perspective, wise words, and inspiration from the trenches. Roger and Fernne Rosenblatt provided a sound perspective to hone the approach to alternate plans. Field support for this project was provided by Brian Vrablick of Northwest Management Inc. and Maurice Williamson of Williamson Consulting Inc. Special thanks to all the landowners who participated in and gave input to this study.

1.0 Historical Overview

This section provides a historical overview of the policy design and regulatory approach of Washington State's Salmon Recovery Act (ESHB 2091), originally know as the Forest and Fish Rules (FFR). When the National Marine Fisheries Service (NMFS) gave notice that salmon and steelhead were to be listed as endangered in Washington State, the Governor's Office, state natural resource agencies, and affected economic sectors were quick to work toward a solution that would keep some degree of autonomy within their realm of decision making. The drive to address salmon listing at the local level arose because both state government agencies and timber harvesters had the potential to be subject to litigation for 'take' of habitat in the process of conducting otherwise lawful activities during timber harvest. Salmon listing also introduced significant uncertainty in administrative procedures and the ability to conduct business for both government and industry. It is apparent that while the FFR was intended as a measure to protect salmon, there was a significant impetus to keep decision making at the state level, rather than allowing federal intervention in forest resource management, and particularly timber harvest, through the mechanism of the Endangered Species Act (WA State governors office, 1999). This need to have some control over the outcome of salmon listing as an endangered species was an implicit goal of the process. In fact, state entities were so successful in meeting this goal, that Washington State's forest practices legislation is the only forestry related legislation mentioned as exempt from 'take' provisions under the various listings of Pacific salmon species in the Federal Register (NOAA 2000). This exemption from 'take' meant that if forestry activities occurred as substantially put forth in the Forest and Fish Report, the National Marine Fisheries Service (NMFS) would not litigate under the ESA against the forestry entity or the Washington Department of Natural Resources (DNR) which is responsible for permitting forestry activities within the state. There is continued negotiation between the DNR and NMFS to obtain these federal assurances (DNR, 2003).

Because of ongoing developments in forest management law and regulation, a multi-party caucus that included resource agencies, timber harvesters, and environmental groups already existed in Washington State prior to the enactment of the FFR. This caucus was called Timber, Fish, and Wildlife (TFW) and its members played a key role in drafting the FFR and determining the outcome of the bill as it traveled through the legislative process. Once the Salmon Recovery Act was approved as an emergency rule, further work was done to make it a 'final rule' that has become Washington State's Forest Practices Act (RCW 76.09) and the Forest Practices Rules (WAC 222) as of July 2001.

1.1 The Goals

As outlined in the preamble to the Forest Practices Rules, there were four key goals that the new legislation was designed to meet (WAC 222, 2001). They are:

While the intent of these environmental and economic goals is clearly articulated, they are conflicting, and imply that salmon listings are directly proportional to the amount of forest harvest activity adjacent to streams. This is particularly apparent as the policy scope of the FFR is limited to public and private forestry operations within Washington State where one is harvesting trees and plans to reforest the area for future tree production. The policy does not extend to timber harvest where the denuded land will be used for agriculture or urban development. This limitation in scope arises because there were policies mandating the extent of forest operations near streams prior to the FFR, and the mechanisms to increase the mandated protections were relatively easy to achieve within the current framework.

The implicit understanding behind the FFR is that previous riparian buffer widths and sediment mitigation measures mandated under Washington State forestry legislation were insufficient to protect salmon and meet the provisions of the Clean Water Act. Thus the FFR was instituted to increase the emphasis on riparian protection and water quality by increasing riparian buffer widths, limiting road development and in some instances eliminating harvest in forested areas. While the causal relationships between forestry activities and salmon are still hotly debated, (Buchal 1998) it is clear that the legislation was directed at a target audience that had accepted a responsibility for environmental management and thus significant regulatory influence in their business. This is obvious from the long standing pre-existent presence of the TFW advisory group.

The FFR legislation was acknowledged to pose significant compliance costs and challenges for all target groups, with a disproportionate impact on small forest landowners. To address the limited compliance capacity of small landowners, a segment of the FFR legislation was dedicated to the establishment of a small forest landowners office (SFLO) within the DNR. The SFLO is charged with assisting small landowners with compliance issues as well as voluntary programs that are part of the policy package. This action was seen as instrumental in ensuring small landowners would continue to keep their property in forestry and thus provide the environmental benefits anticipated by enactment of the FFR.

1.2 Historical Timeline

A historical timeline culminating in the enactment of the FFR is summarized in Table 1.2.1. Table 1.2.1 is adopted from the summary of the rule history as identified on the Washington State DNR website www.wa.gov/dnr/htdocs/fp/fpb/ruleshist.html with the addition of specific information found on the Washington State Governor's Office website. Original TFW information, as provided from the DNR website, has been included in the table to demonstrate the strength and continuity of the TFW process through several ESA listings within Washington State.

1.3 Voluntary Policy Elements of the Forest and Fish Rules

Given that the FFR is derived from a negotiated process that included state and federal government agencies, industrial interests, environmental and tribal coalitions and individuals, and small forest landowners, one would expect that there would be a significant voluntary component to the policy. However, its final form prescribes exactly the processes and outcomes that must occur in riparian zones if timber harvesting and reforestation are to occur. This command and control approach to regulation was deemed necessary to achieve exemption from the ESA take provisions, though the tactic had predictable negative economic outcomes for small landowners. To address the unfair regulatory burden on small landowners, there are two voluntary policy elements within the FFR.

The first voluntary element entails the option for private timber owners to sell the timber rights along riparian areas to the government for a 50 year 'easement' period for a value equal to half the value of the timber required to be left unharvested. This program is known as the forestry riparian easement program (FREP). A second voluntary element allows for the use of alternate plans that will be 'at least as effective' as the current legislation in meeting the four goals of the FFR. The alternate plans are intended to provide habitat value in a more cost effective manner.

While these two voluntary elements conceptually form a minor element of the FFR, in fact they can have a significant impact on environmental and economic outcomes, both for individuals and for the state as a whole. Consider that small landowners eligible for the voluntary programs collectively own 18% of the timber land in Washington State. As approximately 51% or 21 million acres of the state is timberland, small forest landowners own a significant amount of the state and the state's timber harvest that can be affected by these voluntary elements, particularly when we consider that 33% of the timber land in the state is Federal where very little harvest occurs for a variety of reasons. (All percentages from Edelson 2001 as extracted from Adams et al 1992, and Bare et al. 1995)

The voluntary instruments were included in the FFR because they were required under the Regulatory Fairness Act (RCW 19.85) to address the disproportionate impact of the rules on small forest landowners (Perez-Garcia et al. 2001). As such, these voluntary elements contain both a legislative mandate to find solution for regulatory unfairness, as well as elements of negotiated compromises to address differences in land management between industrial and non-industrial (i.e. small) private forest landowners. While the instruments have been included in the FFR to address regulatory fairness, their application has proven to be so problematic that they may prove largely ineffective unless streamlined administrative procedures can be adapted.

Given funding issues and budget deficits, the FREP will not likely be effective in advancing the policy goals of addressing regulatory fairness for small landowners. According to Zobrist (2000) the current funding levels for the riparian easement program over the entire state amounts to $2.5 million per biennium, but the need is equivalent to a $24 million per biennium ($600 million net present value over 50 years) for WesternWashington alone, excluding all eligible participants in Eastern Washington. In fact, according to personal communication with Steve Stinson, the head of the Department of Natural Resources, Small Forest Landowner Office, one riparian easement in Western Washington cost the state 1/5 of the total biennium allotment. With these types of fiscal shortfalls, alternative mechanism to address regulatory fairness will likely be required.

Alternate planning, the second voluntary component of the FFR, was heralded as a first of its kind by industry. Unfortunately, the terminology and definition of this section of the FFR is so vague as to make the adoption and implementation of alternate plans extremely difficult. As noted by Kubasek and Silverman (2002), environmental laws are often made intentionally vague so that they may be passed with the specifics becoming defined by the ensuing case law. In terms of alternate planning, the FFR is no exception to this general rule. Though alternate plans are permitted in specific situations, such as disproportionate levels of impact, or on a small harvest unit, they must provide 'protection to public resources at least equal in overall effectiveness as provided by the act and rules ' (WAC 222-12-040). However, the rules represent a political compromise for all stakeholders in an effort to secure federal assurances of exemption from 'take' under the 4d rule of the Endangered Species Act. In such cases, defining the terms 'protection' and 'overall effectiveness' in order to avoid litigation is problematic particularly given that the rules as defined in the FFR were negotiated on a tree by tree basis.

To address the issues of protection and overall effectiveness, approval to harvest under an alternate plan requires an assessment by an interdisciplinary team (WAC 222-040-0401). At a minimum this team is comprised of environmental professionals from the Washington State Departments of Natural Resources, Ecology, and Fish and Wildlife as well as the National Marine Fisheries Service, the United States Department of Fish and Wildlife, affected tribes, and perhaps a professional forester hired by the landowner in question. Given the amount of government staff time required to conduct a field visit to determine the appropriateness of an alternate plan, relative to the number of potential alternate plans that exist, this process of permitting and approving alternate plans is onerous and unwieldy indeed. From the landowners' perspective, the alternate planning approval process has been difficult, time consuming and costly (Playfair, 2002).

Part of the unwieldiness of the alternate planning process is the expectation that the agencies involved can facilitate the review process for alternate plans given that 18% of 21 million acres of timberland or 4.86 million acres potentially fall within the ownership category available for this program. Implementation problems are compounded by the fact that the average size of these holdings is 84 acres which translates into 67,500 alternate plan approvals (Rural Technology Initiative 2001).

To address these implementation issues the Small Forest Landowners Office of the Department of Natural Resources is designing 'templates' that could facilitate the review of potential alternate plans. These templates are intended to simplify the alternate planning process for commonly occurring scenarios while providing a mechanism to integrate site specific information into forest management decisions.

With the adoption of alternate plans, there is a mechanism whereby visionary members of the regulated community can advance the science and art of forestry. Because these alternate plans occur on relatively small acreages, the opportunity to test current scientific assumptions and protocols does exist with only minimal risk to aquatic resources. It is in these situations that adaptive management mechanisms can be tested prior to implementation in the larger regulated community. Alternate plans become particularly germane in eastern Washington for the intent of the rules in eastern Washington is to provide for restoration of riparian functions, while allowing activities that can ameliorate risks associated with fire, disease and insects within riparian zones.

While general trends and impacts of the FFR were predicted and addressed by measures such as the FREP and alternate plans, no specific impacts were estimated. When placed inside this historical perspective, the case studies that will be discussed in the remaining sections become key to elucidating the consequences that arise from the FFR. The consequences examined include economic outcomes, the benefits and shortcomings of the two voluntary elements of the FFR, some potential biological consequences under different disturbance regimes, and finally some prospective opportunities to move into a phase of forest riparian management that truly takes an adaptive, integrated approach.

2.0 The Study

In conjunction with the FFR, a Small Business Economic Impact Statement (SBEIS) was completed that reported on estimated impacts between small and large landowners affected by the rules. (Perez-Garcia et al 2001). The impacts reported in the SBEIS established the need for mechanisms to address the unfair regulatory burden placed on small landowners. However, the average impacts reported in the SBEIS do not demonstrate the disparity that exists between individual owners, both as a result of the amount of riparian holdings they have and the nature of their currently standing inventory. To determine the potential range of impacts, case studies looking at specific impacts on an individual basis were considered a reasonable approach to further evaluate disparity issues. Initially ten cases were completed in western Washington (Zobrist 2000, 2002). The range of results in western Washington did indicate significant disparity which raised the question of whether impacts would be as disparate in eastern Washington given the biological differences between the two regions. This study was initiated using the same protocols as those used in western Washington to determine what sort of variability and/or disparity might exist between landowners in eastern Washington. The Eastern Washington case studies evaluate riparian management options relative to pre-FFR 'permanent rule' requirements, as well as examining alternative plans as provided for under Washington Administrative Code (WAC 222-12-040).

While many of the implications of the FFR to small landowner economic viability are the same between eastern and western Washington, key differences in optimal solutions arise because of the historical differences in riparian protection between the two regions. In particular, pre-FFR shade requirements in eastern Washington resulted in a significant economic burden on forest landowners prior to the enactment of the forest and fish legislation. This historical difference in legislative impacts creates a situation where the Forest Riparian Easement Program section of the Forest and Fish legislation has significantly different economic consequences for eastern Washington small forest landowners relative to those in western Washington. The FFR also recognizes the unique forest management considerations existing in eastern Washington that arise from its historical natural disturbance patterns. To test the suitability of the rules in addressing disturbance agents, simulations of potential fire mortality outcomes were modeled for four eastern Washington small forest landowner case studies. Results from a second subset of cases were analyzed to test their potential performance in the presence of a mountain pine beetle (Dendroctonus ponderosae Hopkins) infestation.

2.1 Background

2.1.1 The Forest and Fish Rules

Given the historic role of disturbance in eastern Washington ecosystems, the FFR were drafted with the intent of providing for restoration of riparian functions, while allowing management activities that could ameliorate risks associated with fire, insects and disease. To ameliorate the risks from disturbance agents, the FFR allow thinning from below and some overstory removal up to specified limits. Basal area retention requirements vary by elevation or 'habitat type' as defined within the legislation. Stands below 2500' in elevation fall into a legislatively defined 'Ponderosa Pine habitat type'; which is intended to allow for future management actions that could achieve conditions historically found in low severity fire regimes (Weeks, 2001). Stands between 2500' and 5000' in elevation fall into a legislatively defined 'Mixed conifer habitat type', while those above 5000' in elevation fall into the 'High elevation habitat type'. There are no 'High elevation habitat type' case studies within the sample of eastern Washington sites used in this study.

2.1.2 Riparian Buffers

The Forest and Fish Rules (FFR) restrict timber harvest on eastern Washington private forest lands in a three-zone riparian buffer along any potentially fish-bearing streams. Total buffer widths vary from 75-130 feet wide by site quality and stream width, with larger streams and higher sites given wider buffers as indicated in Tables 2.1 and 2.2.