DAR File No. 43792

School and Institutional Trust Lands, Administration

Rule R850-70

Sales of Forest Products From Trust Lands Administration Lands

Notice of Proposed Rule

(Amendment)

DAR File No.: 43792
Filed: 06/12/2019 09:01:34 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

In recent years, School and Institutional Trust Lands Administration (SITLA) has observed an increased interest from parties desiring to harvest wildland seed from trust lands. Wildland seed is a unique product in that the harvesting window is very narrow, sometimes only a couple of weeks, due to weather and other environmental factors. Therefore, when a crop of wildland seed comes on that generates market interest, SITLA has only a brief period of time to issue a permit/contract in order to allow enough time for the harvest to occur. The purpose of these rule amendments are to create a streamlined process specifically for the sale of wildland seed that will allow SITLA to better take advantage of these market opportunities.

Summary of the rule or change:

First, the limit for over-the-counter sales of small forest product permits, for sales of wildland seed only, will be increased from $500 to $5,000. This change will allow SITLA to quickly issue these over-the-counter permits to interested parties for the harvest of seed with a value of up to $5,000, leaving ample time for the harvest to occur. Persons who purchase small forest products permits for the collection of wildland seed will be restricted to a total value of $5,000 per calendar year. Second, the rule amendment creates a streamlined process for competitive sales of wildland seed with a value of over $5,000. Heretofore this rule has required SITLA to publish a sales notice in the newspaper for two consecutive weeks, allow time for the submittal of sealed bids, and potentially hold an oral auction among those submitting the three highest sealed bids. While this process works well for traditional timber sales, it has often proven too lengthy for sales of wildland seed, causing SITLA to miss the narrow harvesting window. The process in the amended rule requires that notice of the sale be sent out to an agency-maintained list of interested parties, which notice may be sent via electronic means. Bids would be accepted up to the established due date and the sale awarded to the harvest bidder.

Statutory or constitutional authorization for this rule:

• Enabling Act 1894, Sections 6, 8, 10, 12
• Articles X, XVIII, and XX
• Subsection 53C-1-302(1)(a)

Anticipated cost or savings to:

the state budget:

The increased efficiencies in the administration of SITLA's wildland seed harvesting program as a result of these rule amendments may result in a slight increase in revenues to SITLA from this program, as SITLA will be able to take advantage of more business opportunities. Revenues are deposited into the permanent trust fund on behalf of SITLA's beneficiaries. There are no anticipated costs or savings to SITLA's budget as a result of this rule change as the program will continue to be administered under our current operating budget. There is no anticipated need to adjust SITLA's budget in the future to administer the wildland seed program. Increasing seed harvesting opportunities on trust lands will support the in-state seed market and reduce the need to import seed from out of state sources, resulting in lower prices for state government entities who have a need to purchase seed for projects such as wildfire rehabilitation.

local governments:

As seed harvesting companies are able to obtain more contracts from SITLA due to increased efficiencies in the permitting program as a result of these rule amendments, they will be able to generate more profit. While it is difficult to forecast just how much more business these rule amendments may generate, any increased profits by seed companies will benefit local governments in the form of increased tax revenues. Furthermore, increasing seed harvesting opportunities on trust lands will support the in-state seed market and reduce the need to import seed from out of state sources, resulting in lower prices for government entities who have a need to purchase seed for projects such as wildfire rehabilitation.

small businesses:

The majority of seed gathering companies are small businesses. While difficult to quantify, streamlining the permitting process on trust lands will present potential cost-savings to these businesses as the turnaround time for obtaining permits will be reduced.

persons other than small businesses, businesses, or local governmental entities:

Increasing seed harvesting opportunities on trust lands will support the in-state seed market and reduce the need to import seed from out of state sources, resulting in lower prices for federal government entities who have a need to purchase seed for projects such as wildfire rehabilitation.

Compliance costs for affected persons:

There are no compliance costs anticipated for the seed gathering companies doing business with SITLA. There are no changes to the fees charged by SITLA for seed gathering permits and there are no changes anticipated to the compliance requirements set forth in the permits as a result of these rule amendments.

Comments by the department head on the fiscal impact the rule may have on businesses:

It is anticipated that these rule changes will have a net positive fiscal impact on businesses. The turnaround time for obtaining wildland seed collection permits and contracts will be shortened and the overall process will be simplified, which will present a cost-savings to businesses. These new streamlined processes will also allow SITLA to take advantage of more opportunities for wildland seed sales, which will lead to increased opportunities to do business with seed gathering companies, the majority of which are small businesses.

David Ure, Director

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

School and Institutional Trust Lands
AdministrationRoom 500
675 E 500 S
SALT LAKE CITY, UT 84102-2818

Direct questions regarding this rule to:

• Lisa Wells at the above address, by phone at 801-538-5154, by FAX at , or by Internet E-mail at lisawells@utah.gov
• Chris Fausett at the above address, by phone at 801-538-5139, by FAX at , or by Internet E-mail at chrisfausett@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

07/31/2019

This rule may become effective on:

08/07/2019

Authorized by:

David Ure, Director

Subsection 53C-1-201(3)(c) exempts the School and Institutional Trust Lands Administration from the requirement to conduct a thorough analysis, consistent with the criteria established by the Governor's Office of Management and Budget, of the fiscal impact a rule may have on businesses, as required in Subsection 63G-3-301(5).

 

 

R850. School and Institutional Trust Lands, Administration.

R850-70. Sales of Forest Products From Trust Lands Administration Lands.

R850-70-100. Authorities.

This rule implements Sections 6, 8, 10, and 12 of the Utah Enabling Act, Articles X, XVIII, and XX of the Utah Constitution, and Section 53C-1-302(1)(a)(ii) which authorize the director of the School and Institutional Trust Lands Administration to provide for the sale of forest products, desert products, and other vegetative material from Trust Lands Administration lands.

 

R850-70-150. Planning.

1. Pursuant to Section 53C-2-201(1)(a), the Trust Lands Administration shall complete the following planning obligations for all competitive and non-competitive forest product sales, in addition to the rule-based analysis and approval processes required by this rule:

(a) To the extent required by the Memorandum of Understanding between the State Planning Coordinator and the School and Institutional Trust Lands Administration, submit the proposal for review by the Resource Development Coordinating Committee (RDCC);

(b) Evaluation of and response to comments received through the RDCC process; and

(c) Evaluate and respond to any comments received through the advertising and notice processes described in R850-70-600(1).

2. All other forest product sales within this category of activity carry no planning obligations by the agency beyond existing rule-based analysis and approval processes.

 

R850-70-200. Definitions.

1. Sawlogs: portions of a tree stem that exceed seven feet in length and are at least six inches in diameter inside bark at the small end.

2. Poles: portions of a tree stem that are at least ten feet in length and do not exceed six inches in diameter at four and one-half feet above the ground.

3. Mine Props: portions of a tree stem that are between seven and ten feet in length, and six to nine inches diameter inside bark at the small end.

4. Posts: portions of a tree or tree stem, generally Utah juniper, which are no more than ten feet in length and are less than six inches in diameter at the top (small end).

5. Fuelwood: any portion of a tree, including those portions defined as sawlogs, poles, mine props, or posts that is harvested for use as fuel.

6. Christmas Tree: any coniferous tree, or part thereof, cut and removed from the place where grown without the foliage being removed.

7. Ornamental: any coniferous or deciduous tree, shrub, or bush less than 20' in height and no more than six inches diameter at four and one-half feet above the ground, which is removed from a natural setting, generally with roots attached, for transplant elsewhere.

8. Desert Plants: include any member of the Cactaceae Family or the Agavaceae Family.

9. Other Forest Products: include boughs, branches, pinyon nuts, cones, and Juniper berries[, and native seed].

 

R850-70-300. Proof-of-Ownership.

Proof-of-ownership shall be issued with each sale of forest products in compliance with Section 78B-8-602.

 

R850-70-400. Small Forest Product Permit Sales.

1. The agency may make non-competitive sales of forest products[, with the exception of sawlogs, ]with a Small Forest Products Permit[when the total sale value does not exceed $500.00. The permit shall be on a form prescribed by the agency. Persons purchasing Small Forest Product Permits shall be restricted to a total value of $500.00 per commodity per calendar year. A Small Forest Product Permit does not grant exclusive use of the permitted lands or the resources contained thereon].

2. The agency may not sell sawlogs under a Small Forest Product Permit.

3. The total sale value of a Small Forest Product Permit issued for the sale of forest products, excluding wildland seed, shall not exceed $500.00.

4. The total sale value of a Small Forest Product Permit issued for the collection of wildland seed shall not exceed $5,000.00.

5. Persons purchasing Small Forest Product Permits for the collection of wildland seed shall be restricted to a total value of $5,000.00 per calendar year.

6. Persons purchasing Small Forest Product Permits for eligible forest products, excluding wildland seed, shall be restricted to a total value of $500.00 per commodity per calendar year.

7. Small Forest Product Permits shall be issued on a form prescribed by the agency.

8. A Small Forest Product Permit does not grant exclusive use of the permitted lands or the resources contained thereon.

 

R850-70-500. Noncompetitive Sales.

If the director finds it to be in the best interests of the trust, the agency may sell forest products at not less than an agency-established minimum value without soliciting competitive bids.

 

R850-70-600. Competitive Sales.

1. Except for sales made under a Small Forest Product Permit pursuant to R850-70-400, [S]sales of forest products , excluding wildland seed, shall be initiated by the agency and shall follow the procedures below:

(a) All competitive sales shall be advertised through publication at least once a week for at least two weeks in one or more newspapers of general circulation in the county in which the sale is located. The cost of the notice will be borne by the successful applicant. This notice shall contain, but is not limited to:

(i) the legal description of the affected lands;

(ii) the species and estimated quantity of forest products;

(iii) minimum sale price;

(iv) bond amounts;

(v) advertising and processing costs, as far as is known;

(vi) dates of bidding period;

(vii) date, time, and location of oral auction; and

(viii) bidder qualifications.

(b) Notice shall also be given to potential purchasers and other interested parties, whose names are on an agency maintained mailing list prior to any competitive sale.

(c) Initial bidding shall be conducted through sealed bids. Each sealed bid must contain 10% of the bid amount and the application fee. The bidders submitting the three highest sealed bids shall be allowed to enter into an oral auction.

(d) Sales shall be awarded to the highest qualified bidder unless a bidder has been previously disqualified, or is notified by the agency in writing within [ten]10 business days of the auction that the bid will be disqualified, on the grounds of previous poor performance or other good cause shown. The agency shall declare the successful bidder within [ten]10 business days of the bid opening. Failure of the successful bidder to execute a contract within 30 days of receipt may result in cancellation of the sale and forfeiture of all monies submitted.

2. The agency may withdraw, at its sole discretion any forest products sale prior to contract execution. All fees associated with a withdrawn sale shall be returned to the purchaser.

 

R850-70-650. Sale of Wildland Seed.

1. Sales of wildland seed, with the exception of sales made under a Small Forest Product Permit pursuant to R850-70-400, shall be initiated by the agency and shall follow the procedures below:

(a) All competitive sales shall be advertised by sending a notice of the sale to potential purchasers and other interested parties on an agency-maintained mailing list. This notice may be circulated through electronic means.

(b) The agency may advertise sales of wildland seed using any other methods the director has determined may increase the potential for additional interest in the sale.

(c) The cost of the notice shall be borne by the successful applicant.

(d) The notice shall contain, but is not limited to, the following:

(i) the legal description of the affected lands;

(ii) the species and estimated quantity of wildland seed;

(iii) the minimum sale price;

(iv) required bond amounts;

(v) advertising and processing costs, so far as is known;

(vi) dates of bidding period; and

(vii) bidder qualifications.

(e) Sales shall be awarded to the highest qualified bidder unless a bidder has been previously disqualified, or is notified by the agency in writing within five business days of the bid opening that the bid will be disqualified, on the grounds of previous poor performance or other good cause shown.

(f) The agency shall declare the successful bidder within five business days of the bid opening.

(g) Failure of the successful bidder to execute a contract within 30 days of the receipt may result in cancellation of the sale and forfeiture of all monies submitted.

2. The agency may withdraw, at its sole discretion, any wildland seed sale prior to contract execution. All fees associated with a withdrawn sale shall be returned to the purchaser.

3. Performance and payment bonds may be required prior the commencement of harvest operations for the collection of wildland seed at the sole discretion of the agency.

 

R850-70-700. Timber Sale Contracts.

1. Timber Sale Contracts must be used for all sales of sawlogs and any other forest product , excluding wildland seed, where the value exceeds $500.00.

2. Timber Sale Contracts must be used for all sales of wildland seed where the value exceeds $5,000.00.

[2]3. Each Timber Sale Contract shall contain the provisions necessary to ensure the responsible harvest of forest products, including the applicable provisions of 53C-4-202.

 

R850-70-800. Timber Harvesting.

1. Prior to commencement of harvest operations, excluding the collection of wildland seed, the purchaser shall submit a timber harvest plan for agency review. Harvesting operations shall not commence until the purchaser is notified, in writing, that the timber harvest plan has been approved by the agency.

2. Prior to commencement of harvest operations, excluding the collection of wildland seed, the purchaser shall post with the agency bonds in the form and amounts as may be determined by the agency to assure compliance with all terms and conditions of the sale contract. Such bonds shall include the following:

(a) A performance bond shall be submitted in an amount at least twice the estimated cost of rehabilitation.

(b) A payment bond shall be submitted in an amount equal to the full purchase price of the sale unless the sale has been paid for in advance, or, at the discretion of the agency, the full price of the largest cutting unit of the sale.

3. All bonds posted may be used for payment of all monies due to the Trust Lands Administration on the total purchase price, and also for the costs of compliance with all other performance terms and conditions of the sale as specified in the contract.

4. The purchaser's bonds shall be maintained in effect even if the purchaser conveys all or part of the sale interest to an assignee or subsequent purchaser until such time as the purchaser fully satisfies sale contract obligations, or until such time as the bond is replaced with a new bond posted by the assignee.

5. Bonds may be increased in reasonable amounts, at any time as the agency may order, provided the agency first gives the purchaser 30 days written notice stating the increase and the reason(s) for the increase.

6. Bonds may be accepted in any of the following forms at the discretion of the agency:

(a) Surety bond with an approved corporate surety registered in Utah.

(b) Cash deposit. The Trust Lands Administration will not be responsible for any investment returns on cash deposits.

(c) an irrevocable letter of credit for a period longer than the term of the sale.

7. Bonds shall remain in force until such time as all contract payments and performance provisions have been satisfied by the purchaser and so documented by the agency in writing.

 

R850-70-900. Assignments.

1. Competitively let sales may be assigned, in accordance with procedures established by the agency, to any person, firm, association, or corporation qualified to execute the terms and conditions of the sale contract, with prior written approval from the agency, provided that the assignee agrees to be bound by the terms and conditions of the sale and to accept the obligations of the assignor.

2. Small Forest Product Permits and other non-competitive sales may not be assigned.

 

R850-70-1000. Extensions of Time.

Extensions of time to complete the harvesting operations authorized by a timber contract may be granted if the director finds it to be in the best interests of the trust. Prior to the approval of a request for an extension of time, the agency may require amendments to the contract, including, but not limited to:

[(a)]1. Increasing the amounts and extending the effective dates of bonds; and,

[(b)]2. Increasing the price of the forest products authorized by the contract.

 

R850-70-1100. Forest Product Valuation.

Forest products shall be offered for sale based on a methodology or price schedule to be determined by the agency pursuant to board policy.

 

R850-70-1200. Long-Term Agreements.

1. Long-term agreements (LTA) are those sales where the harvest of specified forest products will take place over a period of time exceeding two years. Upon approval of the director, the agency may enter into an LTA with a purchaser for a period not to exceed ten years provided that:

(a) Resource or other benefits can be demonstrated by the LTA.

(b) The LTA is advertised and competitively bid.

(c) The area included in the LTA is defined by legal or other tangible description.

(d) The LTA includes provisions for periodic reappraisal and adjustment of prices.

(e) The LTA may not preclude or prohibit forest product sales to other purchasers on trust lands adjacent to or within the area designated by the LTA.

(f) The LTA provides for amendment and cancellation during the term of the LTA.

(g) The LTA does not preclude or prohibit other concurrent resource management activities and uses adjacent to or within the area designated by the LTA.

(h) Each LTA states that access granted by the LTA is not exclusive.

(i) A due-diligence provision is included in each LTA.

 

R850-70-1300. Fees and Procedures.

The agency may establish fees and develop procedures necessary to provide for the administration and sale of forest products pursuant to Section 53C-1-302(1)(b).

 

KEY: forest products, administrative procedures, timber

Date of Enactment or Last Substantive Amendment: [July 2, 2004]2019

Notice of Continuation: December 4, 2017

Authorizing, and Implemented or Interpreted Law: 53C-1-302(1); 53C-2-201(1)(a)