Giving Away Montana’s Old-Growth Forests By George Ochenski

By Matthew Koehler, Unfiltered 10-28-08

Giving Away Montana's Old-Growth Forests
By George Ochenski

Does giving away the state's old growth timber at bargain basement prices in a severely depressed lumber market make sense? Conservationists say "no," but Montana's Department of Natural Resources and Conservation (DNRC) and some Land Board members say it's part of a necessary effort to maintain the state's timber industry in tough economic times. The role of the state - and the disposition of state trust land resources to bolster private timber companies -- is a debate which is likely to heat up significantly in the coming months.

The state's highly controversial Three Creeks timber sale, which is primarily old growth situated in critical wildlife and fisheries habitat od Montana's Swan Valley, is a prime example of the issue. The state received about $46 per ton two years ago when it sold the first of the three-phases of the Three Creeks sale. Now, however, the remaining timber will be offered for sale at about one-third of that price, at $16.75 per ton. While some Land Board members question the wisdom of selling valuable timber in a hugely depressed lumber market, others say the sales are necessary "to preserve the state's timber infrastructure."

At the August meeting of the Land Board, the sale of the last two remaining parcels of the Three Creeks project were approved. DNRC director Mary Sexton told the Board the Small Lost Timber sale, was a "small project we put together so local folks could bid." As Sexton described the sale, she added that it "won't meet old growth criteria once it is harvested." That comment prompted Governor Schweitzer to ask for clarification and Sexton replied: "This 15 acres is old growth and it won't be there once harvested."

The Three Creeks #3 sale followed, which put the remaining 242 acres of the state's largest old growth timber sale on the block for a minimum bid of $16.75 per ton, which prompted State Auditor John Morrison, who was attending the Board meeting via speakerphone, to comment on the price. "My concern is that we did the Three Creeks sale in March of last year at $45.96 per ton. Three Creeks #2, this year, was $21 per ton. Now, with Three Creeks #3, we're talking a minimum bid of $16.75 per ton. It seems like the price just keeps going down." Morrison went to say he commended the department on the salvage sales for pine beetles, but noted that it is "bound to create a growing glut in the market for timber and there's a heck of a lot of pine beetle killed timber yet to be removed. So why are we cutting 240 acres of healthy old growth at $16.75 per ton when we have all these dead pines we could harvest?"

In response to Morrison's question, Sexton replied that: "Yes, the timber market is down at this time. We're getting half of what we used to get from timber sales. But we're working with communities and stakeholders because if there isn't an on-going effort to provide timber, there may not be a timber industry. We're working hard to maintain on-going harvests in a sustained fashion and improvements we are implementing on the ground are having a significant impact on the land."

Morrison then asked Sexton: "What is our obligation as Trustees when the timber industry and market price is such that it is not in the best interest of the trust to sell at that price?"

Sexton replied: "You have to look at the long term, what we can harvest 50-60 years down the road. If there aren't any mills, we will pay a significant price for that. We only supply 10% of the harvest in Montana, so we are a small player."

"So," Morrison replied, "your position is that sometimes we have to sell when the price is low so the industry can be there when the price is high?"

"It's part of the cyclical nature of these things," said Sexton. "If we pull out when the price is low, we may not have the [timber] infrastructure when the price is high."

"It concerns me to be doing the largest timber sale since I've been on the Land Board when prices are so low," Morrison replied.

"When we initiated this sale, prices were high," said Sexton.

Although neither Land Board members nor DNRC staff brought it up, Anne Hedges of the Montana Environmental Information Center (MEIC) points to a Washington State legal ruling (County of Skamania v. State, 685 P.2d 576, 578-579 -- Wash. 1984) that affirms that trustees must have "undivided loyalty" to the trust - not to third parties or interests - and cites a report from the Sonoran Institute that explains the issue succinctly.

"In 1982, in response to collapse in timber prices precipitated by falling housing starts, the Washington Legislature passed the Forest Products Industry Recovery Act, which enabled timber companies to either extend timber contracts on state lands at no cost or to terminate contracts, essentially without penalty. The Act contained language indicating that by helping the timber companies, it would ultimately benefit the trust beneficiaries, noting that if the companies went bankrupt, there would be no buyers for state timber in the future. (at 578-579). Skamania County ultimately sued the state,
arguing that the grant of lands to the state constituted a trust, and the Forest Products Industry Recovery Act violated the state's fiduciary duties as a trustee of state lands (the County was joined in the suit by the State Board of Education and the Board of Regents for the University of Washington). The court ultimately agreed, holding that the grant of lands to the state in fact constituted a trust. Because the Act provided direct, tangible benefits to the contract purchasers and the state economy, at the expense of the trust beneficiaries, the state's actions violated its undivided duty of loyalty as a trustee. (at 581-82)."

"Every time the Land Board puts in the interest of the timber industry ahead of the interests of the trust it is violating the law," said Hedges. "Old growth forests have value beyond immediate short term timber revenues. By selling old growth at bargain basement prices, the Land Board devalues the long term interests of the trust to the benefit of the short term timber industry profits. There are plenty of state lands where timber could be harvested to generate revenue for schools that would not result in destroying valuable old growth habitat. But the Land Board bows to the short term interests of the timber industry instead of the interest of present and future generations."

Despite a letter from Friends of the Wild Swan and MEIC explaining that their staffers could not be at the August Land Board meeting and opposing the last Three Creeks sales, in the end the Board unanimously approved the sale except for Attorney General Mike McGrath, who was absent and not voting.

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