Amendment SSA1-SB161

LRBs0255/1

MGG/RNK/JK:jld/wlj/kjf:ph

2011 - 2012 LEGISLATURE

SENATE SUBSTITUTE AMENDMENT 1, TO 2011 SENATE BILL 161

December 27, 2011 - Offered by Senator Schultz.

SB161-SSA1,2,2 An Act to repeal 77.81 (5); to renumber and amend 77.82 (4) and 77.86 (1); to amend 74.25 (1) (a) 6., 74.25 (1) (a) 8., 77.82 (4) (title), 77.82 (4g) (title), 77.82 (4g) (a), 77.82 (4g) (b), 77.82 (8), 77.83 (4) (b), 77.84 (2) (am), 77.84 (2) (bm), 77.86 (3), 77.86 (5) (a), 77.88 (5) (a) 1. and 2. and (b) 1. and 2., 77.89 (2) (a) and 77.89 (2) (b); to repeal and recreate 77.83 (2) (am); and to create 15.345 (7), 20.370 (1) (cw), 74.25 (1) (a) 6m., 74.25 (1) (a) 8m., 77.81 (5m), 77.81 (7), 77.82 (3e), 77.82 (3m), 77.82 (3r), 77.82 (4) (b), 77.84 (2) (d) and (e), 77.86 (1g), 77.865, 77.89 (2) (c) and 77.896 of the statutes; relating to: creating forest enterprise areas; the creation of a managed forest land board of review; review of certain decisions of the Department of Natural Resources regarding forestry practices on managed forest land; annual allowable timber harvests; management plans for large ownerships of managed forest land and for group enrollments; designation of additional managed forest land; leasing of managed forest land; the taxation of managed forest land; granting rule-making authority; requiring the exercise of rule-making authority; and making an appropriation.

Analysis by the Legislative Reference Bureau

This substitute amendment is explained in the Notes provided by the Joint Legislative Council in the substitute amendment.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

Joint Legislative Council prefatory note: This substitute amendment was prepared for the Joint Legislative Council's Special Committee on Review of the Managed Forest Land (MFL) Program.

FOREST ENTERPRISE AREAS

This substitute amendment directs the department of natural resources (DNR) to designate forest enterprise areas in administrative rule. The DNR may designate forest enterprise areas with a combined area of no more than 200,000 acres. However, before January 1, 2013, the DNR may only designate up to 10 forest enterprise areas with a combined area of not more than 75,000 acres of land. The minimum size of a forest enterprise area must be 5,000 acres. In designating forest enterprise areas, the DNR must give preference to areas that include at least 1,000 acres of land enrolled in the MFL program.

In order to create a forest enterprise area, a town or county must apply to the DNR for designation of a forest enterprise area. The proposed forest enterprise area must be consistent with the town or county forest preservation or development plan if one exists. The DNR is required to promulgate rules as to what information must be included in an application.

A town within a forest enterprise area will receive, from revenues collected by the state from the forestry mill tax, an annual payment of $1 for each acre of the town designated as MFL that is included in a forest enterprise area. A county within a forest enterprise area will receive, from the forestry mill-tax revenues, an annual payment of 50 cents for each acre of the county designated as MFL that is included in a forest enterprise area. The DNR may not include an acre of land in more than one enterprise area.

A town or county must use these funds for sustainable forestry and forest-based economic development within the town or county, including educating landowners about the benefits of participating in a forest enterprise area, and contracting with a private forestry consultant to assist landowners in preparing MFL applications or MFL owners in preparing management plans.

REVIEW OF SOUND FORESTRY PRACTICES BY MANAGED FOREST LAND REVIEW BOARD

Under current law, an applicant for participation in the MFL program or an owner of managed forest land who is adversely affected by a decision of the DNR is entitled to a contested case hearing under ch. 227, stats.

This substitute amendment creates an optional procedure for MFL owners who are dissatisfied with a DNR decision regarding the practice of sound forestry. Under this procedure, an MFL owner who is dissatisfied with a DNR decision regarding the practice of sound forestry may request review of the decision by the MFL Board. The board members are appointed by the DNR secretary for 3-year terms. The board consists of 7 members: one DNR regional forester; one private consulting forester, one forester who represents the Society of American Foresters; one forestry academic; one county forest administrator; one member of a nonprofit conservation organization; and one private nonindustrial owner of a woodland enrolled in the MFL program.

The board must review and decide the issues included in the MFL owner's request within a reasonable time. Upon conclusion of the review process, the board must issue an opinion for review by the chief state forester, who must then determine whether to accept the opinion of the board. All decisions of the chief state forester must be in writing and include sufficient facts in order to substantiate the decision.

The DNR must promulgate rules establishing the procedures and timeline for filing, review, and decision of the issues that come before the board for its review and action.

An MFL owner who receives a decision of the chief state forester retains the right to a contested case hearing under s. 227.42, stats., on the issues decided by the chief state forester.

MANAGED FOREST LAND MANAGEMENT PLANS AND TIMBER HARVESTS

Under current law, s. NR 46.18 (4), Wis. Adm. Code, permits the DNR to modify the requirements of management plans under the MFL program for ownerships exceeding 1,000 acres. Management plans may be modified after consideration of the following:

• Other land of the owner entered as MFL or forest crop land.

• The number of counties in which lands proposed for entry or renewal or the owner's existing MFL and forest crop land lie.

• The existence and availability for review of a management plan prepared by or for the owner and acceptable to the DNR.

• Submission of a written commitment from an owner to provide, upon DNR request, information from the management plan for review or audit. The commitment shall describe the management plan and outline the procedure used to update and amend the management plan.

• An owner's demonstrated consistent accessibility to competent technical forest management assistance through staff or consultant services.

This substitute amendment shifts the contents of s. NR 46.18 (4), Wis. Adm. Code, to the managed forest land subchapter of ch. 77, stats. Additionally, the substitute amendment directs DNR to promulgate rules to permit the management plans of groups of owners of managed forest land to be modified in the same manner as permitted for large ownerships. The substitute amendment directs the DNR to submit its proposed rules on this topic to the administrative rules clearinghouse no later than the first day of the 12th month after the effective date of the substitute amendment.

Under current law, s. 28.025, stats., directs DNR to establish annual allowable timber harvests for forested property owned by this state and forest property under the jurisdiction of DNR from which timber is harvested.

This substitute amendment requires modified management plans for ownerships that exceed 1,000 acres to include the establishment of an annual allowable harvest. This requirement would not apply to ownerships exceeding 1,000 acres whose lands are certified by an independent third party. The substitute amendment directs DNR to promulgate rules to establish annual allowable timber harvests in modified management plans.

Finally, this substitute amendment specifies that, if the DNR requires an owner of MFL to harvest particular timber from the land within a specified time period, the time period may not be less than three years.

DESIGNATION OF ADDITIONAL MANAGED FOREST LAND

Under the MFL program, an owner of land designated as MFL under an order that takes effect on or after April 28, 2004, may apply to the DNR to designate an additional parcel of land as MFL if the additional parcel is at least 3 acres and is contiguous to any of the owner's designated land. The application must include a nonrefundable $20 application recording fee unless a different amount is established by the DNR by rule at an amount equal to the average expense to the DNR of recording a managed forest land order. The fee must be deposited in the conservation fund. An application must be submitted on a DNR form and must contain any additional information required by DNR. [s. 77.82 (4), stats.]

If an owner of land that is designated as MFL under an order that takes effect before April 28, 2004, wishes to have designated as MFL an additional parcel of land that is at least 3 acres in size, that does not satisfy the MFL program eligibility requirements, but is contiguous to any of the owner's designated land, the owner may withdraw the designated land from the original order and may file an application with the DNR for a new order covering both the withdrawn land and the additional land. The withdrawal tax and the withdrawal fee do not apply under these circumstances. [s. 77.82 (4g), stats.] However, the filing of the new order has the effect of applying the current requirements of the MFL program, including a higher rate of taxation to both the additional parcel and the designated land from the original order.

This substitute amendment sunsets current law as it applies to owners of land designated as MFL under orders that take effect before April 28, 2004. Instead, under the substitute amendment, the land owner would be able to designate an additional parcel of land as MFL in, generally, the same manner as an owner of land designated as MFL under an order that takes effect on or after April 28, 2004.

Under the substitute amendment, only the additional parcel of land designated as MFL would be subject to the taxes in effect when the application for addition of the parcel is filed.

LEASING OF MANAGED FOREST LAND

Under current law, for land designated as MFL under an order that takes effect on or after October 27, 2007, no person may enter into a lease or other agreement for consideration if the purpose of the lease or agreement is to permit persons to engage in a recreational activity. Any lease or other agreement for consideration that permits persons to engage in a recreational activity was voided effective January 1, 2008.

The managed forest law defines recreational activities to include hunting, fishing, hiking, sight-seeing, cross-country skiing, horseback riding, and staying in cabins.

This substitute amendment repeals the prohibition on leasing of MFL. Instead, the substitute amendment permits the leasing of MFL, including leases and other agreements for consideration, that permit persons to engage in a recreational activity, if the use does not conflict with sound forestry practices or any forest management objective contained in the management plan for the land. The substitute amendment also specifies that any person who enters into a lease shall be subject to a forfeiture if the lease presents a conflict with sound forestry practices or the forest management objectives contained in the management plan.

TAXATION OF MANAGED FOREST LAND

Except as provided under the MFL program, no tax may be levied on MFL, except that any building on the land is subject to taxation as personal property under ch. 70, stats.

MFL Orders Effective Prior to April 28, 2004

Each owner of MFL must pay to the municipal treasurer an acreage share on or before January 31. Originally, this acreage share was $.74 per acre. In addition to this amount, each owner was required to pay $1 for each acre that is designated as closed under s. 77.83, stats.

Beginning in 1992 and in each 5th year thereafter, the department of revenue (DOR) adjusts the amounts of tax by multiplying the original acreage shares specified by a ratio using as the denominator the DOR's estimate of the average statewide tax per acre of property classes under s. 70.32 (2) (b) 4., 5., and 6., 1993 stats. (agricultural, swamp, or waste and productive forest land), for 1986 and, as the numerator, the DOR estimate of the average tax per acre for the same classes of property for the year in which the adjustment is made. Based on this adjustment, the current acreage share is $.67 per acre of open land and $1.57 per acre of closed land. [s. 77.84 (2) (c), stats.]

MFL Orders Effective on or After April 28, 2004

For MFL orders that take effect on or after April 28, 2004, each owner of MFL must pay to each municipal treasurer, on or before January 31, an amount equal to 5% of the average statewide property tax per acre of property classified as productive forest land under s. 70.32 (2) (a) 6., stats., for each acre of MFL.

In addition to this amount, each owner must pay to each municipal treasurer, on or before January 31, an amount equal to 20% of the average statewide property tax per acre of property classified as productive forest land under s. 70.32 (2) (a) 6., stats., for each closed acre of MFL.