Summer 2001 Volume 10, Number 2
TIMBER BUYER LICENSING LAW: BACKGROUND, NEW AMENDMENT AND COMMENTS
It all started because of the Black Walnut Tree!
Black walnut has always been a valuable species. It became even more valuable during World War II when the wood was used to make gun stocks. Then in the 50's and 60's the demand for walnut increased and prices skyrocketed. As an example, an exceptionally large and high quality Black Walnut tree (one) brought its owner $12,500 in the late 60's. This price was extreme, but shows the unsatisfied demand for black walnut and how valuable it had become.
Unfortunately, the value of black walnut come to the attention of some who were already operating outside the law such as those involved in car theft, burglary, prostitution, extortion, murder for hire, etc. Enter these people into the business. They were not really in the timber buying business per se because, most of the time, they did not buy it. They used fraud or simply took the trees without paying for them. An example of this type of activity was very aptly pointed out in an article titled "Timber Theft: A Solvable Crime" by ICO Lt .David Windsor in the spring issue of the Woodland Steward.
This increased criminal activity combined with higher black walnut prices and the inherent problems and misunderstandings in the business caused substantial public concern. As a result, the General Assembly considered a number of proposals that were, at the very least reactionary. For example, one bill would have made it unlawful to cut ANY black walnut tree 24 inches or larger in diameter regardless of quality.
These legislative proposals come to the attention of personnel in the forest products industry, specifically the Indiana Hardwood Lumbermen's Association (IHLA), and the Indiana Farm Bureau. To say that these proposals caused substantial concern would be a gross understatement. Many of the proposals would have caused severe hardship for the forest products industry and Indiana timber growers. Thankfully, IHLA sponsored a bill that countered the reactionary legislation and helped make timber buyers more profession-al and accountable. The answer was a timber buyer licensing law modeled almost word-for-word after Illinois' law.
The 'Timber Buyers Licensing,' IC 25-36.5, was sponsored by IHLA and passed by the 1972 General Assembly. The purpose of the law is to protect 'timber growers' from fraudulent acts by timber buyers in the state of Indiana. 'A new article concerning occupational licensing; creates regulatory scheme to register timber buyers administered by the Department of Natural Resources (DNR).' The Division of Forestry was given the responsibility of administering the law within the DNR.
The Timber Buyer Licensing Law continues to evolve. Over the years, the law has been amended to better serve the 'timber growers' in Indiana. The law was amended in 1975, 1983, 1988, 1993 and an Administrative Code, 312 IAC 14, was added in 1994 and amended in 1997. Another major change to the law occurred this year as the result of a meeting initiated by Rep. Robert Cherry (R, dist. 53). The meeting included Rep. William Friend (R, Dist. 23) and persons from Farm Bureau, IHLA, Legislative Services, and the Divisions of Enforcement and Forestry.
It and SB 154 (authors J. Lewis-D, Dist. 45 and H. Wheeler-R, Dist. 17; co-authored by A. Craycraft-D, Dist. 26 and B. Skillman-R,Dist. 44; House sponsors Rep. M. Lytle-D, Dist. 69 and R. Cherry-R,Dist. 53) became effective July 1, 2001. The purpose of the bill is to stiffen the penalty for violations of the Timber Buyers Licensing Law.
1 ST VIEW
Ihor Boyko, DNR Staff Attorney
On July 1, 2001, two amendments passed by the Indiana General Assembly to the Timber Buyers Law will take effect. The first is an amendment to IC 25-36.5-1-3 that adds a new paragraph (h) to the provision dealing with surety bonds. This new paragraph does not change existing surety bond requirements for timber buyers. Instead, it applies to the owner of the property where timber is being cut. Under the amendment, the property owner is not required to post a bond or other security with the court when seeking a preliminary injunction or restraining order to prevent or stop the wrongful cutting of timber on the owner's property. How ever, the amendment does not apply to situations where there is a contract for the cutting or sale of the timber. In this case, the property owner is required to file a bond or other security with the court if requesting the court to issue a preliminary injunction or restraining order to stop the cutting of timber on his property.
The second change is an amendment to IC 25-36.5-1-10 dealing with criminal penalties. Criminal offenses under the Timber Buyers Law are increased from a Class B to a Class A misdemeanor. The amendment also provides that a second criminal offense is a Class D felony if the person has a prior unrelated criminal conviction under the Timber Buyers Law. These are significant increases in criminal sanctions, since the original Class B misdemeanor provision carried the possibility of up to 180 days in jail and a fine of $ 1,000.00. By being reclassified as a Class A misdemeanor, penalties are now increased to I year in jail and a fine of $5,000.00. The addition of a Class D felony for a second offense carries the possibility of 1-1 /2 years to 3 years in jail and a fine of $ 1 0,000.00.
2ND VIEW
Captain Michael Crider, Education-Training Section Law Enforcement Division, IDNR
The following is my assessment of what the changes to the Timber Law included in SB 154 mean.
1) Relief is provided in the law for a landowner that is seeking to stop the unlawful cutting of timber on the landowner's property. The law states that these landowners are not required to post a bond or other security with a court as a prerequisite to receiving a preliminary injunction or restraining order to stop the cutting of the landowners trees. This section does not provide relief for a landowner that is in dispute with a timber buyer or cutter that the landowner had entered into a contract with. These disputes will still be handled using our normal process described in paragraph (g) of the law or by the filing of criminal charges for theft. From a law enforcement perspective this change should provide a way to protect landowners from the undue burden of using their cash to protect their own property.
2) The penalty for a violation of engaging in business as a timber buyer without securing a registration or in violation of this chapter, or not allowing inspection of the person's premises, books, accounts, or records as provided in this chapter, has been enhanced to a Class A misdemeanor for the first offense and a Class D felony if the person has a prior unrelated conviction for an offense under this section. This change does a couple of things for law enforcement.
a) It increases the potential penalty for a first offense from 180 days in jail and $1,000 in fines (Class B misdemeanor) to I year jail time and $5,000 in fines (Class A misdemeanor). The fine for a Class D felony is 2 years in jail and $ 10,000 fine. This can either be increased by 2 years or decreased to a Class A misdemeanor.
(b) It kicks in the felony conviction for those persons who refuse to comply with our current timber law. This conviction eliminates those people who currently engage in the timber business and continually violate the law from further participation in the business. This should be a great tool for law enforcement.
It remains to be seen how the courts will interpret the portion of IC 25-36.5-1 -10 (1) that says a person who engages in business as a timber buyer without securing a registration or in violation of this chapter. This can be interpreted to mean that any previous conviction for a violation of the timber law may be considered for the enhanced penalty referred to in Section 10.
The law enforcement division sees this as a great addition to our timber law. The large majority of the timber industry will not be affected, but those who willfully disregard our current law will be facing larger fines and increased jail time. If the penalties are not enough to discourage violations of our law then the felony provision will eliminate the persons this law was designed at address.
3RD VIEW
Gary Gretter, Timber Buyer Licensing Forester, administrator of the law for the Division of Forestry
The new amendment to the Timber Buyers Licensing Law will result in increased protection for Indiana's timber growers. From the standpoint of administration, the more serious penalties will do the following:
I ) Help to eliminate the few individuals who operate without a timber buyer's license.
2) Heighten the awareness of the serious nature of violations against the Timber Buyers Licensing Law. Buying without a license and theft by unlicensed buyers has some times been ignored by law enforcement officials, judges and prosecutors.
3) The felony conviction will result in greater control over licensing previously unlicensed buyers and those licensed buyers and agents who have violated the law. The law states that "The director may revoke or suspend or refuse to issue any license or agent's registration under that license if the applicant or holder of the license has: been convicted of a felony."
4) Help to eliminate the few individuals who operate without a sufficient bond amount.
5) Help to eliminate buyers who fail to pay for timber per their agreement or fail to pay for timber cut, but not purchased.
6) Help to eliminate fraud in connection with the purchase of timber.
7) Increase cooperation in inspecting records by authorized department personnel. Sawmills and loggers have been very cooperative, but we have had a few isolated cases of refusal to inspect records.
A recent judgement stated that a logger and a landowner were both responsible for triple stumpage and damages resulting from a cut that occurred on another landowner's adjacent property. The Natural Resources Commission upheld the administrative law judge's ruling.
What does this mean for you as a forest landowner? First, let's examine a couple of points used by the judge in making the decision.
The landowner exercised some care to clearly mark his property line on one side, but either failed to clearly mark or erroneously marked the property line on the other side. Exactly who marked the property, the logger or landowner, was never established. The landowner had prior business with the logger and knew that he had a poor reputation and was untrustworthy. The logger was not licensed to purchase timber.
The case illustrates that you, as a landowner, can prevent this situation or show a degree of responsibility that virtually ensures you will not be held financially liable if an accidental cut occurs.
Before you sell your timber:
1 ) Clearly mark your property lines. This can be done yourself(if you are certain of the location). If you are unsure, employ the services of a reputable forester (consultant, industry or state) or licensed timber buyer. The location of the established property line should then be confirmed with the adjacent landowner. If you and your neighbor cannot agree on the location of the property line, it may be necessary to have a survey completed.
2) Have your timber marked by a reputable forester (consultant, industry or state) or a licensed timber buyer.
3) Do not, under any circumstances, contract with an unlicensed buyer. Remember that buying on shares is buying timber and requires a license. Licensed timber buyers must post a surety bond with the Division of Forestry. This bond protects landowners who sell timber and landowners adjacent to the sale area. Selling to an unlicensed timber buyer means that you and the adjacent landowner have NO financial protection if trees are accidentally cut. Therefore, you may share in the financial burden should an accidental cutting occur.
Following the above steps may prevent a cut over the property line and onto adjacent property. If an accidental cutting should occur, you will not be held jointly responsible.
REMEMBER: If you sell your timber to an unlicensed buyer, you take a HUGE financial risk.