Eaton Peabody

Liquidation Harvesting Rules - Effective January 2, 2005

The Maine Forest Service has adopted a new rule to control timber harvesting in Maine. The new rule will impact the management and ownership of land by small woodlot owners, large landowners, conservation groups, TIMCOs, loggers, real estate developers and others.

Chapter 23 entitled Timber Harvesting Standards to Substantially Eliminate Liquidation Harvesting, takes effect on January 2, 2005.

The purpose of this rule is to control the practice of liquidation harvesting, which is defined as "the purchase of timberland followed by a harvest that removes most or all commercial value of the standing timber, without regard for long-term forest management principles, and the subsequent sale or attempted resale of the harvested land within 5 years".

Violations of this rule are civil violations for which a penalty of up to $1,000.00 per day may be levied. Each day a violation continues is considered a separate offense.

GENERAL RULE
The general rule under Chapter 23 is timber harvesting must meet certain requirements on land acquired after January 2, 2005, if any part of the parcel is conveyed within 5 years of the acquisition. A "parcel" is defined as contiguous land within one township, plantation or municipality, that is owned by one person or group of persons in common or joint ownership. Under this definition, land is generally not subject to the rule if it is:

• Where the landowner owns less than 100 acres of forest land statewide, or the forest products are harvested for personal use.
• Acquired before January 2, 2005.
• Held for 5 years.
• Contains less than 20 acres of forest land.

KEY EXEMPTIONS
Certain exemptions are available which provide that the land remains exempt even if contiguous land is later acquired that is not exempt from the rule:

• Land that has independent third party certification by a system recognized by the Maine Forest Service (such as SFI or FSC).
• Land that has received a permit to change the use to development (subdivided lots cannot exceed 5 acres) or agriculture. This exemption allows more timber harvesting for purposes of developing portions of the parcel.
• Land that is held in common and undivided ownership and partitioned among the owners. This exemption allows harvested land to be conveyed within 5 years to one of the common undivided owners. However, land transferred to the new owner becomes subject to the rule.

HARVEST STANDARDS
Timber harvesting on land that is subject to the rule must comply with one of the options in the rule:

1. Less than 50% basal area. Remove no more than 50% of the basal area of trees 4.5 DBH that existed when the parcel was acquired. No "high grading" is allowed, and the soil must be protected for advance regeneration. This option may be difficult to manage because it requires measuring trees removed from the land, and the definition of high grading is subjective. Land owners may have to err on the side of caution, and may seek an advisory opinion from the Maine Forest Service before harvesting.
   
2. Less than 100 acres. Harvests less than 100 acres may be conducted by an "accredited" harvester or supervised by a licensed forester who attests to not participating in liquidation harvesting. The area includes the associated roads, yard and trails, so this option is of limited use to commercial land owners.
   
3. Harvest Plan. A Timber Harvest Plan may be prepared by licensed forester in accordance with the rule, and the harvest must be certified by a licensed forester to be in compliance with the plan. Both documents must be kept by the owner for inspection by MFS for 7 years after the harvest. This option contains numerous requirements for the plan that are subject to investigation and challenge by the Maine Forest Service.
   
4. Economic Hardship. Approval may be given by the Maine Forest Service for sale of land in violation of the rule due to unforeseen economic hardship. This option is very limited, and probably not available to commercial investors.
   

Finally, there is a variance procedure to modify the requirements of the rule, which requires review and approval by the Maine Forest Service.

For further information on compliance strategies, or to discuss the defense of alleged violations of this rule, please contact William V. Ferdinand, Jr., (207-622-3747), or Michael L. Lane, (207-947-0111).

This paper is provided as general information, and is not a substitute for legal or other professional advice.