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The legislature finds that since statehood, 21 counties took possession of approximately 538,000 acres of tax foreclosed land capable of producing timber. In 1935, after passage of chapter 126, Laws of 1935, those counties deeded those timberlands to the state forest board, now the department of natural resources.
Chapter 126, Laws of 1935 provided a trust structure, where upon the exchange of deeds, the timberlands would be held in trust and protected from sale in perpetuity for the purpose of revenue generation from timber and other products. This trust structure referenced and incorporated chapter 154, Laws of 1923, which recognized the entity that transferred the land to the state as the grantor, with reserved rights to valuable materials on the lands. The 1935 law explicitly added "forest products" to the list of valuable materials, and provided for the deeded timberlands to be administered by the state as trustee, with the grantor counties as the beneficiaries of the future net revenue from timber harvests.
As evidenced in historical documents, the counties that deeded timberlands to the state did so under the explicit understanding that by granting the land, they would create a perpetual trust. In exchange for the current value of the land, the county beneficiaries would receive the future benefit of perpetual, protected timber revenue.
Chapter 126, Laws of 1935, like the enabling act, imposed upon the state similar fiduciary duties, like federal grant land trusts, in the management and administration of the county forest board trust lands, referred to in statute as "state forestlands." The Washington state department of natural resources is the trust manager and manages these lands on behalf of the state. As the trust manager, the department of natural resources' duties to the trust beneficiaries are bound both by statute and by common law trust principles.
Since 1935, the legislature has amended the 1935 law multiple times, but always preserved the fundamental trust structure. The recent Washington supreme court case Conservation Northwest v. Franz (Conservation Nw. v. Comm'r of Pub. Lands, 199 Wn.2d 813 (2022)) recognized the department of natural resources' enduring and express trust obligation to harvest timber on these lands for the generation of revenue to the county beneficiaries.
During the same period, the management of these trust lands has become significantly more complex. Timber harvest has been increasingly restricted by other values and interests, including both mandatory and discretionary environmental policies. This has resulted in continuously lower harvest volumes and associated loss of revenue to the county beneficiaries.
Trusts are one of the oldest legal concepts, and since their inception, have been based on principles of fairness and equity. To preserve and enforce these fundamental principles, a trust structure must provide ascertainable standards and transparency for a beneficiary to evaluate the performance and ensure protection of their rights.
The legislature finds that a review of the current statutes and trust management of the county forest board lands is needed to inform potential statutory adjustments. These adjustments may be necessary to ensure the trust structure adheres to the conditions under which counties exchanged their lands and to fundamental trust concepts. The legislature intends to direct the joint legislative audit and review committee to review the existing trust structure and terms, analyze the management of the trusts under that structure, and provide recommendations for improvement.
This section expires June 30, 2028.
The joint legislative audit and review committee, in consultation with a third party with relevant legal expertise, shall review:
The structure and parameters of the trust established in 1935, including applicable common law trust principles, under which counties transferred tax foreclosed forest lands to the state for management;
The performance of the trust and of the department of natural resources as trust manager, in accordance with the trust structure and parameters and the applicable common law trust principles. The review of the performance of the trust must include, by county, the volume of timber offered for sale and that not offered for sale over the past three decades pursuant to the sustainable harvest calculations; and
The structures and parameters of other trusts established for comparable purposes, including the use of ascertainable standards and other methods by which trusts provide transparency and performance measures to enable the protection and enforcement of beneficiaries' rights.
The joint legislative audit and review committee shall analyze the findings of the review under subsection (1) of this section and develop recommendations for any adjustments to the trust structure or parameters to ensure adherence to the conditions under which counties exchanged their lands and to fundamental trust concepts as described in section 1(1)(g) of this act. The committee must consider, but is not limited to, the potential application of other trust examples reviewed under subsection (1)(c) of this section.
The joint legislative audit and review committee shall submit its findings and recommendations to the appropriate committees of the legislature by December 31, 2027.
This section expires June 30, 2028.