Title of Regulation: 4VAC10-40. Reforestation of Timberlands Regulations (amending 4VAC10-40-10, 4VAC10-40-50, 4VAC10-40-70, 4VAC10-40-80, 4VAC10-40-170).

Statutory Authority: § 10.1-1101 of the Code of Virginia.

Public Hearing Information: No public hearings are scheduled.

Public Comment Deadline: January 1, 2014.

Effective Date: January 31, 2014.

Agency Contact: Ronald S. Jenkins, Administrative Officer, Department of Forestry, 900 Natural Resources Drive, Suite 800, Charlottesville, VA 22903, telephone (434) 977-6555, FAX (434) 293-2768, or email ron.jenkins@dof.virginia.gov.

Basis: Section 10.1-1101 of the Code of Virginia provides the Department of Forestry with the authority to promulgate regulations necessary or incidental to the performance of duties or execution of powers conferred under Chapter 11 (§ 10.1-1100 et seq.) of Title 10.1 of the Code of Virginia. In addition, § 10.1-1103 of the Code of Virginia provides the Board of Forestry with authority to formulate recommendations to the State Forester concerning regulations and other matters applicable to Article 10 (§ 10.1-1170 et seq.) of Chapter 11 of Title 10.1 of the Code of Virginia, including types of equipment to be purchased, rental rates for equipment, and reforestation practices.

Purpose: The Department of Forestry conducted a periodic review of the Reforestation of Timberlands Regulations, which included a 30-day public comment period ending November 10, 2011. During this periodic review, the agency received no comments. However, the Department of Forestry requested review and received comments from its Board of Forestry and Reforestation of Timberlands Board. Comments from the members of these boards were incorporated into the regulations as proposed amendments. The proposed amendments will update the definitions and current forestry practices in Virginia from language that was originally designed in 1971 and updated in 1980. The amendments have no impact on public health, safety, or welfare.

Rationale for Using Fast-Track Process: During the periodic review and other review of the Reforestation of Timberlands Regulations, the agency did not receive a single concern or proposal to amend the regulation except to bring the regulations current with definitions and current forestry practices. The reviewers included members of the industry and agency staff who are very familiar with all aspects of forestry and especially forestry incentives available through the Reforestation of Timberlands Regulations and Reforestation of Timberlands Act. During these reviews, there was no indication of controversy about the proposed amendments and the board members reached a unanimous agreement on them.

Substance: The amendments to the regulations:

1. In 4VAC10-40-10, delete the definition of "owner."

2. In 4VAC10-40-50, delete pond pine, Virginia pine, and tulip poplar tree species from nonqualifying type of land cover, which will allow land cover with these species to be eligible for reforestation incentive payments under the Reforestation of Timberlands Act.

3. In subdivision 1 of 4VAC10-40-70, delete "including release, by means of chemical, mechanical or hand methods, of seedlings from overtopping shade of trees, brush, or shrubs" and add subdivision 3 to provide that post-reforestation cultural treatments shall also be eligible for reforestation of timberlands incentives along with site preparation and reforestation.

4. In 4VAC10-40-170, delete current language in subsection B where incentive payments to landowners for approved projects are set at 60% of actual cost or $80 per acre, whichever is lesser and replace with language that sets incentive payments to landowners from approved projects at 75% of the total cost of the project or an annually determined maximum per acre agreed upon by the Board of Forestry and the State Forester, whichever is less.

Issues: The primary advantages associated with the proposed regulatory action include updating definitions to reflect current terminology used by forestry practitioners and updating forestry practices used by those persons engaged in forestry management. All amendments will reflect the types of forestry practices that are used in modern forest management and qualify for financial incentives to encourage reforestation. These regulations underpin the foundation for sustainable forest resources in Virginia well into the future. The amendments present no known disadvantages to the public.

Small Business Impact Review Report of Findings: This fast-track rulemaking action serves as the report of the findings of the regulatory review pursuant to § 2.2-4007.1 of the Code of Virginia.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Board of Forestry (Board) proposes to amend its reforestation regulations to reword some language, delete several types of trees from the list of ground cover that does not qualify for incentive payments, and change the formula for maximum repayment under the reforestation incentive program.

Result of Analysis. Benefits likely outweigh costs for these regulatory changes.

Estimated Economic Impact. Currently, regulations that govern the Commonwealth's reforestation and timberland incentive program include a list of ground cover plants that do not qualify for reforestation incentive payments. The Board proposes to remove pond pine, Virginia pine and tulip poplar from this list. This change will benefit private landowners who might plant these types of trees in the future as they will be eligible for incentive payments to cover part of their planting and maintenance costs. This program is funded through a tax on forest products and most of the money budgeted each year is expended each year.¹ This being the case, total expenditures on this program are unlikely to increase much on account of this change. It is more likely that the total amount spent on incentives will be approximately the same, but more individual landowners may apply for incentives. This may have the effect of driving down the amount of money that each applicant may get.

Current regulations set the amount of reimbursement under this program at 60% of land owner's actual costs or $80 per acre, whichever is less. The Board proposes to change reimbursement to 75% of actual costs or a maximum dollar amount per acre to be set annually by the Board of Forestry and the State Forester. This change will benefit individuals who are interested in availing themselves of this program as it will give them a much more realistic picture of how much reimbursement they might be eligible for. From 2005 to 2011, reimbursement rates have ranged between $22 and $37 (between 32% and 48% of actual costs). These payments are far below those indicated in current regulations as payments are also constrained by a maximum budget. The new regulatory language directs interested parties to getting information on actual yearly incentives from the Board staff who will be able to give them more accurate information.

Businesses and Entities Affected. Board staff reports that this regulatory action will affect all private forest landowners who seek financial incentives through the reforestation and timberland incentive program. DOF staff also reports that the number of individuals who have submitted applications for reimbursement from the incentive program have ranged between 900 and 1,500 over the past five years.

Localities Particularly Affected. No locality will be particularly affected by these proposed regulations.

Projected Impact on Employment. This proposed regulatory action is unlikely to have any effect on employment in the Commonwealth.

Effects on the Use and Value of Private Property. By incentivizing reforestation, these proposed regulatory changes will likely lead to affected private property forests being slightly more valuable than they otherwise would be. Since participation in this program is voluntary, individuals would be unlikely to participate unless they perceived that participation would lead to more valuable forestland than non-participation.

Small Businesses: Costs and Other Effects. No small business is likely to incur any additional expense on account of these regulatory changes.

Small Businesses: Alternative Method that Minimizes Adverse Impact. No small business is likely to incur any additional expense on account of these regulatory changes.

Real Estate Development Costs. This regulatory action will likely have little effect on real estate development costs in the Commonwealth.

Legal Mandate. The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Administrative Process Act and Executive Order Number 14 (10). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, a determination of the public benefit, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has an adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB's best estimate of these economic impacts.

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¹ Between 2005 and 2011, the percentage of money budgeted from the tax on forestry products that was actually disbursed in incentive payments ranged between 80% and 96%.

Agency's Response to Economic Impact Analysis: The Department of Forestry concurs with the economic impact analysis.

Summary:

The amendments update language; remove pond pine, Virginia pine, and tulip poplar from the list of ground cover plants that do not qualify for reforestation incentive payments; and change the formula for maximum repayment under the reforestation incentive program to the lesser of (i) 75% of actual costs or (ii) a maximum dollar amount per acre set annually by the Board of Forestry and the State Forester.

Part I
Definitions

4VAC10-40-10. Definitions.

The following words and terms when used in this regulation shall have the following meanings unless the context indicates otherwise:

"Acre" means one or more acres or part of an acre or any combination of them.

"Board" means the Reforestation Board of Forestry.

"Department" means the Department of Forestry.

"Forest Products Tax Act" means the tax paid by every person engaged in the Commonwealth in business as a manufacturer or shipper of forest products for sale, profit, or commercial use (§ 58.1-1600 of the Code of Virginia).

"Owner" means individual, corporation, partnership, trust, association or any other business unit, device or arrangement owning land to which the Reforestation Act is applicable.

"Project" means the reforestation activity, completed or an approved portion of it, on a specific number of acres, in a specific location under one ownership.

"Reforestation Act" means Reforestation of Timberlands Act, Article 10 (§ 10.1-1170 et seq.) of Chapter 11 of Title 10.1 of the Code of Virginia.

"Reforestation assistance" means funds, material, personnel or other assistance made available to a landowner pursuant to § 10.1-1173 of the Reforestation Act and these Reforestation of Timberlands Regulations.

"State Forester" means the chief executive officer of the Department of Forestry.

"Tract" means specific acreage upon which a reforestation project is conducted.

4VAC10-40-50. Nonqualifying type of land cover.

In addition to those acres to which the Reforestation Act does not apply pursuant to the provisions of § 10.1-1171 of the Reforestation Act, reforestation assistance shall not be available with respect to the following:

1. Any acre on which there are present 400 or more well distributed and free-to-grow loblolly pine (Pinus taeda), short leaf pine (Pinus echinata), pond pine (Pinus serotina), white pine (Pinus strobus), Virginia pine (Pinus virginiana), of or pitch pine (Pinus rigida), stems or tulip poplar (Liriodendron tulipfera) stems, singly or together, four feet or more in height, measured from ground level to tip of stem.

2. Any acre on which loblolly pine (Pinus Taeda), short leaf pine (Pinus echinata), pond pine (Pinus serotina), or white pine (Pinus strobus), singly or together, occur and exceed in number 50 live, thrifty trees of the above species six inches or more in diameter of the point of average thickness measured from outside of bark to outside of bark at a point on the trunk 10 inches above the general ground level.

4VAC10-40-70. Qualifying practices.

The type of forest practices qualifying for reforestation assistance shall include any method approved by the board and State Forester designed to:

1. Prepare land for reforestation, including release, by means of chemical, mechanical or hand methods, of seedlings from overtopping shade of trees, brush, or shrubs;.

2. Reforest land, either naturally or artificially, by sowing of seed and/or planting of seedlings.

3. Conduct post-reforestation cultural treatments.

Part IV
Seed Trees

4VAC10-40-80. Seed trees.

After expiration of the number of years that the eight pine and/or two tulip poplar seed trees are required, pursuant to the Seed Tree Trees Act (§ 10.1-1162 et seq. of the Code of Virginia), to be left standing following the date of cutting of the timber, and after release of the tract to the owner, reforestation assistance may be made available with respect to any acre on which seed trees were left standing and uncut as required by the Seed Tree Trees Act, provided such reforestation assistance is not prohibited by the provisions of 4VAC10-40-50.

Part XI
Incentive Payments

4VAC10-40-170. Incentive payments.

A. The department may from time to time and upon consultation with the board adjust the levels and manner of incentive payments to be offered to landowners for reforestation projects in accordance with the Reforestation Act. Those changes will be for one fiscal year and may not change within a fiscal year. Any such adjustments shall be announced and publicized as far in advance of their affective dates as practical.

B. Effective July 1, 1982, the incentive payments to landowners for approved projects are hereby set at 60% of actual cost or $80 per acre, whichever is the lesser. The incentive payments to landowners from approved projects are hereby set at 75% of the total cost of the project or an annually determined maximum amount per acre agreed upon by the Board of Forestry and the State Forester, whichever is less.