TIMBERCHECK™

According to an audit, two Alaska timber sales by the U.S. Forest Service were not “managed in accordance” with the agencies’ own policy. Both occurred in the Tongass National Forest.

Tongass National Forest

What is a national forest?

In the United States, national forest is a classification of protected and managed federal lands. National forests are largely forest and woodland areas owned collectively by the American people through the federal government, and managed by the United States Forest Service, a division of the United States Department of Agriculture.

National forest (United States) – Wikipedia

The Tongass National Forest is the largest U.S. National Forest at 16.7 million acres. Most of it is temperate rainforest. The area classified for timber production is 593,000 acres (or 3.5% of the total area).

Two timber sales audited

Under the timber sale program, two Tongass timber sales were prepared, awarded, and administered by the U.S. Forest Service and Alaska State staff. These were:

• Big Thorne Stewardship Contract (2014) – 98 million board feet (MMBF) (231,132 m3)
• Kosciusko Good Neighbor Authority (GNA) Agreement (2017) – 30 MMBF (70,754 m3)

Due to inconsistencies reportedly discovered during routine paperwork on the timber sales, an internal audit was conducted by the U.S. Forest Service. The results were published August 18, 2020.

…the timber sale cruising, appraisal, sale preparation, and contracting program fro the Big Thorne Stewardship Contract and Kosciusko Good Neighbor Authority Agreement were not always managed in accordance with the terms of the agreements and Forest Service policy.

Final Report – Alaska Region Timber Sales Program Audit. USDA Forest Service.

Here is a summary of the findings…

Big Thorne Stewardship Contract

• The Tongass personnel cruised the timber sale site without an approved cruise plan.
• Tongass personnel made errors that resulted in an overstatement of the cruised timber volume.
• Adjustments in Profit and Risk (P&R) calculations were made that resulted in a higher appraisal value for the sale.

The audit report also made reference to an earlier review of the timber sale in 2016 by the Forest Service WO. The earlier review including findings such as:

• The timber purchaser tended to remove less than what was prescribed by species, in favor of removing larger diameter and more valuable species groups, such as Western Red Cedar and Spruce.
• There were concerns that the sale administration team relied heavily on contractor self-inspections.

However, in a site visit by the internal auditors, they seemed to find evidence that they claim was contradictory to this earlier review by the Forest Service. For example, the auditors observed Hemlock – a less valuable species – in the purchasers scaling yard. They also observed Hemlock at the helicopter drop off location. And, based on a review of the scaling reports, they “verified” that Hemlock was cut substantially.

Kosciusko Good Neighbor Authority (GNA) Agreement

Findings of the audit for this timber sale include:

Potential conflict of interest

• The contractor who helped develop the final appraisal of the timber sale for the State, was also awarded the contract to perform the timber sale layout for the purchaser of the timber sale.
• The auditors (U.S. Forest Service) attempted to obtain the contract from the timber sale purchaser and the contractor to determine whether the agreement was signed before the award of the Kosciusko sale, but both parties declined to provide the document.
• As a result, a person with privileged details of the Kosciusko timber sale, theoretically had the ability to gain financially by potentially agreeing to work for the purchaser prior to the sale being awarded.

See: Is wood distribution from rigged timber sales illegal under the Lacey Act?

This potential conflict of interest was not the only issue. The timber volume was calculated incorrectly.

Timber volume calculated incorrectly

• The cruising software used for the Kosciusko sale did not calculate the correct timber volume.
• The audit team found 47% of the total sampled logs, were inaccurately calculated by the software.
• The timber volume of all logs over 9 inches in diameter, with exception of 12-inch diameter logs, were under calculated in a range of 10 – 40 board feet.
• An official with the Forest Service identified this issue.
• By the time the individual reported their concern to the State, the request for proposal was already out for bid and a State official stated it was too late to make any changes.
• Because of this, potential bidders did not have accurate information on how much timber was available for bidding.

And the State’s contract with the purchaser was inaccurate.

• The appraisal volume didn’t reflect the allowable 8″ merchantable end log diameter that’s stated in the contract with the purchaser.

Other issues were also found related to financial reporting and the absence of restoration services within the initial agreement with the state. Read the full report.

Understanding how timber harvest rights are awarded

Irregularities in timber sales are some of the ways in which timber can become illegal and enter markets. Often, these are emergent risks – not evident until long after the timber has been placed on the market. The irregularities often occur within and/or between government institutions. Investigations and legal procedures can take many years.

See: 31 Romanian timber companies fined a record 26.6 million Euros

As is evident in these two Alaska timber sales, irregularities can arise from timber volume calculations, discrepancies between appraisals and contracts, conflicts of interest, and other internal issues that are harder to measure and analyze.

See: Idaho timber sales bidder collusion may have cost the state $43 million

The first step in assessing emergent risk related to forest tenure is to understand how timber harvest rights were awarded at the point of harvest. Data about these processes can then be collected and analyzed regarding the risk of mismanagement during the sale.