OFFICE OF THE LEGISLATIVE AUDITOR O L A STATE OF MINNESOTA

Evaluation Report Summary / August 2014 DNR Management

Key Facts and Findings:  The Division’s database is inadequate to support some on-the­  The Forestry Division in the ground activities and fully monitor Department of Natural Resources progress toward achieving forest (DNR) administers 4.2 million management goals. acres of land for economic, recreational, and environmental  Direct appropriations to the Overall, we benefits. concluded that Forestry Division, excluding those for land and easement acquisition,  State law directs the division to the Forestry dropped between 2008 and 2012 manage state forest resources Division operates and remain below their 2008 level. within a according to principles of multiple use and sustained yield. framework that Key Recommendations: supports the  Interdisciplinary forest resource division’s management planning by the DNR  DNR should accelerate responsibility to divisions of Forestry, Fish and implementation of changes to manage state Wildlife, and Ecological and Water forest management policies only forest land Resources contributes to when it is essential. management that satisfies multiple sustainably and uses sustainably.  DNR should prioritize resources to for multiple uses. improve monitoring of forest  Independent, third-party forest resource management plans. management certification and use of best-practice guidelines also  The Forestry Division should support management for multiple determine criteria for identifying uses over the long term. underperforming loggers and expand options to penalize them.  Some recent forest management policy statements and their  DNR should provide guidance to implementation have emphasized department staff on prioritizing the economic uses of forest goals that affect long-term resources. economic returns when school trust land is involved.  According to Forestry Division staff, most loggers who harvest  DNR should continue to improve state timber perform well, but there its interdisciplinary forest are insufficient options to penalize management efforts. those who do not.

Room 140 Centennial Building, 658 Cedar Street, St. Paul, Minnesota 55155‐1603 • Tel: 651‐296‐4708 • Fax: 651‐296‐4712 E‐mail: [email protected] • website: www.auditor.leg.state.mn.us • Minnesota Relay: 1‐800‐627‐3529 or 7‐1‐1 2 DNR FOREST MANAGEMENT

Resources guide development of the Report Summary subsection plan. (Subsections are physical areas sharing features such as Minnesota contains over 17 million acres climate and distribution of species.) of forest land. Almost one-quarter of the These ten-year plans bring the divisions’ forest land is owned and administered by expertise and perspectives “to the table,” the state. The Forestry Division in the helping address the multiple-use Department of Natural Resources (DNR) principal of forest management. The manages 4.2 million acres of land. plans also include long-term forest management goals, providing a focus that Forest management includes activities supports management for a sustained undertaken to affect the health and yield of forest resources. The forest growth of to achieve a desired resource plans contribute directly to the outcome. These activities can contribute Forestry Division’s annual work plans to the economy, create for and influence harvest and regeneration wildlife, support diverse plant and animal plans for stands of . life, lessen fire risk, and promote forest health. For example, an aspen timber However, DNR has not adequately harvest may provide employment for a monitored the extent to which it is logger, raw material for a paper mill, and making progress toward plan goals. In make room for young forest that provides addition, DNR staff have identified habitat for ruffed grouse and golden- opportunities to improve interdisciplinary winged warblers. Forest management planning. can be controversial because activities that meet one objective can adversely Independent, third-party forest affect others. certification validates that DNR’s forest management considers multiple State statutes direct DNR to manage uses and sustainability. forest resources according to the principles of multiple use and sustained Independent, third-party certification yield. These principles require DNR to requires DNR to meet standards manage forest resources to meet current established and audited by others. economic, environmental, and Almost 5 million acres of DNR- recreational needs, without risking the administered land is certified by the ability of future generations to do the Forest Stewardship Council® and the same. State law defines forest resources Sustainable Forestry Initiative. to include timber, wildlife habitat, air, and aesthetic values, among others. The organizations that certify DNR forest land have standards that include DNR’s subsection forest resource management for multiple uses and management plans support sustainable sustainability. To maintain certification, management of forest resources for DNR must meet these standards, as multiple uses, but plan monitoring and verified by independent auditors. some aspects of interdisciplinary work Although some Forestry staff thought need improvement. certification has not changed the division’s forest management practices, Subsection forest resource management others in DNR commented on positive plans support the Forestry Division’s effects of certification, such as improved work by requiring interdisciplinary interdisciplinary work. planning, opportunities for public input, and long-term goals for state- DNR’s commitment to follow best- administered forest land. practice guidelines developed by the Minnesota Forest Resources Council In each subsection, a team of staff from further supports its sustainable forest the DNR divisions of Forestry, Fish and management. Wildlife, and Ecological and Water

SUMMARY 3

As directed by state law, the Minnesota emphasis on offering timber for sale Forest Resources Council oversaw quickly. DNR is considering whether to development of site-level timber apply the economic rotation age policy to harvesting guidelines that consider the planted red pine on non-school-trust land. economic, social, and ecological values of forest resources and support The Forestry Division relies on timber sustainability. harvest as its main forest management tool. DNR has committed to following these guidelines. The guidelines include, for The Forestry Division has 17 area offices example, the amount of live trees to leave throughout northern and southeastern in a harvest area to provide habitat and Minnesota. Area begin the food for wildlife and a seed source for timber sale process with a list of stands . Guidelines also address derived from subsection forest resource minimizing the impact of harvests on management plans. The division directs resources such as soil and water quality. foresters to consider the plans’ goals and Minnesota Forest Resource Council Some recent statements of forest guidelines when designing sales. Staff management policy and their from the Fish and Wildlife Division and implementation have emphasized the Ecological and Water Resources economic uses of forest resources. Division may review the harvest and regeneration plans designed by foresters. In 2012, DNR reiterated its responsibility to manage school trust land to maximize For the majority of timber sales, foresters economic returns over time. School trust appraise the timber and offer it for sale in land is land granted by the federal oral or sealed-bid auctions. Foresters government to the state for the benefit of issue permits to successful bidders. schools. As trustee, the state must Regular permits typically last three years. manage the land in the interests of current and future trust beneficiaries. According to some Forestry staff, underperforming loggers create Depending on how DNR implements inefficiency, and penalty options are changes to school trust land management, insufficient. other forest land could be affected. However, maximizing economic return is Forestry Division staff indicated that the not necessarily the primary goal for these vast majority of loggers who operate on other lands. state forest land comply with guidelines and timber sale specifications and leave DNR has also reconsidered some of its the harvest site in good condition. policies related to harvest age, with the However, several staff indicated that the consequence that forests may be small number of loggers who do not available for harvest earlier than they operate to these standards require otherwise would have been. For significantly more supervision and example, the department rescinded its guidance than others. policy on extended-rotation forests— forests for which the time between Currently, the division may charge harvests has been prolonged. DNR also loggers for liquidated damages if they has decided to harvest planted red pine breach permit terms. For example, the on school trust land when it is 60 to 70 division may bill a logger who damages years old—its “economic rotation age”— trees that were reserved from harvest. rather than the average normal rotation However, the division cannot prevent the age of 112 years reflected in forest logger from bidding or operating on management plans. future sales, no matter how regularly the logger commits violations of this kind. DNR implemented the change to the Representatives from the Forestry extended-rotation forest policy with an Division and a contract-loggers

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association indicated willingness to work to some staff, and does not generate together to establish criteria for reports needed to monitor progress identifying and penalizing loggers who toward plan goals. habitually violate permit terms. The Forestry Division is working on According to staff, portions of the updating inventory records and has Forestry Division’s forest management developed an approach to minimize database do not support efficient duplicative data entry and improve operations or provide needed monitoring capabilities. monitoring data. Fiscal year 2014 direct appropriations The Forestry Division’s database has to the Forestry Division were lower modules for (1) recording timber sales, than 2008 appropriations. (2) maintaining an inventory of state forest land, and (3) planning and Fiscal year 2008 appropriations to the documenting timber stand and forest road Forestry Division totaled $43.2 million. activities. Forestry staff were fairly Appropriations, excluding those for land positive in their assessment of the timber and easement acquisitions, declined sales module. steadily between 2008 and 2012, to $34.4 million. Appropriations for fiscal However, some Forestry staff indicated year 2014 increased to $36.8 million, but that incorrect and outdated inventory data remain below the 2008 level. can contribute to planning difficulties and timber sales inefficiencies. For The Forest Management Investment example, a plan may identify a stand to Account, which includes timber sales and harvest to help achieve plan goals. But related revenues, is a primary source of an on-site visit by a to design a division funding, but its balance has been timber sale may reveal that the stand is declining. The account’s ending balance not ready for harvest. in fiscal year 2007 was over $9 million, compared with $1.4 million in 2013. The module for planning and documenting timber stand activities requires duplicative data entry, according

Summary of Agency Response In a letter dated August 15, 2014, Department of Natural Resources (DNR) Commissioner Tom Landwehr said the report is “a good summary of our forest management activities, how effective they are, and how they can be improved to help us meet both the opportunities and challenges we face today and in the years ahead.” The commissioner noted that bonding dollars for reforestation “have generally been insufficient to meet our needs in recent years.” He also highlighted the report’s observation that technology used to support on-the-ground management activities is aging and reduces staff efficiency.

The commissioner emphasized that DNR’s interdisciplinary planning processes “are key to sustainably managing our forests for multiple benefits” and that “forest management activities, including timber harvesting, are used in tandem to achieve positive results, including increased economic value, improved wildlife habitat, greater diversity in plant and animal life, and reduced fire risk.” The commissioner indicated that “the department supports all the report’s recommendations and will work with our stakeholders and partner organizations to identify how best they can be incorporated into our planning and management activities.”

The full evaluation report, DNR Forest Management, is available at 651-296-4708 or: www.auditor.leg.state.mn.us/ped/2014/forestmgmt.htm