The Licensed Timber Buyer Law
In the early 1970s several bills had been proposed to limit timber theft in Indiana. One proposal would make it unlawful to cut any Black Walnut tree 24 inches or larger. Another bill would set a penalty of five times the stumpage value of the tree or trees cut and/or damaged with an added fine and possible jail time.
In light of these proposed bills, The Indiana Hardwood Lumberman’s Association (IHLA) sponsored one of its own that was passed into law in 1972 commonly called the Timber Buyers Law (I.C. 25-36.5). The Indiana Department of Natural Resources (DNR) Division of Forestry (DoF) administers the law, which has undergone some revisions in the 50 years since its passage, but the goal remains the same; to license Indiana timber buyers while helping the Indiana timber growers pursue justice for bad actors. This law works to protect the timber growers of Indiana and the law-abiding timber buying industry of Indiana.
In the last legislative session, the Indiana General Assembly passed some changes to the Timber Buyers Law in pursuit of the above-mentioned goal, that went into effect July 1. The first is that all timber sales will have a contract that meets a minimum standard, which is defined in the Uniform Commercial Code (I.C. 26-1). The burden of meeting the law is put upon the timber buyers, and it is to be sure that there is a record of the agreement between the timber buyer and the timber grower. If there is no contract, the timber buyer will be in violation of the law. Since many times there can be a timespan between the agreement of the sale and the actual harvest, another change requires timber buyers to keep the records from all timber sales for a minimum of five years. The maintaining of records also allows more evidence for law enforcement should a criminal investigation be warranted.
These changes help both parties if there is a dispute. They also help the timber grower file for what is commonly known as an Administrative Hearing under 312 IAC 14. The Administrative Hearing process is an adjudicative process focused on the I.C 25-36.5 and heard by judges that hear these cases on a regular basis. The system is such that the court can come to the area where the parties are, and can help mediate negotiations, if necessary, rather than going straight to the formal hearing. In order to learn more, see 312 I.A.C. 14 Rule 6.
In the past, the Timber Buyers Law had no provision to request compensation for a lawyer’s fees in the case of the Administrative Hearing process. This was changed because there were many cases in the past when a timber grower did not file because the lawyer fees were likely to surpass even the three times value allowed under the law. This will allow timber growers to file administratively no matter how small the value of the timber in question.
There have been cases in which a person who was being investigated under the Timber Buyers Law for criminal activity was able to keep operating under their Timber Buyer’s License because there was no judicial decision or conviction against the buyer. This time lag allowed them to victimize more timber growers before they could be stopped by having their license revoked. A new change to the law allows the DNR Director or their designee to enact a 90-day suspension of the timber buyer and agents license(s) under investigation in order to address this issue.
There are many ways in which timber may be purchased. Lump sum, cut and measure, and shares are the largest part of the list. Does the cost of harvesting the timber come out the Timber Buyer’s or the Timber Grower's share? If the timber grower is to be paid a percentage of what the timber buyer is paid for the logs from that particular property, who determined the value of those logs? What trees are to be harvested according to the agreement? What is timber worth on the market at the time of the sale? These questions and more are important for the timber grower to consider before agreeing to sell their timber. However, the law cannot protect those that would sell their timber without these considerations outlined in their agreement.
The DoF and DNR Law Enforcement do the best they can to protect the timber growers and Indiana Forest Products Community as a whole, including those who are law abiding. Please recognize that changes to the law place a burden upon them. In 2016 the law raised the bond requirement for timber buyers to have on file with the state in order to maintain a Timber Buyer’s License. The reason for this had been bad actors that had the minimum bond, and the victims who could not recover single stumpage value on judicial decisions awarding restitution of three times stumpage value. For some of the smaller businesses, it is a new burden to have a contract on every sale and maintain records for five years or more, but it allows them to continue to work and help maintain this very important industry in Indiana’s economy.
These changes help the forest products community of Indiana if both timber grower and timber buyer have a transparent agreement that both parties understand from the beginning. If one or both parties “glaze over” the particulars and do not list them specifically in the contract, this may contribute to misunderstandings. As a timber grower, if you do not understand or know the timber market you may want to seek help from someone who knows the timber market.
Duane McCoy is a timber buyer licensing forester with the Indiana DNR Division of Forestry. If you have any questions concerning the Timber Buyer’s Law, please contact Duane McCoy at dmccoy@dnr.IN.gov or 317-232-4112.