Jurisdictional risk assessments reveal low levels of timber theft

The jurisdictional risk assessments suggest that generally hardwood producers and transformers comply with all applicable legal and regulatory requirements governing forest management, and the sale and export of lumber and wood products. Legislation exists at the national, state, and local levels regarding taxes and other fees associated with timber management and harvest and in turn, it is the norm that these taxes are paid.

The suite of 37 state risk assessments all concluded that there is substantive evidence that legal structures exist, and law enforcement agencies act on reported cases of timber theft. In many states there are isolated instances where offenders are prosecuted as illustrations of a functional regulatory system. There was no evidence that timber theft is a regular and systematic occurrence within any of the states assessed.

Reported or even "guesstimated" levels of illegal logging or timber theft as they effect the supply of American hardwoods within the 37 States are certainly below 1% of the total supply. Forest governance and enforcement levels are consistently high, and evidence of conviction and penalties indicate a functioning regulatory system.

Oklahoma serves as a typical example of how state governments manage the issue of timber theft.

Timber theft is suspected to be increasing in Oklahoma due to rising timber prices and high percentage of absentee landowners in Eastern Oklahoma (in addition to a reported increase in Texas). The Oklahoma Department of Agriculture, Food and Forestry (ODAFF) oversee the Oklahoma Forestry Services division (OFS). OFS is the state agency charged with oversight of forest management on state and private lands in Oklahoma. OFS law enforcement officers address allegations of timber theft/trespass or other violations of Oklahoma Forestry Code. ODAFF has a publicly available complaint form and arson hotline that can be used to seek help with timber theft/trespass allegations.

Oklahoma passed a suite of laws to address and lower the risk of timber trespass. Oklahoma statute requires all timber owners involved in logging operations must clearly mark any property boundaries within one hundred feet of an area to be harvested and to notify adjoining property owners where property boundaries have not been clearly established.

Timber theft is explicitly addressed in Oklahoma statutes that address many components of potential timber theft including; fraudulent representation of timber rights, ownership or failure to pay for purchased timber within 45 days. Crimes are classified as felony or misdemeanour based on the value of the forest product.

Oklahoma state law requires that all operators involved in a timber harvest must have a bill of sale or contract on site during operations. The bill of sale must include the name of the landowner (and seller if different), purchaser, tract identification, and a description of the sold materials. Documentation must be made available for inspection by law enforcement personnel at all times during the operation.

State law also explicitly establishes that it is the duty of any purchaser of timber from a logger or operator (e.g., mills purchasing from loggers), to obtain a bill of sale from the supplier including the name of the seller, a legal description of the site of origin, and a description of the timber.

In other states, such as Texas, timber theft has been reported to be increasing due to rising timber prices and an increase in absentee landowners. The Texas A&M Forest Service (TAMFS) is the state agency overseeing forest management on state and private lands in Texas. TAMFS reports that timber theft occurs in situations where absentee landowners are not around to monitor their properties and also where log purchasers fail to fulfil contracts with landowners. The Texas Timber Asset Protection Act, passed in 2023, functions as a strengthening of protection for both purchasers and sellers of forest products by increasing documentation requirements related to purchase of forest products. It was passed, in part, to address occurrences of timber theft and fraud.

Timber theft in the state occurs at a rate that affects individual landowners, but overall represents an inconsequential volume at the industry level. There is reported success of the new legislation from the Texas Forestry Association in terms of establishing a paper trail for law enforcement officers investigating alleged crimes.

Timber theft in Arkansas is recognized to include trespass (intentional or unintentional), underpayment by a logger, over-harvesting by a logger, and fraudulent statements. The legal, although unethical, practice of getting a landowner to agree to a price far less than the value of the timber may be increasing. The Arkansas forest products industry also recognizes unscrupulous buyers offering unfair pricing to inexperienced landowners as unethical, however, it is not illegal.

Across all of the state assessments there are isolated cases of timber theft that have been investigated and resolved by law enforcement illustrating a functional rule of law and judicial system and that theft is characterized by volumes of timber that are worth thousands of dollars but that constitute a very small component of the industry.

The 2019 FSC U.S. Controlled Wood National Risk Assessment made a Low Risk determination for all indicators addressing legality and specifically indicators related to land tenure and management rights, concession licenses, management and harvesting planning, harvesting permits, timber harvesting regulations, protected sites and species, environmental requirements, classification of species, quantities, qualities, trade and transport, offshore trading and transfer pricing, custom regulations, and CITES.

Taxes are routinely paid

Across all the state assessments it was found that laws associated with applicable taxes, fees, and assessments as they relate to hardwood ownership and purchase transactions are upheld. Legislation exists at the national, state, and local levels regarding taxes and other fees associated with timber management and harvest.

The 2019 FSC U.S. Controlled Wood National Risk Assessment made a Low-Risk determination for indicators related to payment of taxes and fees in the United States. This includes indicators and assessments specifically for payment of royalties and harvesting fees, value added taxes and sales tax, and income and profit taxes, trade and transport, and transfer pricing.

Federal taxation in the U.S. is highly regulated through the Internal Revenue Service (IRS) via the Internal Revenue code. There is no evidence of systematic avoidance of federal taxes, and there are multitudes of instances of audit and investigation by the IRS to verify correct payment.

The U.S. Forest Service and National Woodland Owners Association maintain a database for state timber and forest owner taxes with information for landowners. Numerous State University extension services offer a tax education programme for agriculture professionals and business owners (including forestland owners). These programmes provide assistance to landowners to understand tax laws, how to address a sale, and what incentives are available to landowners to reduce taxation.

The jurisdictional risk assessments indicated that there is no evidence that timberland owners, loggers, or hardwood mills regularly or systemically fail to comply with payment of taxes or other fees associated with hardwood production.