SB 6539 — Ensuring compliance with the state's fiduciary duty in managing state trust lands.

S-4777.1SECONDS-3275.3SENATE SUBSTITUTE SENATE BILL 6539State of Washington65th Legislature2018 Regular SessionBy Senate Ways & Means (originally sponsored by Senators Braun, Rivers, and Wilson)READWilsonRead FIRSTfirst TIMEtime 02/06/18.AN01/23/18. ACT Relating to ensuring compliance with the state's fiduciary duty in managing state trust lands;

Referred to Committee on Agriculture, Water, Natural Resources & Parks.AN ACT Relating to ensuring compliance with the state's fiduciary duty in managing state trust lands;

and creating new sections.BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:NEW SECTION.  Sec. 1.  InSECTION.  Sec. 1.  The orderlegislature tofinds ensurethat the state islands, managing state lands and state forestlands, as defined in RCW 79.02.010, inplay thean mostimportant efficientrole andin effectiveproviding mannerfunding possible for theeducation trust beneficiaries and allowableother multiplecritical uses for the people of Washington, the legislature finds that an evaluation of the current state land portfolio and managementlocal practicespublic isinstitutions. appropriate.

The legislature'sdepartment goalof innatural establishingresources' thismanagement evaluation is to ensure the state's fiduciary duty is being met, increase the amount and stability of revenuethese from state lands andis stateimportant, forestlanddue over time, and develop tools to betterthe estimatefact thisthat assetevery value.NEWdollar SECTION.  Sec. 2.  Athat new section is addedgenerated to chapter 79.10 RCW under the subchapter heading "general provisions" to read as follows:(1) The department must endeavor to generate an average of two hundred thirty million dollars from state lands andsaves state forestlands each year, which represents the approximatestate highfrom waterexpending marka fordollar suchfrom revenueother since 2000.(2) By December 1, 2018, the department must evaluate its lands portfolio and revenue streams,sources. management practices, and transaction processes, and develop options and recommendations designed to ensure the state's fiduciary duty is being met and increase the amount and stability of revenue from state lands and state forestland over time.

Sustainable management of these lands is consistent with the legislature's intent to maintain sustainability in the revenue and services provided to the benefiting institutions.

The portfolio of state lands and forestlands includes forestland, agricultural lands, and commercial lands.

In managing state lands granted from the federal government, case law specifically charges the state with fiduciary duties, including duties of undivided loyalty and prudent management.

The legislature further recognizes that state lands are used for multiple purposes and provide multiple benefits to the people of Washington, including recreation and other public benefits, when consistent with trust obligations.The legislature finds that in the twenty-first century, the revenues from state lands and forestlands have been a flat and underperforming asset.

In this century, average yearly revenue collections are thirty million dollars below intake during the 1990s.

The timber board feet sold for this decade has continued to decline, with a sustainable harvest target that is now over two hundred million board feet below the target twenty years ago.

In the last six years, the harvest has failed to meet even that lower target.

The legislature is concerned that this level of fiscal performance is not fulfilling the state's fiduciary duty and intends to set targets for the trust lands to meet.The legislature also finds that the state Constitution provides an alternative to having state lands managed as a land asset, by the establishment of permanent funds for the benefit of the same public institutions served by management of state lands.

These permanent funds are managed by the state investment board and that the rate of return averages over five percent per annum.In order to ensure the state is managing this resource in the most efficient and effective manner possible for the trust beneficiaries and allowable multiple uses for the people of Washington, the legislature finds that an evaluation of the current state land portfolio and management practices is appropriate.

The legislature's goal in establishing this evaluation is to ensure the state's fiduciary duty is being met, increase the amount and stability of revenue from state land and state forestland over time, and develop tools to better estimate this asset value.NEW SECTION.  Sec. 2.  A new section is added to chapter 79.10 RCW under the subchapter heading "general provisions" to read as follows:(1) The department must endeavor to generate an average of two hundred thirty million dollars from state lands and state forestlands each year, which represents the approximate high water mark for such revenue since 2000.(2) By September 1, 2018, the department must evaluate its lands portfolio and revenue streams, management practices, and transaction processes, and develop options and recommendations to promote achievement of this goal in a manner consistent with section 1 of this act.

and(iii) Any other options for legislative consideration.(3) In evaluating annual revenue under this section, the department must annually adjust the two hundred thirty million dollar goal for inflation and may not count any trust land transfer funds towards the goal.NEW SECTION.  Sec. 3.  SubjectSECTION.  Sec. 3.  The to the availability of amounts appropriated for this specific purpose, the joint legislative audit and review committee must develop methods or tools to estimate the current asset value of state lands and forestlands, as defined in RCW 79.20.010.

The joint legislative audit and review committee must submit a summary of its selected method or tools and an initial estimate by December 1, 2021.NEW2021.--- SECTION.  Sec. 4.  (1)END Within--- existing appropriations, the department of natural resources must prepare an evaluation of use authorizations and leases of state-owned aquatic lands for industrial and commercial uses in existence on January 1, 2018, except for use authorizations and leases for purposes of marinas and moorage.

The evaluation must include:(a) A summary of each lease and use authorization, including lease term, rental rate, and use conditions;(b) A listing of annual revenues obtained from each lease and use authorization;(c) The methods or formula used to value and establish payment for each lease and use authorization;(d) A summary of actual inspections conducted and monitoring reports submitted over the previous ten years relating to compliance with the terms of the lease or use authorization as well as compliance with all applicable water quality and other local, state, or federal environmental, public health, and safety standards;(e) A description of the applicable requirements for inspection and monitoring under the terms of the leases and use authorizations as well as other applicable local, state, and federal regulatory requirements;(f) A summary of any lease and use authorization compliance activities performed by the department to ensure the protection of the state's aquatic resources, consistent with RCW 79.105.010, is maintained.(2) The department of natural resources must submit the evaluation, including any recommendations for legislative or administrative actions, to the appropriate policy and fiscal committees of the senate and house of representatives by December 1, 2018.--- END ---