Court of Justice of the European Communities (including Court of First Instance Decisions)

OPINION OF ADVOCATE GENERAL

ĆAPETA

delivered on 4 July 2024 (1)

Case C‑370/23

Mesto Rimavská Sobota

v

Ministerstvo pôdohospodárstva a rozvoja vidieka Slovenskej republiky

(Request for a preliminary ruling from the Najvyšší správny súd Slovenskej republiky (Supreme Administrative Court of the Slovak Republic, Slovakia))

( Preliminary reference - Environment - Regulation (EU) No 995/2010 - Timber and timber products - Concepts of ‘operator’ and ‘placing on the market’ )

I.      Introduction

1.        Mesto Rimavská Sobota (‘the applicant’) is a municipality in the river valley of the Slovenské rudohorie (Slovak Ore Mountains) in southern Slovakia. It administers a municipal forest.

2.        In June 2018, the applicant sold a certain quantity of timber to a legal person, and was subsequently fined by the competent authorities for failing to have in place a due diligence system, as required by the Slovak Timber Law, (2) which implements Regulation (EU) No 995/2010 (‘the Timber Regulation’). (3)

3.        Challenging that fine before the Slovak courts, the applicant claims, inter alia, that, for the purposes of the transaction at issue, it does not act as an ‘operator’, within the meaning of the Timber Regulation, and should not therefore be subject to the due diligence obligation arising therefrom.

II.    Background of the case and the question referred

4.        On 11 June 2018, the applicant entered into a contract with MK&MK Holz, s.r.o. (‘the purchaser’) for the sale of timber.

5.        Pursuant to the national file, under the terms of that contract, the applicant sold a specified volume of timber (expressed in cubic metres) to the purchaser. Pursuant to that same contract, the purchaser was ‘to carry out’ the timber harvest until 31 December 2018. The contract also provided for the specific parcels of (wood)land in the municipal forest of Rimavská Sobota in which the harvest was to occur. The applicant’s employees were to supervise the purchaser’s felling of the trees and to measure the volumes harvested in order to ensure the complete satisfaction of the contract terms. In return for receipt of the amount of timber agreed upon, the purchaser was to pay the applicant a fixed price per cubic metre of timber, inclusive of VAT.

6.        According to the referring court, the applicant also sold timber to natural persons in a similar manner for use as fuel wood. (4)

7.        By its decision of 25 June 2019, taken on the basis of the earlier decision of the Slovenská lesnícko-drevárska inšpekcia (Slovak Forestry and Timber Inspectorate), the Ministerstvo pôdohospodárstva a rozvoja vidieka Slovenskej republiky (Ministry of Agriculture and Rural Development of the Slovak Republic, Slovakia; ‘the Ministry’), found that the applicant had committed an administrative offence under the Slovak Timber Law by failing, in its capacity as an ‘operator’, to maintain a system of due diligence in order to prevent illegally harvested timber or timber products from being placed on the internal market for the first time. It imposed a fine of EUR 2 000.

8.        The applicant challenged that fine before the Krajský súd v Banskej Bystrici (Regional Court, Banská Bystrica, Slovakia). That court dismissed that action.

9.        On appeal before the Najvyšší správny súd Slovenskej republiky (Supreme Administrative Court of the Slovak Republic, Slovakia; ‘the referring court’), the applicant claims that it is not an ‘operator’, within the meaning of the Timber Regulation.

10.      The definition of an ‘operator’ is provided for in Article 2(c) of the Timber Regulation, which states that an ‘operator’ means any natural or legal person that places timber or timber products on the market.

11.      Article 2(b) of the Timber Regulation further explains that ‘placing on the market’ means the supply by any means, irrespective of the selling technique used, of timber or timber products for the first time on the internal market for distribution or use in the course of a commercial activity, whether in return for payment or free of charge.

12.      In that regard, the applicant claims that, under the terms of the contract, it is the purchaser that ‘places timber products on the market … for the first time’, as it is the purchaser that harvests the timber in question. Therefore, it is the purchaser and not the applicant who acts as the ‘operator’ for that particular type of transaction, and hence is subject to the due diligence obligation under the Timber Regulation. The applicant accordingly claims that it could not be reproached for failing to establish a system of due diligence.

13.      The Ministry considers that since the applicant had sold timber directly to a third party without, however, transferring all the rights that are attached to the status of forest manager under Slovak law, it alone was subject to the obligation of maintaining the specific records required by Zákon č. 326/2005 Z. z. o lesoch (Law No 326/2005 on Forestry), as amended, to implement a system of due diligence.

14.      Against that factual and legal background, the Najvyšší správny súd Slovenskej republiky (Supreme Administrative Court of the Slovak Republic) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Is Article 2(b) of Regulation [No 995/2010] to be interpreted as meaning that the placing on the market of timber also constitutes a sale for consideration of raw timber or fuel wood within the meaning of Annex 1 to that regulation, if, under the harvest concession agreement, the purchaser harvests the timber under the direction and supervision of the seller?’

15.      Written observations were submitted by the Hungarian and Slovak Governments as well as the European Commission. The latter two parties also presented oral argument at the hearing that took place on 15 May 2024.

III. Analysis

16.      My Opinion is structured as follows. I will first take position on the Slovak Government’s concerns relating to the admissibility of the present action (A). Thereafter, I will turn to the interpretation requested by the referring court (B). In that exercise, I will briefly introduce the system set up by the Timber Regulation (B.1), before explaining why, in the type of arrangement at issue in the present case, I consider the applicant to hold the status of ‘operator’ (B.2).

A.      Admissibility

17.      The Slovak Government has expressed doubts concerning the admissibility of the reference. It considers that the question, as formulated by the referring court, demands that the Court apply the Timber Regulation to the facts at issue in the main proceedings. However, that government does not propose that the Court find the present reference inadmissible. Instead, it suggests that the question be reformulated so as to enquire, more generally, about the interpretation of the Timber Regulation.

18.      I am not convinced that the question, as referred, requires reformulation. In the manner that it was put to the Court, that question already respects the division of labour, laid down in the first subparagraph of Article 267 TFEU, between the interpretation of EU law (which is a matter ultimately left to the Court) and the application of the same body of law (which is a task for the national courts).

19.      The question may thus be answered as formulated, even if, as will be demonstrated, a useful answer to the referring court does entail the additional interpretation of other parts of the Timber Regulation, and not only Article 2(b) thereof.

B.      Substance

1.      Placing the Timber Regulation within its context

20.      The 2003 Forest, Law, Enforcement, Governance and Trade (‘FLEGT’) action plan (5) recognised ‘the growing problem of illegal logging and related trade’ as one of the Commission’s priorities. (6)

21.      With a view to reducing illegal logging and timber production and related forest degradation and deforestation, the FLEGT Action Plan led to two key pieces of legislation: the FLEGT Regulation (7) and the Timber Regulation.

22.      The FLEGT Regulation regulates the importation of timber and timber products into the European Union from countries with which the European Union concludes specific types of partnership agreements. (8) For that purpose, it introduces a system of ‘FLEGT licences’. These are essentially administrative certificates issued by the competent authorities of the partnership country, with which an EU importer of timber and timber products may certify that the products it seeks to place on the internal market were harvested in accordance with the applicable national law of the partner country. In other words, FLEGT licences certify that the imported products were ‘legally harvested’. (9)

23.      The Timber Regulation is a much broader instrument. It entered into force on 2 December 2010 and started applying from 3 March 2013. (10)

24.      It governs the placing on the internal market of all timber and timber products falling within its scope, (11) whether produced in the European Union or not, and irrespective of whether the timber and timber products in question were imported from a FLEGT partner country.

25.      The Timber Regulation does not tackle illegal logging as such, but seeks to discourage such practices by regulating the market for the trade of the resulting timber and timber products in the European Union. (12)

26.      To that end, that regulation imposes two horizontal obligations on ‘operators’. (13)

27.      The first obligation on that group is  the prohibition to place illegally harvested timber or products derived from such timber on the market for the first time. (14) The second such obligation is the use of a due diligence system before placing timber or timber products on the market for the first time. (15)

28.      Such a due diligence system, which may be devised either by the operators themselves or by a monitoring organisation, (16) must contain three elements: first, measures and procedures designed to keep track of the origin and legality of the timber and timber products; (17) second, risk assessment procedures enabling an analysis and evaluation of the risks of illegally harvested timber and timber products being placed on the market; (18) and, third, in cases where identified risks are not negligible, risk mitigation measures that are adequate and proportionate to minimise effectively those risks. (19)

2.      Who is the ‘operator’ in the present case?

29.      The referring court in essence seeks an interpretation of the concept of an ‘operator’ in order to decide whether the fine was correctly imposed on the applicant for failing to have in place a due diligence system.

30.      Under Article 4(2) of the Timber Regulation, only ‘operators’ are subject to the due diligence obligation imposed thereby. (20)

31.      That obligation is imposed in order to enable the reasonable traceability of timber and timber products that are placed on the internal market, (21) and thus to contribute to the prevention of trade in illegally harvested timber.

32.      That obligation further reflects the purpose of the Timber Regulation, which, according to recital 31 thereof, constitutes the fight against illegal logging and related trade. It is to that end that the Timber Regulation imposes specific obligations on ‘operators’ and ‘traders’. (22)

33.      However, the obligations imposed on ‘operators’ are different from those imposed on ‘traders’. While ‘traders’ have the obligation of identifying the persons that supplied them with timber or timber products and, where applicable, the persons to whom they have supplied such products, (23) ‘operators’ have the obligation of due diligence. (24)

34.      A combined reading of Article 2(b) and Article 2(c) of the Timber Regulation tells us that an ‘operator’ is the person who supplies timber or timber products for the first time on the internal market for distribution or use in the course of a commercial activity, whether in return for payment or free of charge.

35.      Consequently, what distinguishes an ‘operator’ from a ‘trader’ for the purposes of the Timber Regulation is not the fact that they supply timber or timber products on the internal market - they both do. The distinguishing characteristic is that the ‘operator’ is the person that is first in the supply chain of timber and timber products on the internal market, whereas traders sell or buy timber or timber products that are already placed on the internal market.

36.      It follows that the determinative element for the purpose of defining who constitutes an ‘operator’ within the meaning of the Timber Regulation is the point within the commercial chain of trade in timber and timber products at which those products are first placed on the internal market.

37.      In that regard, we may distinguish between two situations: one, in which timber and timber products originate from standing trees located in a third country, which are then imported into the European Union and placed on the internal market (as raw timber or derived products), and, another, in which timber and timber products are produced from standing trees located in the European Union and placed on the internal market.

38.      Given that the first placing on the market for the former category arises at the point of release for free circulation by the national customs authorities, in that context, it is the importer of timber and timber products from third countries that acts as the ‘operator’ for the purposes of Article 4(2) of the Timber Regulation.

39.      It is therefore the importer that needs to satisfy the due diligence obligation imposed on ‘operators’. The choice of the EU legislator to impose the due diligence obligation on the importer is logical, since the importer is the first person on which EU law can directly impose enforceable obligations when the timber or timber products at issue originate from a country outside the European Union. (25)

40.      If, however, as in the case at hand, the trees that are turned into timber and timber products, and the illegal harvesting of which the Timber Regulation ultimately aims at preventing, are located in the European Union, the commercial chain of trade in timber (or derived products) begins with the felling of those trees in a Member State.

41.      In that scenario, the ‘operator’ is the person that disposes of those trees under the entitlement granted to it by national law.

42.      Accordingly, it is also only that person who can establish, within the due diligence system of Article 4(2) of the Timber Regulation, that the products thus entering into circulation are ‘legally harvested’ (that is to say, harvested in accordance with the applicable national legislation, as stipulated in Article 2(f) of that regulation).

43.      That brings me to the case at hand. From the court file, it arises that the applicant, which the Slovak Government confirmed at the hearing holds the entitlement to act as the forest manager under Slovak law, sold a certain quantity of timber to the purchaser. That timber had to be harvested, since the trees in question had not yet been felled. Accordingly, the contract for the quantities of timber in question has the effect of resulting in the first placing on the internal market of products falling within the scope of the Timber Regulation, since it is at that point that the commercial chain for the timber in question commences. It is thus the applicant who acted as the ‘operator’ for that particular transaction, and who holds the obligation of having in place and using the due diligence system of Article 4(2) of the Timber Regulation. After all, the applicant is the only person that can legally establish that the first placing on the market of the products in question took place in accordance with the applicable Slovak legislation.

44.      For the determination of the ‘operator’, it is irrelevant who physically felled the trees in question. Since only the ‘operator’ can satisfy the due diligence obligation of confirming the legality of the resulting harvest, delegating the act of felling the trees to a third person cannot rid the applicant of their due diligence obligation, imposed on them by Article 4(2) of the Timber Regulation.

45.      The opposite would mean that the placing on the market of timber or timber products could be dissociated from the obligation arising from Article 4(2) of the Timber Regulation to assure the legality of the harvest in question. That, in turn, risks the result of timber and timber products being placed on the internal market without the person doing so, or in charge of doing so, being able to evidence the legality of their harvesting, in accordance with that person’s obligations. (26)

46.      In the context of the present case, the purchaser could become an ‘operator’ only if the applicant sold or transferred the management rights over the trees prior to their harvest. Only in that scenario would the decision to fell the trees and place the resulting timber or timber products on the market be taken by the purchaser. (27) Subject to confirmation by the referring court, that, however, does not appear to have been agreed in the present case.

47.      In conclusion, in the factual circumstances of the case at hand, it is the applicant that acted as the ‘operator’. It is thus that person who should have had in place a due diligence system to ensure, inter alia, compliance with the applicable Slovak legislation.

IV.    Conclusion

48.      In the light of the foregoing, I propose that the Court answer the question referred for a preliminary ruling by the Najvyšší správny súd Slovenskej republiky (Supreme Administrative Court of the Slovak Republic, Slovakia) as follows:

The concept of ‘placing on the market’ in Article 2(b) of Regulation (EU) No 995/2010 of the European Parliament and of the Council of 20 October 2010 laying down the obligations of operators who place timber and timber products on the market

must be interpreted as covering a sale for consideration of raw timber or fuel wood within the meaning of Annex 1 to that regulation, if, under a harvest concession agreement, the purchaser harvests the timber in question under the direction and supervision of the seller.

1      Original language: English.

2      Zákon č. 113/2018 Z. z. o uvádzaní dreva a výrobkov z dreva na vnútorný trh a o zmene a doplnení zákona č. 280/2017 Z. z. o poskytovaní podpory a dotácie v pôdohospodárstve a rozvoji vidieka a o zmene zákona č. 292/2014 Z. z. o príspevku poskytovanom z európskych štrukturálnych a investičných fondov a o zmene a doplnení niektorých zákonov v znení neskorších predpisov (Law No 113/2018 on the placing of timber and timber products on the internal market and amending and supplementing Law No 280/2017 on the provision of support and subsidies to agriculture and rural development and amending Law No 292/2014 on subsidies provided from European structural and investment funds and amending and supplementing certain laws) (‘the Slovak Timber Law’).

3      Regulation of the European Parliament and of the Council of 20 October 2010 laying down the obligations of operators who place timber and timber products on the market (OJ 2010 L 295, p. 23; ‘the Timber Regulation’).

4      Although, I should add, we are not privy to any information regarding those transactions beyond the limited explanation of their existence in the referring court’s order.

5      See Communication from the Commission to the Council and the European Parliament, Forest Law Enforcement, Governance and Trade (FLEGT), Proposal for an EU Action Plan (COM(2003) 251 final) (‘the FLEGT Action Plan’).

6      See the FLEGT Action Plan, p. 3.

7      See Council Regulation of 20 December 2005 on the establishment of a FLEGT licensing scheme for imports of timber into the European Community (OJ 2005 L 347, p. 1; ‘the FLEGT Regulation’). Detailed measures for the implementation of the FLEGT Regulation were laid down in Commission Regulation (EC) No 1024/2008 of 17 October 2008 laying down detailed measures for the implementation of Council Regulation (EC) No 2173/2005 on the establishment of a FLEGT licensing scheme for imports of timber into the European Community (OJ 2008 L 277, p. 23).

8      At the time of writing, the sole voluntary partnership agreement that had entered into force was with the Republic of Indonesia; see Voluntary Partnership Agreement between the European Union and the Republic of Indonesia on forest law enforcement, governance and trade in timber products into the European Union (OJ 2014 L 150, p. 252). A number of agreements with other third countries, while already concluded, have not yet entered into force; see, for example, Voluntary Partnership Agreement between the European Union and the Republic of Cameroon on forest law enforcement, governance and trade in timber and derived products to the European Union (FLEGT) (OJ 2011 L 92, p. 4), and Voluntary Partnership Agreement between the European Union and the Republic of the Congo on forest law enforcement, governance and trade in timber and derived products to the European Union (FLEGT) (OJ 2011 L 92, p. 127). However, the Voluntary Partnership Agreement between the European Community and the Republic of Ghana on forest law enforcement, governance and trade in timber products into the Community (OJ 2010 L 70, p. 3), while also pending entry into force, appears to be in advanced stages of negotiation concerning its implementation; see VPA Africa-Latin America, ‘Ghana and the EU advance toward FLEGT licensing in their joint effort to combat trade in illegal timber’, available at: https://flegtvpafacility.org/ghana-eu-advance-toward-flegt-licensing-joint-effort-combat-trade-illegal-timber/.

9      See Article 1(1) and (2), Article 2(10) and Article 4(1) of the FLEGT Regulation, and recitals 3, 6 and 7 thereof.

10      As of 30 December 2024, the Timber Regulation will be repealed and progressively replaced by Regulation (EU) 2023/1115 of the European Parliament and of the Council of 31 May 2023 on the making available on the Union market and the export from the Union of certain commodities and products associated with deforestation and forest degradation and repealing Regulation (EU) No 995/2010 (OJ 2023 L 150, p. 206; ‘the Deforestation Regulation’). That regulation was adopted after a 2021 ‘fitness check’ revealed that, among others, the Timber Regulation had not met its objectives of preventing illegally harvested timber from being placed on the internal market (see Commission Staff Working Document –Fitness check on Regulation (EU) No 995/2010 of the European Parliament and of the Council of 20 October 2010 laying down the obligations of operators who place timber and timber products on the market (the EU Timber Regulation) and on Regulation (EC) No 2173/2005 of 20 December 2005 on the establishment of a FLEGT licensing scheme for imports of timber into the European Community (FLEGT Regulation) (SWD(2021) 328 final)). The Deforestation Regulation lays down a general prohibition on the placing on the market, including exporting from the European Union, of products which contain, have been fed with or have been made using certain commodities, including meat of cattle (beef), leather, cocoa butter, chocolate, selected palm-oil-based derivatives, furniture, printed paper and plywood, unless those products are proven to be deforestation-free and satisfy other substantive and formal requirements (see Article 1(1), Article 2(1) and Article 3 of the Deforestation Regulation). A similar initiative is also progressing in the United States (see the bill, introduced on 1 December 2023, entitled Fostering Overseas Rule of law and Environmentally Sound Trade Act of 2023; available at: https://www.congress.gov/bill/118th-congress/senate-bill/3371/text) and has taken place in the United Kingdom (see the introduction, on 12 December 2023, of Schedule 17 into the 2021 Environment Act; available at: https://www.legislation.gov.uk/ukpga/2021/30/schedule/17/enacted).

11      The material scope of application of the Timber Regulation is provided for in Article 2(a) thereof and the annex thereto. It is uncontested, for the purposes of the present case, that the products at issue fall within the scope of the annex.

12      Indeed, regulating what amounts to ‘illegal logging’ is left to the Member States and third States (including partner countries) from which timber and timber products falling within the scope of the Timber Regulation originate. See Article 2(f) and (g) of the Timber Regulation.

13      For the sake of completeness, I should highlight that there are also obligations on ‘traders’, which Article 2(d) of the Timber Regulation defines as ‘any natural or legal person who, in the course of a commercial activity, sells or buys on the internal market timber or timber products already placed on the internal market’. Pursuant to Article 5 of that regulation, traders have the obligation of tracing timber and timber products at issue, that is to say that they must be able to identify the persons that supplied them with the relevant timber or timber products as well as those persons to whom they have supplied such products.

14      See Article 4(1) of the Timber Regulation, read in conjunction with recital 12 thereof. See, generally, on that prohibition, Geraets, D. and Natens, B., ‘Governing through trade in compliance with WTO law: a case study of the European Union Timber Regulation’, in Wouters, J., Marx, A., Geraets, D. and Natens, B. (eds), Global Governance through Trade, Edward Elgar, Cheltenham, 2015.

15      See Article 4(2) of the Timber Regulation, read in conjunction with recital 16 thereof.

16      See Article 8 of the Timber regulation. To the best of my knowledge, a total of 12 monitoring organisations have been recognised by the Commission as fulfilling the requirements laid down in Article 8(2) of the Timber Regulation to operate as ‘monitoring organisations’. See Publication pursuant to Article 9 of Regulation (EU) No 995/2010 of the European Parliament and of the Council laying down the obligations of operators who place timber and timber products on the market (OJ 2015 C 384, p. 4).

17      See Article 6(1)(a) and recital 17 of the Timber Regulation.

18      See Article 6(1)(b) and recitals 16 and 17 of the Timber Regulation.

19      See Article 6(1)(c) and recitals 16 and 17 of the Timber Regulation.

20      Article 4(2) of the Timber Regulation explains that ‘operators shall exercise due diligence when placing timber or timber products on the market. To that end, they shall use a framework of procedures and measures, hereinafter referred to as a “due diligence system”, as set out in Article 6.’ For its part, Article 6 of the same regulation in relevant part lays down that ‘the due diligence system referred to in Article 4(2) shall contain the following elements … (b) risk assessment procedures enabling the operator to analyse and evaluate the risk of illegally harvested timber or timber products derived from such timber being placed on the market. Such procedures shall take into account the information set out in point (a) as well as relevant risk assessment criteria, including: - assurance of compliance with applicable legislation, which may include certification or other third-party-verified schemes which cover compliance with applicable legislation, - prevalence of illegal harvesting of specific tree species, - prevalence of illegal harvesting or practices in the country of harvest and/or sub-national region where the timber was harvested, including consideration of the prevalence of armed conflict …’

21      I should highlight the word ‘reasonable’ in this context since, as set out in recital 15 of the Timber Regulation, the intended traceability of timber and timber products seeks, at the same time, to avoid putting in place an unnecessary administrative burden on market participants.

22      The concept of ‘trader’ is defined in Article 2(d) of the Timber Regulation as ‘any natural or legal person who, in the course of a commercial activity, sells or buys on the internal market timber or timber products already placed on the internal market’.

23      See Article 5 of the Timber Regulation.

24      The due diligence obligation is not imposed on ‘traders’, who are defined in Article 2(d) of the Timber Regulation as ‘any natural or legal person who, in the course of a commercial activity, sells or buys on the internal market timber or timber products already placed on the internal market’.

25      Obviously, imported timber or timber products may have already been in circulation outside of the internal market for some time, having possibly undergone multiple rounds of processing, and such that the point of importation may be far removed from the point at which the trees in question were first felled. However, before timber or timber products are imported into the European Union, the EU legislator is not competent to influence the trade in such timber and timber products by means of internal regulation.

26      At the hearing, there was a discussion about who would the ‘operator’ would be in a hypothetical scenario in which a person fells a tree without permission in order to sell the resulting timber or timber products on the internal market. In that type of scenario, is it the forest manager or the ‘timber thief’ that acts as ‘operator’, within the meaning of Article 2(c) of the Timber Regulation? That is most likely not a scenario that the legislator contemplated when enacting the Timber Regulation Nevertheless, as such a situation might, of course, arise in practice, in my opinion, and in accordance with the position of Slovak Government, it would still be the forest manager, and not the ‘timber thief’, that would hold the title of ‘operator’ for the purposes of the Timber Regulation. That is because only the former is capable of assuring the legality of a harvest operation, and thereby satisfy the due diligence obligation under Article 4(2) of the Timber Regulation. The ‘timber thief’, on the other hand, could never satisfy that obligation and would thus be incapable of commencing the commercial chain on the internal market that the Timber Regulation seeks to regulate. The due diligence obligation would be satisfied in such a scenario by the forest manager’s entry, in its due diligence system, inter alia of a description of the trees that were illegally felled, alongside an evaluation that the resulting stolen timber is at risk of being illegally placed on the internal market.

27      That also seems to be the situation which the Commission had in mind in the Scenario 10a of Commission Notice of 12 February 2016, Guidance Document for the EU Timber Regulation (C(2016) 755 final, pp. 18 and 19). In relevant part, that document reads as follows: ‘[Scenarios 10 and 10a highlight the fact that standing trees do not fall within the scope of the Regulation. Depending on the detailed contractual agreements, the ‘operator’ could be either the forest owner or the company that has the right to harvest timber for distribution or use through its own business] … Forest owner Z sells to company A the right to harvest standing trees on Z’s land, for distribution or use through A’s own business. Company A becomes an operator when it harvests the timber for distribution or use in its own business.’

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