[Federal Register Volume 73, Number 210 (Wednesday, October 29, 2008)]
[Proposed Rules]
[Pages 64288-64293]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-25799]
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DEPARTMENT OF AGRICULTURE
Forest Service
36 CFR Part 223
RIN 0596-AC80
Sale and Disposal of National Forest System Timber; Downpayment
and Periodic Payments
AGENCY: Forest Service, USDA.
ACTION: Proposed rule; request for comments.
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SUMMARY: The Forest Service is proposing to amend the Downpayment rule
and the Periodic payments rule to reflect changes in contracting
procedures adopted in the April 2004 and June 2006 timber sale
contracts. These changes reflect stewardship contracting authorities,
and reflect changes in forest products markets since these rules were
adopted in 1991. The proposed changes also would remove obsolete
references and procedures; make downpayments and periodic payments
optional for stewardship contracts; allow downpayment and periodic
payment amounts to be recalculated when contracts receive a rate
redetermination; revise the procedure for releasing the downpayment;
and would allow downpayments to be temporarily reduced when Forest
Service authorizes certain additions of contract time.
The intended effect of this proposed rule is to protect the
Government's financial security while providing financial relief to
timber purchasers during periods when forest products prices
drastically decline or purchasers receive additional contract time for
periods when they are not expected to operate.
DATES: Comments must be received in writing by December 29, 2008.
ADDRESSES: Mail written comments to the Director of Forest Management,
MAIL STOP 1105, Forest Service, USDA, 1400 Independence Avenue, SW.,
Washington, DC 20250-1105; via e-mail to [email protected]; or via
facsimile to (202) 205-1045. All comments, including names and
addresses when provided, are placed in the record and are available for
public inspection and copying. The public may inspect comments received
on this proposed rule in the office of the Director of Forest
Management, Third Floor, Northwest Wing, Yates Building, 201 14th
Street, SW., Washington, DC. Visitors are encouraged to call ahead to
(202) 205-0893 to facilitate entry into the building.
FOR FURTHER INFORMATION CONTACT: Lathrop Smith, Forest Management,
(202) 205-0858.
SUPPLEMENTARY INFORMATION:
Background
The current downpayment regulation (36 CFR 223.49) and periodic
payments regulation (36 CFR 223.50) were adopted on July 31, 1991, (56
FR 36099) to protect the Government's financial interests, reduce
speculative bidding, encourage purchasers to harvest timber in a timely
manner and to comply with section 2d of the Federal Timber Contract
Payment Modification Act (Pub. L. 98-478, 98 Stat 2213; 16 U.S.C. 618)
(Buy-out Act).\1\
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\1\ Section 2(d) provides that ``[e]ffective January 1, 1985, in
any contract for the sale of timber from the National Forests, the
Secretary of Agriculture shall require a cash down-payment at the
time the contract is executed and periodic payments to be made over
the remaining period of the contract.''
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Under the current downpayment regulations, a purchaser must deposit
cash in the timber sale account at the time of sale award equal to 10
percent of the total advertised value of the sale plus 20 percent of
the bid premium. This cash is held by the Forest Service and cannot be
used by the purchaser for any other purpose until (1) on scaled sales
stumpage representing 25 percent of the total bid value has been
charged and paid for, or (2) on tree measurement sales until stumpage
value representing 25 percent of the total bid value is shown on the
timber sale statement of account to have been cut, removed, and paid
for (36 CFR 223.49(d)).
Under the current periodic payments regulation, periodic payments
are ``amounts specified in the contract that a purchaser must pay by
the periodic payment determination date(s) unless reduced by amounts
paid as stumpage for volume removed.'' (36 CFR 223.50(a)(4)). The
initial periodic payment is equal to 35 percent of the total contract
value or 50 percent of the bid premium, whichever is greater. Where an
additional periodic payment is required by the contract, the payment
will equal 75 percent of the total contract value. The amount of the
periodic payment(s) will be reduced if the payment would result in the
purchaser's credit balance for timber charges exceeding the current
contract value. (36 CFR 223.50(c)).
Proposed Amendments to the Downpayment Requirements
The following changes are proposed. Sections 223.49 and 223.50 will
be reformatted accordingly.
1. In Sec. 223.49(a)(2), the definition for ineffective purchaser
credit would be removed. Section 329 of the Department of the Interior
and Related Agencies Appropriations Act, 1999 (as contained in section
101(e) of division A of Public Law 105-277; 16 U.S.C. 535a) directed,
among other things, that the procedure known as ``purchaser credit'' be
eliminated no later than April 1, 1999. The use of purchaser credit was
discontinued in timber sales advertised after March 31, 1999 by making
changes in timber sale contract provisions (File code 2450 letter to
Regional Foresters dated February 19, 1999). As of March 30, 2008, only
$6,000 worth of ineffective purchaser credit was being used to cover
downpayment requirements. Because no additional purchaser credit is
being earned, references to ineffective purchaser credit in the
downpayment regulation are obsolete and unnecessary.
2. In Sec. 223.49(b), the option of using effective purchaser
credit would be eliminated for the same reasons cited above, and to
make downpayments for stewardship contracts optional. Section 323 of
the Department of the Interior and Related Agencies Appropriations Act,
2003 (as contained in division F of Pub. L. 108-7; 16 U.S.C. 2104 Note)
(Stewardship Contracting Act),
[[Page 64289]]
authorizes the Forest Service, until September 30, 2013, to enter into
stewardship contracting projects for up to 10 years with private
persons or public or private entities, by contract or by agreement, to
perform services to achieve land management goals for the national
forests or public lands that meet local and rural community needs. In
addition to other items, the Stewardship Contracting Act authorizes the
Forest Service to apply the value of timber or other forest products
removed under a stewardship project as an offset against the cost of
service work performed under the contract or agreement.
On October 5, 2004, the Forest Service implemented interim
Integrated Resource Timber Contracts FS-2400-13 and FS-2400-13T for use
in stewardship end result contracting. The Forest Service awards
stewardship contracts on the basis of best value as described in the
Federal Acquisition Regulations. (FSH 2409.19, chapter 60). Awarding
stewardship contracts on a best value basis virtually eliminates the
potential for speculative bidding because factors other than price are
used to determine best value.
Further, offsetting the value of timber against the cost of service
work within a stewardship contract accomplishes the dual functions of
providing financial security to the Government and establishing
incentive for the contractor to harvest timber and perform the service
work in a timely manner. In addition, the government's financial
security is safeguarded on most stewardship contracts without a
downpayment. Specifically, the government's risk of financial loss is
minimized if the contractor performs the service work before harvesting
timber. Alternatively, the contractor must pay in advance for any
timber cut prior to performing service work. For these reasons, the
Forest Service has adopted the policy that most stewardship contracts
do not need a downpayment.
However, there can be exceptions. For example, if the value of the
timber greatly exceeded the costs of the services, a downpayment may be
needed to encourage the contractor to harvest the timber in a timely
manner. Forest Service Handbook (FSH) 2409.19, chapter 60, currently
requires the contracting officer to determine what bonds will be
required for individual stewardship contracts. That chapter will be
amended to include determining whether a downpayment should be required
on a stewardship contract.
3. In Sec. 223.49(c) the obsolete references to converting units
of measure other than board feet to board feet would be deleted, and a
requirement would be added to include recalculating the amount of the
downpayment when stumpage rates are redetermined. The downpayment
amount is calculated as a percentage of sale value without regard to
unit of measure for the timber. Timber sale contracts contain
procedures to redetermine stumpage rates for (1) Environmental
modification, (2) catastrophic damage, (3) market change that occurs
after Forest Service orders a suspension or delay, and (4) a market
change emergency rate redetermination. None of these stumpage rate
redetermination procedures includes a process for concurrently
recalculating the amount of the downpayment or periodic payments. The
amount of cash deemed necessary to protect the Government's financial
security and encourage purchasers to harvest timber in a timely manner
is based on a percentage the contract's value at time of award.
Therefore, when the contract value changes substantially as a result of
a stumpage rate redetermination, the downpayment and periodic payments
should also be recalculated commensurate with the change in sale value.
The Government's financial security is maintained because it retains
the same percentage of total contract value before and after the rates
are redetermined.
4. Section 223.49(d) would be amended to clarify when the
downpayment can be released. In Sec. 223.49(d), purchasers of scaled
sales cannot apply the amount deposited as a downpayment to cover other
obligations on the sale until 25 percent of the total bid value of the
sale has been charged and paid for; on tree measurement sales, the
purchaser cannot apply the downpayment to cover other obligations until
stumpage value representing 25 percent of the total bid value of the
sale shown on the timber sale statement of account to have been cut,
removed and paid for. On sales subject to stumpage rate adjustment,
prices can decline so much that the amount of the downpayment can
exceed the value of timber remaining to be harvested without triggering
the release of the downpayment. For example: Sale A contains 4000 ccf
of timber advertised at $50/ccf and bid up to $70/ccf for a total sale
bid value of $280,000. Pursuant to Sec. 223.49(c) the downpayment
amount is $36,000 and pursuant to Sec. 223.49(d), $70,000 of timber
must be charged and paid for before the purchaser can apply the amount
deposited as the downpayment to cover other obligations on the sale. As
a result of stumpage rate adjustments in a rapidly declining market
current contract rates de-escalate to $14/ccf for a total contract
value of $56,000. The purchaser harvests 2000 ccf at $14/ccf and pays
$28,000. The Forest Service is still holding the $36,000 downpayment
even though it is greater than the $28,000 remaining value of the sale.
The Forest Service never intended to hold a downpayment greater
than the value of timber remaining to be harvested which is evidenced
by the following: (1) Sec. 223.49(d), which specifies that for lump
sum sales the downpayment may be applied to payment for release of the
single payment unit, and (2) Sec. 223.49(h), which authorizes release
of the downpayment for sales subject to the additional downpayment
requirement in Sec. 223.49(g) when the value of timber remaining to be
harvested is equal to or less than the amount of the downpayment. The
amendment to Sec. 223.49(d) will allow a downpayment to be released
when it equals or exceeds the value of timber remaining to be
harvested. Section 223.49(d)(1) would be added to address the procedure
on scaled sales and Sec. 223.49(d)(2) would be added to address the
procedure on tree measurement sales.
5. Amend Sec. 223.49(g) to allow the downpayment amount on
contracts subject to Sec. 223.49(e)'s higher downpayment requirement
to be recalculated when stumpage rates are redetermined for the same
reasons cited in the description of changes for Sec. 223.49(c).
6. Remove Sec. 223.49(g)(1) to eliminate the obsolete reference to
ineffective purchaser credit.
7. Remove Sec. 223.49(g)(2) to eliminate obsolete references to
converting units of measure other than board feet to board feet for the
same reasons cited in the description of changes for Sec.
223.49(a)(2).
8. Add Sec. 223.49(k) to allow a temporary reduction of
downpayments. Timber sales on contract forms dated April 2004 and later
contain provisions for temporarily reducing the amount of the
downpayment when Forest Service orders a delay or interruption of the
contract for 30 days or more when the contract would be operating but
for the order. That procedure went through a public review process in
2004 (69 FR 25367), and is included in the proposed Sec. 223.49(k).
This amendment proposes expanding that procedure to include when a
purchaser's scheduled operations are delayed or interrupted for 30
consecutive days or more for any of the following reasons: (1) Forest
Service
[[Page 64290]]
requests or orders purchaser to delay or interrupt operations for
reasons other than breach; (2) a contract term addition pursuant to
purchaser shifting operations to a sale designated by the Forest
Service as in urgent need of harvesting; or (3) an extension of the
contract term authorized upon a determination of substantial overriding
public interest (SOPI), including a market-related contract term
addition (MRCTA), or urgent removal contract term extension under 36
CFR 223.53. During the qualifying period of delay, interruption, or
extension, the downpayment may be reduced to $1000 or two (2) percent
of the downpayment amount stated in the contract, whichever is greater.
Upon purchaser's receipt of the bill for collection and written notice
from the contracting officer that the basis for the delay or
interruption no longer exists, the purchaser shall restore the
downpayment to the full amount stated in the contract within 15 days
after the date the bill for collection is issued. Purchaser shall not
conduct operations until the downpayment amount stated in the contract
is fully restored.
Under normal market conditions, purchasers have an incentive to
harvest enough timber to release the downpayment; that is not always
the case when forest products markets have drastically declined.
Although the Forest Service does not require purchasers to operate
sales receiving additional time pursuant to a SOPI, the current
regulation requires purchasers to maintain their full downpayment
during a SOPI extension. Requiring purchasers to maintain their full
cash downpayment as an inducement to operate a sale receiving
additional time pursuant to a SOPI, or because the Forest Service
requested or authorized a purchaser to harvest other timber in more
urgent need of harvesting is unnecessary. In addition, the Forest
Service does not believe that the temporary downpayment reductions
allowed by Sec. 223.49(k) will impact the regulation's effectiveness
in reducing speculative bidding.
Further, the Forest Service has determined that the benefits of
temporarily reducing downpayments under Sec. 223.49(k) outweigh the
potential increased risks to the government's financial security.
First, the Forest Service believes that temporarily reducing
downpayments on sales that the Agency requested or ordered be
interrupted or delayed minimizes the Agency's potential financial
liability under the contract. Second, allowing purchasers to
temporarily reduce downpayments when they shift their operations to
other timber designated as in urgent need of harvesting may result in
purchasers buying urgent need timber that otherwise would not be sold.
Finally, allowing purchasers to temporarily reduce downpayments on
contracts extended by a SOPI determination may help purchasers and the
Forest Service meet the challenges associated with drastic declines in
forest products markets, which have become apparent during the current
prolonged softwood and hardwood lumber market declines. Following is an
example showing how both parties can benefit from a temporary reduction
in downpayment on sales receiving a SOPI extension pursuant to the
MRCTA regulation.
When a purchaser harvests a sale, the downpayment is released and
the purchaser receives revenue from selling or processing the timber.
The purchaser uses some of that cash to cover the bid guarantee and
downpayment on a new sale that will be operated in the future.
Presently that cash flow is interrupted when harvesting activities are
put on hold because the sale is receiving MRCTA to allow time for
market conditions to improve. The cash tied up covering the downpayment
and lack of revenue being generated from the inactive sale dries up the
cash needed to buy a new sale. This leads to the Government not
receiving a bid on a new sale that is offered at prices reflecting the
depressed market. The purchaser can't operate the high priced sale
receiving MRCTA without suffering losses and can't afford to buy a new
less expensive sale that could be operated. With its revenue stream
broken, the purchaser starts laying off workers and has logging
equipment repossessed as payments fall behind. By the time market
conditions improve the purchaser has lost the ability to complete the
sale that had received the MRCTA and defaults. Defaults are costly for
the Government to process and often lead to loss of industry
infrastructure needed to accomplish forest management objectives in a
cost effective manner and industry infrastructure needed for dependent
communities. The Government can apply the downpayment it is still
holding towards default damages but the purchaser is now gone and not
available to buy and harvest future sales. But the current depressed
market conditions aren't affecting just one purchaser; they are
affecting virtually all purchasers. While many purchasers will be able
hold on until market conditions improve, many will not. As those
numbers increase, there will be an increase in the number of sales not
receiving any bids. The costs of completing forest management work such
as treating fuels in a Wildland Urban Interface area will increase if
that work has to be performed with a service contract that generates no
offsetting revenue to the Government. Temporarily reducing downpayments
as proposed will help a purchaser's cash flow and potentially head off
the drastic economic chain of events described above. This won't
prevent all purchasers from failing or prevent all contracts from
defaulting during drastic market declines. But, the amount of financial
security the Government may forgo by temporarily reducing downpayments
on contracts that ultimately default will be more than offset by the
economic benefits derived from the increased number of contracts that
don't default because of helping purchasers with their cash flow.
Proposed Amendments to the Periodic Payment Requirements
1. Section 223.50(b) would be amended to clarify that periodic
payments are not required for stewardship contracts for the same
reasons that downpayments are not required for stewardship contracts.
2. Section 223.50(f) would be amended to remove obsolete contract
modification procedures and add procedures for recalculating the amount
of the periodic payment(s) following a rate redetermination authorized
under the contract. The obsolete procedures being removed required
purchasers of pre-1991 contracts to make a written request by December
31, 1991, to receive market-related contract term additions. The
addition of procedures for recalculating the amount of the periodic
payment(s) following a rate redetermination are for the same reasons as
cited for Sec. 223.49(c) above.
Conclusion
The proposed rule will modify the downpayment regulation (36 CFR
223.49) and the periodic payments regulation (36 CFR 223.50) to provide
financial relief to timber purchasers during times of significant
market declines. The small amount of financial security the Government
may forgo by temporarily reducing downpayments on contracts that
ultimately default will be more than offset by the economic benefits
derived from the increased number of contracts that don't default
because of helping purchasers with their cash flow.
The proposed rule will add flexibility to the regulations on
downpayment and periodic payments for stewardship sales
[[Page 64291]]
consistent with existing Forest Service policy. Finally, the proposed
rule will eliminate out of date references to purchaser credit and to
modifying contracts awarded prior to July 1, 1991.
Regulatory Certifications
Regulatory Impact
This proposed rule has been reviewed under USDA procedures and
Executive Order 12866 on Regulatory Planning and Review. The Office of
Management and Budget (OMB) has determined that this is not a
significant regulatory action and is not subject to OMB review. This
rule will not have an annual effect of $100 million or more on the
economy nor adversely affect productivity, competition, jobs, the
environment, public health or safety, nor State or local Governments.
This rule will not interfere with an action taken or planned by another
agency nor raise new legal or policy issues. This rule consists of
technical administrative changes to regulations affecting the
administration of commercial timber sales on National Forest lands.
Finally, this action will not alter the budgetary impact of
entitlements, grants, user fees, or loan programs or the rights and
obligations of recipients of such programs. Accordingly, this proposed
rule is not subject to OMB review under Executive Order 12866.
Regulatory Flexibility Act
This proposed rule has been considered in light of the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.), and it is hereby certified that
this rule will not have a significant economic impact on a substantial
number of small entities. This rule makes only technical administrative
changes to existing regulations affecting the administration of
commercial timber sales on National Forest System land. The proposed
rule imposes minimal additional requirements on all timber purchasers
while providing economic relief from current market conditions. The
information required is easily within the capability of small entities
to produce.
Unfunded Mandates Reform
Pursuant to Title II of the Unfunded Mandates Reform Act of 1995,
which the President signed into law on March 22, 1995, the Department
has assessed the effects of this rule on State, local, and Tribal
Governments and the private sector. This proposed rule does not compel
the expenditure of $100 million or more by any State, local, or tribal
Government or anyone in the private sector. Therefore, a statement
under section 202 of the Act is not required.
Environmental Impact
This proposed rule establishes uniform criteria to be followed when
consideration is being given to temporarily reduce or change the
downpayment requirements on a timber sale. Downpayments in timber sales
have been required for many years and this requirement remains. Only
the amount of downpayment is being revised and will be controlled at
the local level by the Timber Sale Contracting Officer. Section 31.12
of Forest Service Handbook 1909.15 (February 15, 2007) excludes from
documentation in an environmental assessment or impact statement
``rules, regulations, or policies to establish Service-wide
administrative procedures, program processes, or instructions'' that do
not significantly affect the quality of the human environment. The
agency's preliminary assessment is that this rule falls within this
category of actions and that no extraordinary circumstances exist which
would require preparation of an environmental assessment or
environmental impact statement. The intent of this proposed rule is to
provide authority to allow for changes in the downpayment requirements
while maintaining financial protection to the Government.
No Takings Implications
This rule has been analyzed in accordance with the principles and
criteria contained in Executive Order 12630. It has been determined
that the rule does not pose the risk of a taking of private property.
There are no private property rights to be affected because the rule
applies to commercial timber sale on National Forest lands.
Civil Justice Reform Act
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. If this rule were adopted, (1) All State and local laws
and regulations that are in conflict with this rule or which would
impede its full implementation would be preempted; (2) no retroactive
effect may be given to this rule; and (3) it does not require
administrative proceedings before parties may file suit in court
challenging it provisions.
Controlling Paperwork Burdens on the Public
This proposed rule does not contain any recordkeeping or reporting
requirements or other information collection requirement as defined in
5 CFR Part 1320, Controlling Paperwork Burdens on the Public.
Accordingly, the review provisions of the Paperwork Reduction Act of
1995 (44 U.S.C. 3501 et seq.) and its implementing regulations at 5 CFR
part 1320 do not apply.
List of Subjects in 36 CFR Part 223
Administrative practice and procedures, Exports, Forests and forest
products, Government contracts, National Forests, Reporting and
recordkeeping requirements.
For the reasons set forth in the preamble, the Forest Service
proposes to amend Part 223 of Title 36 of the Code of Federal
Regulations as follows:
PART 223--SALE AND DISPOSAL OF NATIONAL FOREST SYSTEM TIMBER
1. The authority citation for part 223 continues to read as
follows:
Authority: 90 Stat. 2958, 16 U.S.C. 472a; 98 Stat. 2213; 16
U.S.C. 618, 104 Stat. 714-726, 16 U.S.C. 620-620j, unless otherwise
noted.
Subpart B--[Amended]
2. Revise Sec. 223.49 to read as follows:
Sec. 223.49 Downpayments.
(a) For the purposes of this section, the terms listed in this
paragraph shall have the following meaning:
(1) Total bid value is the sum of the products obtained by
multiplying the rate the purchaser bid for each species by the
estimated volume listed in the contract.
(2) Bid premium is the amount in excess of the advertised value
that a purchaser bids for timber offered.
(3) Lump sum timber sales are premeasured sales where the entire
value of the sale is paid in one payment at time of release for
cutting.
(4) Affiliate. Concerns or individuals are affiliates if directly
or indirectly, either one controls or has the power to control the
other, or a third party controls or has the power to control both. In
determining whether or not affiliation exists, the Forest Service shall
consider all appropriate factors, including, but not limited to, common
ownership, common management, and contractual relationships.
(b) Timber sale contracts shall include provisions that require
purchasers to make a downpayment in cash at the time a timber sale
contract is executed, except that a downpayment is not required for
stewardship contracts unless the contracting officer determines that a
downpayment is needed to ensure the Government's financial security.
(c) The minimum downpayment shall be equivalent to 10 percent of
the total advertised value of each sale, plus 20 percent of the bid
premium, except in those geographic areas where the Chief of the Forest
Service determines that it
[[Page 64292]]
is necessary to increase the amount of the downpayment in order to
deter speculation. The amount of the downpayment shall be redetermined
when contract rates for timber are redetermined under the terms of the
contract for:
(1) Environmental modification,
(2) Catastrophic damage,
(3) Market change, or
(4) An emergency rate redetermination.
For the purpose of recalculating the minimum downpayment, total
advertised value shall be replaced with total redetermined value.
(d) A purchaser cannot apply the amount deposited as a downpayment
to cover other obligations due on that sale until:
(1) On scaled sales stumpage value representing 25 percent of the
total bid value of the sale has been charged and paid for, or the
estimated value of unscaled timber is equal to or less than the amount
of the downpayment; or
(2) On tree measurement sales stumpage value representing 25
percent of the total bid value of the sale is shown on the timber sale
statement of account to have been cut, removed, and paid for, or the
estimated value of timber remaining to be cut, removed and paid for as
shown on the timber sale statement of account is equal to or less than
the amount of the downpayment, except that on lump sum sales, the
downpayment amount may be applied to payment for release of the single
payment unit.
(e) A purchaser or any affiliate of that purchaser awarded a Forest
Service timber sale contract must meet the additional downpayment
requirements of paragraph (g) of this section under the following
circumstances:
(1) The purchaser or its affiliate after September 29, 1988, has
failed to perform in accordance with the terms of a Forest Service or
Bureau of Land Management timber sale contract which results in
notification by a Contracting Officer that a contract has expired
uncompleted or is terminated for cause; and
(2) The estimated value of the unscaled timber on scaled sales, or
the estimated value of the timber outstanding on tree measurement
sales, included in those terminated or expired contracts exceeds
$100,000, and
(3) Unpaid damages claimed by the Government remain outstanding
prior to award of the new sale at issue and corrective action has not
been taken to avoid future deficient performance.
(f) A subsequent final determination by the Contracting Officer or
by a court of competent jurisdiction that a contract was improperly
classified under the criteria in paragraph (e) of this section will
result in the refund or credit of any unobligated portion of the amount
of downpayment exceeding that required by paragraphs (c) and (d) of
this section and the limitations of paragraph (h) of this section on
application of downpayment shall no longer apply.
(g) Notwithstanding the provisions of paragraphs (c) and (d) of
this section, a purchaser meeting the criteria of paragraph (e) of this
section must make a minimum downpayment equal to 20 percent of the
total advertised value of that sale, plus 40 percent of the total bid
premium. This higher downpayment requirement applies throughout the
National Forest System, except in those areas where the Chief of the
Forest Service determines, before advertisement of the sale, that
another downpayment rate is necessary to achieve the management
objectives of the National Forest System. The amount of the downpayment
shall be redetermined in accordance with this paragraph when contract
rates for timber are redetermined under the terms of the contract for:
(1) Environmental modification,
(2) Catastrophic damage,
(3) Market change, or
(4) An emergency rate redetermination.
For the purpose of redetermining the downpayment total advertised
value shall be replaced with total redetermined value.
(h) A purchaser subject to the additional downpayment requirements
of paragraph (g) of this section cannot apply the amount deposited as a
downpayment to other uses until:
(1) On scaled sales, the estimated value of the unscaled timber is
equal to or less than the amount of the downpayment; or
(2) On tree measurement sales, the estimated value remaining to be
cut and removed as shown on the timber sale statement of account is
equal to or less than the amount of the downpayment.
(i) For the purpose of releasing funds deposited as downpayment by
a purchaser subject to paragraph (f) of this section, the Forest
Service shall compute the estimated value of timber as follows:
(1) On scaled sales, the estimated value of the unscaled timber is
the sum of the products obtained by multiplying the current contract
rate for each species by the difference between the advertised volume
and the volume that has been scaled of that species.
(2) On tree measurement sales, the estimated value of the timber
outstanding (that not shown on the timber sale statement of account as
cut and removed) is the sum of the products obtained by multiplying the
current contract rate for each species by the difference between the
advertised volume and the volume that has been shown on the timber sale
statement to have been cut and removed of the species. The current
contract rate for each species is that specified in each Forest Service
timber sale contract.
(j) In order to deter speculation, the Chief of the Forest Service
may increase the period for retention of the downpayment for future
contracts subject to such criteria as the Chief may adopt after giving
the public notice and opportunity to comment.
(k) The Forest Service may temporarily reduce the downpayment when
a purchaser's scheduled operations are delayed, interrupted, or
extended for 30 or more consecutive days for any of the following
reasons:
(1) Forest Service requests or orders purchaser to delay or
interrupt operations for reasons other than breach;
(2) A contract term addition pursuant to purchaser shifting
operations to a sale designated by the Forest Service as in urgent need
of harvesting; or
(3) An extension of the contract term authorized upon a
determination of substantial overriding public interest, including a
market-related contract term addition, or an urgent removal contract
term extension under 36 CFR 223.53.
(l) During the qualifying period of delay, interruption, or
extension that meets the conditions of paragraph (k) of this section,
the Forest Service may reduce the downpayment to $1000 or two (2)
percent of the downpayment amount stated in the contract, whichever is
greater. Upon purchaser's receipt of the bill for collection, and
written notice from the contracting officer that the basis for the
delay, interruption, or extension no longer exists, the purchaser must
restore the downpayment to the full amount stated in the contract
within 15 days after the date the bill for collection is issued.
Purchaser shall not conduct operations until the downpayment amount
stated in the contract is fully restored.
3. In Sec. 223.50 revise paragraphs (b) introductory text and (f),
and add a new paragraph (b)(3) to read as follows:
Sec. 223.50 Periodic payments.
* * * * *
(b) Except for lump sum sales each timber sale contract of more
than one full normal operating season shall provide for periodic
payments. The number of periodic payments required will be dependent
upon the number of
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normal operating seasons within the contract, but shall not exceed two
such payments during the course of the contract. Periodic payments must
be made by the periodic payment determination date, except that the
amount of the periodic payment shall be reduced to the extent that
timber has been removed and paid for by the periodic payment
determination date. Should the payment fall due on a date other than
normal billing dates, the contract shall provide that the payment date
will be extended to coincide with the next timber sale statement of
account billing date.
* * * * *
(3) Notwithstanding paragraph (b) of this section, periodic
payments are not required for stewardship contracts unless the
contracting officer determines that periodic payments are needed to
ensure the government's financial security.
* * * * *
(f) The amount of any periodic payment(s) not yet reached shall be
revised when rates are redetermined under the terms of the contract.
The revised periodic payment amounts shall be based on a recalculated
total contract value using the same procedures described in paragraphs
(c) and (d) of this section . The recalculated total contract value is
the current contract value following the rate redetermination plus:
(1) The total value of timber scaled prior to establishing
redetermined rates in a scale sale, or
(2) The total value of timber shown on the timber sale statement of
account as having been cut, removed and paid for in a tree measurement
sale.
Dated: October 23, 2008.
Abigail R. Kimball,
Chief, Forest Service.
[FR Doc. E8-25799 Filed 10-27-08; 11:15 am]
BILLING CODE 3410-11-P