[Federal Register Volume 73, Number 214 (Tuesday, November 4, 2008)]
[Rules and Regulations]
[Pages 65546-65552]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-26203]
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DEPARTMENT OF AGRICULTURE
Forest Service
36 CFR Part 223
RIN 0596-AC79
Sale and Disposal of National Forest Service System Timber;
Timber Sale Contracts; Market-Related Contract Term Additions
AGENCY: Forest Service, USDA.
ACTION: Final rule.
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SUMMARY: The original Market-Related Contract Term Addition (MRCTA)
regulation was adopted in 1990 to provide financial relief to timber
sale purchasers during cyclic downturns in forest products markets.
However, the current drastic reduction in Forest Product markets, which
began in late 2004, revealed several problems with the existing MRCTA
regulation. Therefore, this final rule is needed to help ensure that
the MRCTA regulation functions as originally intended.
This final rule makes four changes to the MRCTA regulation. First,
the regulation now allows more than 3 years to be added to a contract's
term pursuant to MRCTA when there is a drastic reduction in wood
product prices that lasts for more than 10 out of 12 consecutive
quarters. Second, the regulation now gives contracting officers the
flexibility needed to assign the most appropriate Bureau of Labor
Statistics Producer Price Index (PPI) to a timber sale contract. Third,
the regulation now prevents any single 3-month MRCTA from extending a
contract's term by more than 1 year. Finally, the regulation now
explicitly states what types of sales are ineligible for any MRCTA
relief.
DATES: This rule is effective December 4, 2008.
FOR FURTHER INFORMATION CONTACT: Lathrop Smith, Forest Management
staff, at (202) 205-0858, or Richard Fitzgerald, Forest Management
staff, at (202) 205-1753.
Individuals who use telecommunication devices for the deaf (TDD)
may call the Federal Information Relay Service (FIRS) at 1-800-877-8339
between 8 a.m. and 8 p.m., Eastern Standard Time, Monday through
Friday.
SUPPLEMENTARY INFORMATION:
Background
In order to encourage the retention of a viable established
industry capable of supplying the wood fiber needs of the public for
housing and other products, the Chief of the Forest Service issued a
final rule (36 CFR 223.52) on December 7, 1990, finding that the
substantial overriding public interest justifies MRCTAs whenever there
is a drastic reduction in wood product prices (55 FR 50643). The
Chief's finding was based on the fact that MRCTAs (1) help purchasers
avoid severe financial hardship; (2) ensure that the Federal government
receives payments due from purchasers by reducing the likelihood of
defaults; and (3) help ensure that receipts to States and counties from
timber sales are not adversely affected by contract defaults.
Additionally, MRCTAs help promote stability in the wood products
industry, which helps promote competition, employment, investment,
productivity, innovation and the industry infrastructure needed by the
Forest Service to accomplish land management objectives most
economically done with timber sales. (73 FR 53817).
In accordance with the December 7, 1990, final rule, the Forest
Service uses PPIs to determine when a drastic reduction in wood product
prices has occurred. The Forest Service currently uses the Softwood
Lumber Index (WPU0811), the Hardwood Lumber index (WPU0812) and the
Wood Chips index (PCU3211133211135) to monitor different wood products.
Except for sales of timber subject to rapid deterioration, each
contract over 1 year in length is assigned the index that represents
more than one-half of the advertised volume. When a drastic reduction
in the assigned index has occurred for two consecutive quarters during
the contract period, the Forest Service notifies purchasers and, upon a
purchaser's written request, adds 1 year to the contract term. For each
additional consecutive quarter a drastic reduction occurs, the Forest
Service, upon a purchaser's written request, adds an additional 3-month
period to the normal operating season of the contract.
Under the current rule, no more than twice the original contract
length or 3 years, whichever is less, may be added to a contract's term
by MRCTA. Pursuant to the National Forest Management Act of 1976 (16
U.S.C. 472a(c)), total contract length cannot exceed 10 years as the
result of a MRCTA. Further, MRCTA may not be granted for those portions
of the contracts (1) with a required completion date other than the
contract termination date, (2) with timber the Forest Service
determines is in need of urgent removal, or (3) where the Forest
Service determines timber deterioration or resource damage may result
from delay.
Since the MRCTA rule was adopted in 1990, a drastic reduction in
softwood lumber prices occurred for five quarters in 1994-1995, three
quarters in 1998, six quarters in 2000-2001, and for 12 quarters
beginning in September 2005, through June 2008. The hardwood index has
also shown a drastic reduction for three quarters in 2005-2006 and in
the first two quarters of 2008. As a result, many purchasers requested
and received MRCTA for qualifying timber sales.
The MRCTA regulation's intent is to avert widespread contract
defaults and attendant adverse economic impacts on industry and
dependent communities. Using MRCTA to add no more than 3 years to a
contract's term met that objective during previous drastic reductions.
However, when a drastic reduction in wood prices continues for more
than 3 straight years, like the current softwood lumber market,
[[Page 65547]]
purchasers holding high priced sales bid when the markets were stronger
face severe economic hardship without the ability to rely on additional
MRCTA for relief.
To respond to the poor market conditions and associated adverse
economic impacts on industry and dependent communities, Section 8401 of
the Food, Conservation, and Energy Act of 2008, Public Law No. 110-246,
122 Stat. 1651 (June 18, 2008), authorized the Forest Service to use
MRCTA to add up to 4 years to the original length of contracts awarded
prior to January 1, 2007. While section 8401 provided immediate relief
to contracts that had or were about to reach the 3-year limit, the
committee notes for section 8401 state ``the Managers encourage the
Forest Service to revise the existing regulations within 90 days of
enactment of this Act to reflect provisions of this section for future
market problems.''
In response, on September 3, 2008, the Forest Service sought public
comment on proposed amendments to the MRCTA regulation. (73 FR 51388).
Agency Response to Major Public Comments
The Forest Service received comments responsive to the merits of
the rule from three respondents. Two of the responses were from timber
industry associations who supported the intent of the proposed changes.
However, one of those respondents recommended changes. The third
response was from an environmental organization that raised several
issues related to the rule. Agency responses to the public comments are
as follows:
Comment: The proposed amended rules would have an overall positive
effect on the Forest Service timber sale program and are in the best
interest of the people of the United States. The Forest Service should
move ahead with amending the regulations to expand the maximum amount
of additional contract time contracts can receive during prolonged
periods of market price reductions and to modify the procedure for
selecting the proper producer price index.
Response: While these are statements for which no response is
necessary, it is noted that all three respondents specifically
supported the proposed changes to establishing the appropriate producer
price index.
Comment: We are concerned that the agency has proposed allowing
additional quarters of MRCTA only after the relevant producer price
index has triggered for 11 consecutive quarters. This would potentially
exclude numerous contracts if there is a temporary rebound in the
market with the longer term decline trend resuming quickly thereafter.
``We strongly urge the agency to modify the final rule to allow
additional quarters of MRCTA when the relevant PPI triggers for 6 of
the 8 previous quarters, allowing MRCTA up to 10 years. At this point,
a sale may only be extended by a determination of the Chief that doing
so will lead to better utilization of the forest resources.''
Response: The comment addresses three issues: (1) The number of
qualifying quarters needed to trigger additional MRCTA time; (2) the
proposed requirement that those triggering quarters must be
consecutive; and (3) the 10-year limit on total contract length
pursuant to the National Forest Management Act of 1976 (NFMA). These
issues will be responded to separately as follows:
(1) Under the old rule, the maximum amount of time that could be
added to a contract's term by MRCTA was 3 years. The proposed rule was
designed to only allow MRCTA to extend a contract's term beyond 3 years
when there is a drastic reduction in forest products markets that lasts
over 2\1/2\ years, like the current decline and the decline in the
early 1980s. The Forest Service looked at all the trigger periods for
the softwood lumber and hardwood lumber PPIs from the late 1970s to the
present and used the two longest declines as a basis for the proposed
rule. Table 1 below shows quarters triggering MRCTA for the softwood
lumber and hardwood lumber PPIs since 1978. Since the MRCTA procedures
were not adopted until December 1990, and have been amended several
times since then, the data shows quarters that would have qualified
using the procedures in the rule being amended. Also, because the
Bureau of Labor Statistics PPIs are not adjusted for inflation, the
Forest Service calculates a relative index adjusted for inflation that
allows comparisons to be made over time on a constant dollar basis.
Qualifying quarters occur when the relative index is less than 88.5
percent of the average high of the four highest quarters in the
previous eight quarters.
Table 1--Bureau of Labor Statistics PPI Data
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Avg. high Avg. high
Relative 4 of 8 88.5% of Relative 4 of 8 88.5% of
Qtr/yr softwood prior high 4 Qualifying quarter hardwood prior high 4 Qualifying quarter
index qtrs qtrs index qtrs qtrs
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Sep-78............................... 155.8 152.6 135.0 ...................... 131.7 123.8 109.5
Dec-78............................... 155.3 154.6 136.9 ...................... 130.9 126.7 112.1
Mar-79............................... 154.0 155.3 137.5 ...................... 129.9 129.3 114.5
Jun-79............................... 151.5 155.4 137.5 ...................... 127.8 130.4 115.4
Sep-79............................... 155.9 155.4 137.5 ...................... 122.7 130.4 115.4
Dec-79............................... 134.4 155.2 137.4 Yes................... 118.6 130.4 115.4
Mar-80............................... 128.8 155.2 137.4 Yes................... 112.6 130.4 115.4 Yes.
Jun-80............................... 115.2 155.2 137.4 Yes................... 107.6 130.4 115.4 Yes.
Sep-80............................... 118.4 155.2 137.4 Yes................... 102.9 130.1 115.1 Yes.
Dec-80............................... 117.9 154.2 136.4 Yes................... 101.0 127.9 113.2 Yes.
Mar-81............................... 110.9 148.9 131.8 Yes................... 98.5 124.8 110.4 Yes.
Jun-81............................... 112.7 142.7 126.3 Yes................... 99.0 120.4 106.6 Yes.
Sep-81............................... 105.6 134.4 118.9 Yes................... 99.8 115.4 102.1 Yes.
Dec-81............................... 101.2 124.9 110.5 Yes................... 99.8 110.4 97.7
Mar-82............................... 99.6 120.1 106.3 Yes................... 99.6 106.0 93.8
Jun-82............................... 102.0 116.1 102.7 Yes................... 100.1 102.8 91.0
Sep-82............................... 99.8 115.0 101.8 Yes................... 100.0 101.0 89.3
Dec-82............................... 99.8 111.8 98.9 ...................... 100.9 100.2 88.7
Mar-83............................... 114.4 107.8 95.4 ...................... 103.1 100.2 88.7
Jun-83............................... 122.5 108.7 96.2 ...................... 105.4 101.0 89.4
Sep-83............................... 109.4 111.1 98.3 ...................... 109.0 102.4 90.6
Dec-83............................... 109.5 112.1 99.2 ...................... 114.1 104.6 92.6
[[Page 65548]]
Mar-84............................... 114.5 114.0 100.8 ...................... 115.5 107.9 95.5
Jun-84............................... 105.4 115.2 102.0 ...................... 119.5 111.0 98.2
Sep-84............................... 101.5 115.2 102.0 Yes................... 119.6 114.5 101.4
Dec-84............................... 102.7 115.2 102.0 ...................... 115.8 117.2 103.7
Mar-85............................... 104.8 115.2 102.0 ...................... 115.8 117.6 104.1
Jun-85............................... 112.6 114.0 100.9 ...................... 113.4 117.7 104.2
Sep-85............................... 102.4 111.5 98.7 ...................... 113.0 117.7 104.2
Dec-85............................... 98.5 110.5 97.8 ...................... 110.7 117.7 104.2
Mar-86............................... 105.7 109.3 96.8 ...................... 116.3 117.7 104.2
Jun-86............................... 108.4 107.1 94.8 ...................... 118.2 117.8 104.3
Sep-86............................... 111.8 107.9 95.5 ...................... 119.8 117.5 104.0
Dec-86............................... 108.9 109.6 97.0 ...................... 121.2 117.5 104.0
Mar-87............................... 112.7 110.4 97.7 ...................... 122.7 118.9 105.2
Jun-87............................... 112.5 111.5 98.7 ...................... 122.8 120.5 106.6
Sep-87............................... 118.7 111.5 98.7 ...................... 123.9 121.6 107.6
Dec-87............................... 112.3 113.9 100.8 ...................... 126.1 122.7 108.5
Mar-88............................... 114.6 114.1 100.9 ...................... 126.8 123.9 109.6
Jun-88............................... 114.1 114.6 101.5 ...................... 124.3 124.9 110.5
Sep-88............................... 110.4 115.0 101.8 ...................... 119.2 125.3 110.9
Dec-88............................... 107.2 115.0 101.8 ...................... 116.7 125.3 110.9
Mar-89............................... 111.1 115.0 101.8 ...................... 114.3 125.3 110.9
Jun-89............................... 116.5 115.0 101.8 ...................... 113.9 125.3 110.9
Sep-89............................... 114.9 116.0 102.6 ...................... 113.9 125.3 110.9
Dec-89............................... 108.2 115.0 101.8 ...................... 114.6 124.1 109.8
Mar-90............................... 112.3 115.0 101.8 ...................... 114.6 121.8 107.8
Sep-90............................... 109.9 114.4 101.3 ...................... 115.0 118.7 105.1
Sep-90............................... 103.0 113.7 100.6 ...................... 111.0 116.4 103.0
Dec-90............................... 97.8 113.7 100.6 Yes................... 109.6 115.2 102.0
Mar-91............................... 100.9 113.7 100.6 ...................... 110.9 114.6 101.5
Jun-91............................... 118.7 113.4 100.4 ...................... 109.6 114.5 101.4
Sep-91............................... 108.6 114.0 100.8 ...................... 110.1 114.5 101.3
Dec-91............................... 111.9 112.4 99.5 ...................... 112.6 113.8 100.7
Mar-92............................... 131.7 113.2 100.2 ...................... 115.6 113.3 100.3
Jun-92............................... 125.6 118.1 104.5 ...................... 118.2 113.5 100.5
Sep-92............................... 124.8 122.0 108.0 ...................... 122.7 114.3 101.2
Dec-92............................... 135.7 125.2 110.8 ...................... 128.7 117.3 103.8
Mar-93............................... 178.6 129.5 114.6 ...................... 133.0 121.3 107.3
Jun-93............................... 155.5 142.9 126.5 ...................... 139.2 125.7 111.2
Sep-93............................... 156.6 150.4 133.1 ...................... 140.7 130.9 115.8
Dec-93............................... 176.1 156.6 138.6 ...................... 140.1 135.4 119.8
Mar-94............................... 175.6 166.7 147.5 ...................... 140.3 138.2 122.3
Jun-94............................... 165.8 171.7 152.0 ...................... 139.9 140.0 123.9
Sep-94............................... 159.4 174.0 154.0 ...................... 139.5 140.2 124.1
Dec-94............................... 154.9 174.0 154.0 ...................... 138.7 140.2 124.1
Mar-95............................... 149.6 174.0 154.0 Yes................... 137.2 140.2 124.1
Jun-95............................... 138.6 169.2 149.8 Yes................... 133.4 140.2 124.1
Sep-95............................... 143.7 169.2 149.8 Yes................... 132.2 140.2 124.1
Dec-95............................... 134.7 169.2 149.8 Yes................... 130.0 139.9 123.8
Mar-96............................... 138.1 163.9 145.1 Yes................... 130.1 139.6 123.5
Jun-96............................... 153.8 157.4 139.3 ...................... 127.7 138.8 122.9
Sep-96............................... 159.0 154.4 136.7 ...................... 127.5 137.2 121.4
Dec-96............................... 156.8 154.3 136.6 ...................... 128.6 135.4 119.8
Mar-97............................... 165.4 154.8 137.0 ...................... 134.5 133.2 117.9
Jun-97............................... 166.3 158.7 140.5 ...................... 136.6 132.5 117.3
Sep-97............................... 158.4 161.9 143.2 ...................... 138.7 133.3 118.0
Dec-97............................... 153.6 162.3 143.6 ...................... 140.6 135.0 119.5
Mar-98............................... 155.3 162.3 143.6 ...................... 144.2 137.6 121.8
Jun-98............................... 141.9 162.3 143.6 Yes................... 143.7 140.0 123.9
Sep-98............................... 141.5 162.3 143.6 Yes................... 143.9 141.8 125.5
Dec-98............................... 142.6 161.7 143.1 Yes................... 143.5 143.1 126.6
Mar-99............................... 157.7 161.3 142.8 ...................... 143.5 143.8 127.3
Jun-99............................... 164.5 159.4 141.1 ...................... 141.1 143.8 127.3
Sep-99............................... 154.2 159.0 140.7 ...................... 138.5 143.8 127.3
Dec-99............................... 150.9 157.9 139.8 ...................... 142.6 143.8 127.3
Mar-00............................... 147.6 157.9 139.8 ...................... 141.5 143.8 127.3
Jun-00............................... 134.2 156.8 138.8 Yes................... 139.4 143.6 127.1
Sep-00............................... 124.4 156.8 138.8 Yes................... 138.7 143.4 126.9
Dec-00............................... 121.1 156.8 138.8 Yes................... 137.0 142.8 126.4
Mar-01............................... 121.9 156.8 138.8 Yes................... 135.8 142.2 125.8
Jun-01............................... 138.2 154.3 136.5 ...................... 133.4 141.1 124.9
[[Page 65549]]
Sep-01............................... 130.1 147.7 130.7 Yes................... 134.2 140.6 124.4
Dec-01............................... 125.7 142.7 126.3 Yes................... 138.4 140.6 124.4
Mar-02............................... 137.3 137.5 121.7 ...................... 136.4 139.5 123.5
Jun-02............................... 130.0 134.9 119.4 ...................... 135.3 138.4 122.5
Sep-02............................... 128.1 133.9 118.5 ...................... 135.1 137.6 121.8
Dec-02............................... 124.0 133.9 118.5 ...................... 136.0 136.9 121.2
Mar-03............................... 116.5 133.9 118.5 Yes................... 130.9 136.7 120.9
Jun-03............................... 119.5 133.9 118.5 ...................... 137.7 136.5 120.8
Sep-03............................... 132.7 131.4 116.3 ...................... 137.9 137.1 121.4
Dec-03............................... 128.0 132.0 116.9 ...................... 138.8 137.6 121.8
Mar-04............................... 143.0 132.0 116.9 ...................... 138.2 137.7 121.9
Jun-04............................... 148.5 133.5 118.1 ...................... 135.7 138.1 122.3
Sep-04............................... 156.5 138.1 122.2 ...................... 136.3 138.1 122.3
Dec-04............................... 130.6 145.2 128.5 ...................... 132.8 138.1 122.3
Mar-05............................... 140.0 145.2 128.5 ...................... 128.0 138.1 122.3
Jun-05............................... 135.8 147.0 130.1 ...................... 126.7 138.1 122.3
Sep-05............................... 124.8 147.0 130.1 Yes................... 121.0 137.8 121.9 Yes.
Dec-05............................... 119.8 147.0 130.1 Yes................... 120.9 137.2 121.4 Yes.
Mar-06............................... 127.4 147.0 130.1 Yes................... 120.5 135.7 120.1 Yes.
Jun-06............................... 117.1 145.2 128.5 Yes................... 117.8 133.2 117.9 No.
Sep-06............................... 108.9 140.7 124.5 Yes................... 117.7 130.9 115.9
Dec-06............................... 100.1 133.4 118.1 Yes................... 117.9 127.1 112.5
Mar-07............................... 103.2 132.0 116.8 Yes................... 114.0 124.1 109.9
Jun-07............................... 100.3 127.0 112.4 Yes................... 111.0 122.2 108.2
Sep-07............................... 97.7 122.3 108.2 Yes................... 110.8 120.0 106.2
Dec-07............................... 89.0 118.3 104.7 Yes................... 106.8 119.3 105.5
Mar-08............................... 80.6 114.2 101.0 Yes................... 100.3 118.5 104.8 Yes.
Jun-08............................... 83.4 107.4 95.1 Yes................... 92.5 116.8 103.4 Yes.
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The situation described by the commenter of a brief break in
triggering MRCTA followed by a continuation of a long term decline has
merit. Table 1 shows the current decline with the softwood index
triggering for 12 consecutive quarters beginning with the 3rd quarter
2005. Even though it was a qualifying quarter, the index showed a
slight rebound in the 1st quarter of 2006. If that rebound had been
high enough to prevent that single quarter from triggering, instead of
having 12 consecutive qualifying quarters, only eleven of the previous
12 quarters would have been qualifying quarters and the longest
consecutive string of qualifying quarters would have been nine. That
minor break would not have been sufficient to change the need for
additional contract time provided by the 2008 Farm Bill and the final
rule. Table 1 contains another example pertinent to this issue. The
softwood lumber index triggered for four consecutive quarters beginning
with the 2nd quarter 2000; didn't trigger in the 2nd quarter 2001, and
then triggered for two additional quarters. Using the old rule, a sale
awarded prior to April 1, 2000, could have its contract term extended
by 1 year for the first two qualifying quarters, plus 3 months of
normal operating season time for each of the second two qualifying
quarters, and 1 year for the last two qualifying quarters following the
break. Depending on the length of the normal operating season, the
sale's term would have been extended by 2\1/2\ to 3 years. Using the
above example, the commenter's suggestion of allowing additional MRCTA
when the PPI triggers for 6 of the previous 8 quarters, could result in
the sale being extended by more than 3 years. However, while the Forest
Service agrees that requiring 11 consecutive qualifying quarters before
triggering additional MRCTA is overly limiting, the commenter's
suggestion is unacceptable because it could trigger additional MRCTA in
a market decline as short as 1\1/2\ years. Accordingly the rule has
been revised to allow more than 3 years to be added to a contract's
term pursuant to MRCTA when there is a drastic reduction in wood
product prices that lasts for more than 10 out of 12 consecutive
quarters.
The Forest Service chose at least 10 of the previous 12 quarters as
the trigger point because most contracts are already eligible to have
their terms extended by 3 years pursuant to MRCTA. The Forest Service
does not believe that there is a need to allow MRCTA to extend a
contract's term by more than 3 years unless there is a drastic
reduction in the market that lasts more than 2\1/2\ years (10
quarters). The rationale for allowing 3 years of MRCTA for a 2\1/2\
year market decline is that after recovery begins purchasers need a
reasonable amount of time to conclude operations where they are were
working and then move back to sales that were receiving MRCTA. Up to 6
months is considered reasonable. The final rule has been revised
accordingly.
(2) The commenter also recommended allowing up to 10 years of
MRCTA. Following that recommendation would allow contracts to exceed 10
years in total length as the result of MRCTA. For example, 3-or 4-year
contracts could become 13 or 14 year contracts. Section 472a(c) of NFMA
provides, in part, as follows: ``Unless there is a finding by the
Secretary of Agriculture that better utilization of the various forest
resources (consistent with the provisions of the Multiple-Use,
Sustained-Yield Act of 1960) will result, sales contracts shall be for
a period not to exceed ten years.'' Considering the language in NFMA,
the Forest Service believes the decision to extend any timber sale or
group of timber sales beyond 10 years in total length should be made on
a case-by-case basis. No change will be made in the final rule relative
to the 10-year limit on total contract length.
Comment: ``We are extremely concerned and strongly opposed to the
proposed change to the regulation
[[Page 65550]]
which would disqualify any contract for which all advertised species
reach base rates from receiving additional MRCTA.''
Response: The commenter noted that many sales at base rates may
include high associated charges for such things as brush disposal or
the base rates may have been increased substantially for essential
regeneration. In addition, a sale at base rates may have high
operational costs for such things as helicopter logging or road
construction. As a result, even though the stumpage rates for one or
more species included in a sale are set at the lowest rate the Forest
Service may accept for the timber, the costs of operating the sale may
still be very high, especially during a depressed market period. The
Forest Service agrees with the commenter and has revised the final rule
accordingly.
Comment: One respondent believed that additional analysis and
direction should be included before issuing a final rule. The
respondent disagreed with the Agency's conclusion that the rule has no
direct effect upon the amount, location, or manner of timber offered
for purchase. The respondent believed extensions of timber sale
contracts may have a significant effect on the environment by delaying
needed vegetative and habitat management work such that adverse effects
to habitat, species, or people could accrue. The respondent suggested
making changes in sections of the Forest Service Handbook and Manual,
and agency National Environmental Policy Act (NEPA) procedures as a
better way to accomplish Forest Service management objectives while
responding to agency and industry concerns regarding market conditions.
The respondent also noted that the citation to the categorical
exclusion was out of date.
Response: The Forest Service agrees that contract extensions might
in some instances have environmental consequences. However, this rule
is not self-executing and does not by itself cause contract extensions
to occur. Further, this rule is categorically excluded from
documentation in an environmental assessment or an environmental impact
statement.
The Forest Service disagrees that its NEPA policies and procedures
should be changed to ``better accomplish Forest Service management
objectives while responding to agency and industry concerns regarding
market conditions.'' However, the Forest Service agrees that additional
NEPA analysis might be necessary when a project is authorized or when a
contract receives additional time under this rule. The determination of
whether such analysis is necessary will be made by the responsible
official in full accordance with the law. The Forest Service's NEPA
policies and procedures currently provide for such situations and do
not need to be changed. This notice's regulatory certification section
now correctly refers to 36 CFR 220.6(d)(2).
Comment: We cannot find any definition for ``urgent removal'' in 36
CFR part 223. It is unclear how the agency maintains consistency in the
application of this term and how the lack of clarity would affect
market related extensions.
Response: The commenter is correct that the term ``urgent removal''
is not specifically defined in 36 CFR part 223. However, Sec.
223.53(b) and Forest Service Handbook (FSH) 2409.18, chapter 50,
section 55.21, addresses sales in urgent need of harvesting, as dead
and dying timber subject to rapid deterioration as the result of
catastrophic events such as fire, disease or weather-related damage.
Other examples of timber in need for urgent removal are addressed in
the following comment/response. Ultimately, the determination of
whether timber in a specific sale or project is in need of urgent
removal is a decision the Forest Service makes on a case-by-case basis.
Comment: If fuel reduction and/or HFRA projects are considered
urgent, then the regulations at 36 CFR part 223 should explicitly state
so to eliminate any confusion as to whether they are eligible for an
extension. The same type of specificity should apply to projects
proposing to use commercial timber sales to accomplish needed
endangered or threatened species habitat work under the Endangered
Species Act.
Response: Section 223.52(c)(1) of the old rule specifies that
additional contract time may not be granted for those portions of the
contract which have a required completion date, or for those portions
where the Forest Service determines that the timber is in need of
urgent removal, or that timber deterioration or resource damage will
result from delay. While this appears to address the concerns raised in
the comment, Sec. 223.52(c)(1) only pertains to portions of the sale
area. Addressing the sale as a whole, Sec. 223.52(a)(3) in the old
rule specifies that a market-related contract term addition provision
shall not be included in contracts where the sale has a primary
objective of harvesting timber subject to rapid deterioration. The
Forest Service agrees that many sales, in addition to those where the
timber is subject to rapid deterioration, have timing needs that if not
met may jeopardize the purpose and intended objective of the project.
Examples include treating hazardous fuels in a wildland-urban interface
area, removing hazardous trees adjacent to developed sites such as
roads and campgrounds, and sales where trees are designated by diameter
and delay could change the treatment as the result of trees either
growing into or out of the diameter range specified for treatment. But
to attempt to list specific classes of sales such as HFRA projects as
the respondent suggests runs the risk of being too exclusive. In order
to provide resource managers with the flexibility to determine which
sales should be excluded from receiving MRCTA, Sec. 223.52(a)(3) has
been amended in the final rule to state that a market-related contract
term addition provision shall not be included in contracts where
fulfilling the primary objective is dependent upon timely completion of
harvest. The final rule also requires notifying purchasers in the
prospectus when a sale is precluded from receiving a MRCTA.
Regulatory Certifications
Regulatory Impact
This final rule has been reviewed under USDA procedures and
Executive Order 12866 on Regulatory Planning and Review. It has been
determined that this final rule is not a significant regulatory action
and is not subject to Office of Management and Budget (OMB) review.
This final rule will not have an annual effect of $100 million or more
on the economy and will not adversely affect the economy, a sector of
the economy, productivity, competition, jobs, the environment, public
health or safety, or State, local or tribal governments or communities.
This final rule will not interfere with an action taken or planned by
another agency nor raise new legal or policy issues. Little or no
effect on the national economy will result from this regulatory action,
which consists of necessary, technical changes to the regulation
governing market-related contract term additions. Using the replacement
indices and the modified formula contained in this final rule, the
Forest Service will be able to determine whether a drastic decline in
wood products prices has occurred. 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 final rule is not subject to OMB review under
Executive Order 12866.
Moreover, this final rule has been considered in light of the
Regulatory Flexibility Act (5 U.S.C. 610 et seq.), and it is hereby
certified that this action
[[Page 65551]]
will not have a significant economic impact on a substantial number of
small entities as defined by that act. As revised in this final rule,
the Forest Service will be able to grant additional market-related
contract term additions to small and large purchasers when there is a
prolonged drastic reduction in wood product prices. This will have the
intended effect of averting massive defaults and attendant adverse
economic impacts on industry and dependent communities by providing
purchasers additional contract time until markets improve.
Proper Consideration of Small Entities
This final rule has been considered in light of Executive Order
13272 regarding proper consideration of small entities and the Small
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), which
amended the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). The
Forest Service has determined that this action will not have a
significant economic impact on a substantial number of small entities
as defined by SBREFA.
To the extent that the final rule imposes additional requirements
on small entities, these requirements are the minimum necessary to
protect the public interest, are not administratively burdensome or
costly to meet, and are well within the capability of small entities to
perform.
Unfunded Mandates Reform
Pursuant to Title II of the Unfunded Mandates Reform Act of 1995 (2
U.S.C. 1531-1538), which the President signed into law on March 22,
1995, the Forest Service has assessed the effects of this final rule on
State, local, and tribal governments and the private sector. This final
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 final rule concerns the extension of timber sale contracts
when warranted by a drastic reduction in wood product prices, and, as
such, has no direct effect upon the amount, location, or manner of
timber offered for purchase. Code of Federal Regulations at 36 CFR
220.6(d)(2) excludes from documentation in an environmental assessment
or impact statement ``rules, regulations, or policies to establish
Service-wide administrative procedures, program processes, or
instructions.'' The agency's 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.
Controlling Paperwork Burdens on the Public
This final rule includes information collection requirements as
defined in 5 CFR part 1320. Accordingly, the review provisions of the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501, et seq.) and
implementing regulations at 5 CFR part 1320 apply. The Office of
Management and Budget (OMB) has approved the collection of this
information under OMB control number 0596-0212.
Energy Effects
This final rule has been reviewed under Executive Order 13211,
Actions Concerning Regulations That Significantly Affect Energy Supply,
Distribution, or Use. It has been determined that this final rule does
not constitute a significant energy action as defined in the Executive
order.
Federalism
The agency has considered this final rule under the requirements of
Executive Order 13132, Federalism. The agency has made an assessment
that the final rule conforms with the federalism principles set out in
this Executive Order; would not impose any compliance costs on the
States; and would not have substantial direct effects on the States, on
the relationship between the national government and the States, or on
the distribution of power and responsibilities among the various levels
of government.
Consultation and Coordination With Indian Tribal Governments
This final rule does not have tribal implications as defined in
Executive Order 13175, Consultation and Coordination with Indian Tribal
Governments, and, therefore, advance consultation with tribes is not
required.
No Takings Implications
This final rule has been analyzed in accordance with the principles
and criteria contained in Executive Order 12630, and it has been
determined that the rule does not pose the risk of a taking of
Constitutionally-protected private property.
Civil Justice Reform
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. The agency has not identified any State or local
laws or regulations that are in conflict with this regulation or that
would impede full implementation of this rule. In any event, after
adoption of this final rule: (1) All State and local laws or
regulations that conflict with this rule or that would impede full
implementation would be preempted; (2) no retroactive effect would be
given to this final rule, except as described herein; and (3) the final
rule would not require the use of administrative proceedings before
parties could file suit in court challenging its provisions.
List of Subjects in 36 CFR Part 223
Administrative practice and procedure, Exports, Forests and forest
products, Government contracts, National forests, Reporting and
recordkeeping requirements.
0
Therefore, for the reasons set forth in the preamble, Part 223 of Title
36 of the Code of Federal Regulations is amended as follows:
PART 223--SALE AND DISPOSAL OF NATIONAL FOREST SYSTEM TIMBER
0
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.
0
2. In Sec. 223.52 revise paragraphs (a)(2), (a)(3), (c)(1) through
(c)(4) and add a new paragraph (c)(5) to read as follows:
Sec. 223.52 Market-related contract term additions.
(a) * * *
(2) The contract term addition provision of the contract must
specify the index to be applied to each sale. The Forest Supervisor
shall determine and select from paragraph (b) of this section, the
index to be used for each sale based on the species and product
characteristics, by volume, being harvested on the sale. The index
specified shall represent more than one-half of the advertised volume.
If none of the indices in paragraph (b) of this section represent more
than one-half of the advertised volume, the index specified shall
represent the species product combination representing the highest
percentage of volume for which there is an index. When the Forest
Supervisor determines that the species and potential product
characteristics are such that more than one index could be used, the
prospectus will state that the Contracting Officer may, upon the
purchaser's written request, select an alternative index from paragraph
(b) of this section, and may modify the contract by mutual agreement,
at time of contract execution, to include an alternative index that the
Contracting Officer has determined represents the
[[Page 65552]]
highest percentage of products the purchaser intends to produce or have
produced from the sale. Purchasers seeking a change of index at time of
award must substantiate the need for an alternative index by providing
the Contracting Officer with a written request that includes a list of
products by volume the purchaser intends to produce or expects will be
produced from the timber on that sale. In the event a mutual agreement
to modify a contract to include an alternative index is not reached at
time of contract execution, the index specified in the sample contract
shall apply.
(3) A market-related contract term addition provision shall not be
included in contracts where the primary management objective requires
prompt removal of the timber, such as, timber is subject to rapid
deterioration, timber is in a wildland-urban interface area, or hazard
trees adjacent to developed sites.
* * * * *
(c) * * *
(1) Additional contract time may not be granted for those portions
of the contract:
(i) With a required completion date;
(ii) Where the Forest Service determines that the timber is in need
of urgent removal;
(iii) Where timber deterioration or resource damage may result from
delay; or
(iv) Where included timber is designated by diameter and delay may
change the treatment as a result of trees growing into or out of the
specified diameter range(s).
(2) For each additional consecutive quarter in which a contract
qualifies for market-related contract term addition, the Forest Service
will, upon the purchaser's written request, add an additional 3 months
during the normal operating season to the contract, except that no
single 3-month addition shall extend the term of a contract by more
than 1 year.
(3) No more than 3 years shall be added to a contract's term by
market-related contract term addition unless the following conditions
are met:
(i) The sale was awarded after December 31, 2006;
(ii) A drastic reduction in wood product prices occurred in at
least ten of twelve consecutive quarters during the contract term, but
not including the quarter in which the contract was awarded; and
(4) For each qualifying quarter meeting the criteria in paragraph
(c)(3)(ii) of this section, the Forest Service will, upon the
purchaser's written request, add an additional 3 months during the
normal operating season to the contract, except no single 3-month
addition shall extend the term of a contract by more than 1 year.
(5) In no event shall a revised contract term exceed 10 years as a
result of market-related contract term addition.
* * * * *
Dated: October 24, 2008.
Mark Rey,
Under Secretary, Natural Resources and Environment.
[FR Doc. E8-26203 Filed 11-3-08; 8:45 am]
BILLING CODE 3410-11-P