[Federal Register Volume 61, Number 151 (Monday, August 5, 1996)]
[Notices]
[Pages 40602-40603]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19915]
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Notices
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains documents other than rules
or proposed rules that are applicable to the public. Notices of hearings
and investigations, committee meetings, agency decisions and rulings,
delegations of authority, filing of petitions and applications and agency
statements of organization and functions are examples of documents
appearing in this section.
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Federal Register / Vol. 61, No. 151 / Monday, August 5, 1996 /
Notices
[[Page 40602]]
DEPARTMENT OF AGRICULTURE
Forest Service
Extension of Certain Timber Sale Contracts; Finding of
Substantial Public Interest
AGENCY: Forest Service, USDA.
ACTION: Notice of additional extension.
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SUMMARY: Government indices indicate a major downtown in the lumber
market during 1994 and 1995. While many National Forest System timber
sale contracts contain provisions to extend termination dates during
severely declining markets, the mechanisms used in some areas of the
country to measure severely declining markets do not appear to measure
the softwood lumber market. Accordingly, on April 2, 1996, the Under
Secretary of Agriculture determined that it was in the substantial
overriding public interest to extend for 120 days certain National
Forest System timber sale contracts which were awarded prior to January
1, 1995j, in order to evaluate alternatives to existing market-related
contract term addition rules for both existing and new contracts. The
study indicates that contract extension is the best alternative to
address existing contracts. Accordingly, the Chief of the Forest
Service is now granting an additional extension of 1 year for contracts
awarded prior to January 1, 1995, except for salvage sales and sales in
western Washington and western Oregon. The intended effect is to
minimize contract defaults, mill closures, and company bankruptcies.
DATES: The Chief's new determination was made on July 31, 1996.
FOR FURTHER INFORMATION CONTACT: Rex Baumback, Timber Management Staff,
Forest Service, USDA, (202) 205-0855.
SUPPLEMENTARY INFORMATION: The Forest Service sells timber from
National Forest System lands to individuals or companies. Each sale is
formalized by execution of a contract between the purchaser and the
Forest Service. The contract sets forth the explicit terms and
provisions of the sale, including such matters as the estimated volume
of timber to be removed, period for removal, price to be paid to the
Government, road construction and logging requirements, and
environmental protection measures to be taken. The average contract
period is approximately 3 years, while a few contracts have terms of 7
or 8 years.
The National Forest Management Act of 1976 (16 U.S.C. 472a(c))
provides that the Secretary of Agriculture shall not extend any timber
sale contract period with an original term of 2 years or more, unless
the purchaser has diligently performed in accordance with an approved
plan of operations or the ``substantial overriding public interest''
justifies the extension. The authority to make this determination has
been delegated to the Chief of the Forest Service (7 CFR 2.60).
Government indices indicate a major downturn in the softwood lumber
market occurred during 1994 and 1995. During this period, price indices
have declined approximately 25 percent. Rules at 36 CFR 223.52 permit
extensions when Forest Service officials determine that adverse wood
product market conditions have resulted in a drastic decline in wood
product prices. Under contract procedures, the Douglas fir dressed
lumber price index (commodity code 081101) used to measure severe
market declines in western Oregon and western Washington has reflected
the market decrease. Timber sale purchasers in this area have received
1 year of additional contract time, if requested. However, the indices
used to measure severe market declines in other parts of the country do
not appear to be as predictable an indicator of market declines as the
index used in the Pacific Northwest. As a result, timer sale purchasers
outside of the Pacific Northwest have not received any additional time
to complete their contracts, and some of these purchasers are facing
contract default, mill closure, and bankruptcy. It has been determined
that additional contract time will assist these purchasers by giving
them more time in which the market may improve or in which they can mix
their high-priced sales with lower priced sales.
Accordingly, based on a study of alternatives and current rules at
36 CFR 223.115, the Chief of the Forest Service has made a finding that
there is a substantial overriding public interest in extending sales
for 1 year. This determination does not apply to contracts that were
previously extended under market-related contract term addition
contract provisions or to salvage sale contracts that were sold with
the objective of harvesting deteriorating timber. In addition to
extending contracts pursuant to the Chief's finding, periodic payments
will be deferred for 1 year on the extended sales. To receive the
extension and periodic payment deferral, purchasers must request the
extension in writing and agree to release the Forest Service from
damages for the replacement cost of timber if the contract is canceled
in the future. The text of the finding, as signed by the Chief, is set
out at the end of this notice.
Dated: July 31, 1996.
Gray F. Reynolds,
Acting Chief.
Determination of Substantial Overriding Public Interest for Extending
Certain Timber Sale Contracts
Government indices indicate a major downturn in the lumber market
has occurred during 1994 and 1995. While many Forest Service timber
sale contracts contain provisions to extend termination dates during
severely declining markets, the mechanisms used in some areas of the
country to measure severely declining markets do not appear to measure
the softwood lumber market.
Periodically, lumber markets may experience severe declines in
prices. Based on Bureau of Labor Statistics producer price indices, the
lumber market peaked in January 1994. During 1994 and 1995, price
indices have declined approximately 25 percent. The Douglas fir dressed
lumber price index (commodity code 081101) used to measure severe
market declines in western Oregon and western Washington has reflected
the market decrease. Timber sale purchasers in this area have received
1 year of additional contract time, if requested. However, the indices
used to measure severe market declines in other parts of the country do
not appear to measure the softwood
[[Page 40603]]
lumber market as well as the index used in the Pacific Northwest.
Until April 2, when the Under Secretary of Agriculture extended
their contracts for 120 days, timber sale purchasers outside of the
Pacific Northwest had not received any additional time to complete
their contracts. Some of these timber sale purchasers are still facing
contract default, mill closure, and bankruptcy. A contract extension
would assist these purchasers by giving additional time in which the
market may improve or in which they could mix their high-priced sales
with lower-priced sales.
The Government benefits if defaulted timber sale contracts, mill
closures, and bankruptcies can be avoided by granting contract
extensions, because having numerous, economically viable timber sale
purchasers both maintains market opportunities and increases
competition for National Forest System timber sales. These factors
result in higher prices paid for such timber. In addition, the
Government would avoid the difficult and expensive process of
collection contract default damages.
Therefore, pursuant to 16 U.S.C. 472a, 36 CFR 223.115, and the
authority delegated to the Chief at 7 CFR 2.60, I have determined that
it is in the substantial overriding public interest to extend for 1
year National Forest System timber sale contracts that were awarded
prior to January 1, 1995. This finding does not apply to contracts in
western Washington and western Oregon that have been previously
extended under market-related contract term addition contract
provisions or to salvage sale contracts that were sold with the
objective of harvesting deteriorating timber. For those contracts
extended pursuant to this finding, periodic payments also will be
deferred for 1 year. To receive the extension and periodic payment
deferral, purchasers must make written request and agree to release the
Forest Service from damages for the replacement cost of timber if the
contract is canceled in the future.
Dated: July 31, 1996.
Gray F. Reynolds,
Acting Chief.
[FR Doc. 96-19915 Filed 8-1-96; 2:36 pm]
BILLING CODE 3410-11-M
