[Federal Register: October 19, 2007 (Volume 72, Number 202)]
[Rules and Regulations]
[Page 59187-59190]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19oc07-8]
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DEPARTMENT OF AGRICULTURE
Forest Service
36 CFR Part 223
RIN 0596-AB70
Sale and Disposal of National Forest System Timber; Modification
of Timber Sale Contracts in Extraordinary Conditions; Noncompetitive
Sale of Timber
AGENCY: Forest Service, USDA.
ACTION: Final rule.
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SUMMARY: This final rule revises regulations at Title 36, Code of
Federal Regulations, part 223, on noncompetitive disposal of timber and
other forest products based on the Secretary of Agriculture's
determination that extraordinary conditions exist. A notice with
request for comment on an interim final rule was published in the
Federal Register on June 16, 2006. The Forest Service made appropriate
changes to the rule in response to the public comments.
DATE: This rule is effective November 19, 2007.
ADDRESSES: The public may inspect comments received at Office of the
Director, Forest Management Staff, Forest Service, USDA, 201 14th
Street, SW., Washington, DC 20250. Visitors are encouraged to call
ahead to (202) 205-1496 to facilitate entry to the building.
FOR FURTHER INFORMATION CONTACT: Forest Management Staff personnel,
Lathrop Smith (202) 205-0858, or Richard Fitzgerald (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
The National Forest Management Act (NFMA), codified in part at
Title 16 U.S.C. 472a(d), requires the Secretary of Agriculture to
advertise all sales of forest products unless the appraised value of
the sale is less than $10,000, or the Secretary determines that
extraordinary conditions exist, as defined by regulation. The
requirement to advertise sales unless extraordinary conditions exist
applies to the substitution of timber outside a sale contract area.
Prior to NFMA, the Government Accountability Office (formerly the
General Accounting Office) held that substitution of timber outside the
contract area for timber in the contract area violated the Agency's
authority to sell timber.\1\ Since the passage of NFMA, but in the
absence of a regulation defining ``extraordinary conditions,'' the
Agriculture Board of Contract Appeals has decided similarly in several
cases.\2\
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\1\ Letter to Mr. Secretary, 1973 WL 7905 (Comp. Gen.), B-177602
(1973).
\2\ See Appeal of Summit Contractors, 1986 WL 19566 (AGBCA),
Nos. 81-252-1, No. 83-312-1 (Jan. 8, 1986), and Appeal of Jay
Rucker, 1980 WL 2345 (AGBCA) Nos. 79-211A, 79-211B (June 11, 1980).
See also, Croman Corporation v. United States, 31 Fed. Cl. 741, 746-
47 (August 16, 1994).
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Before authorizing activities on National Forest System lands, the
Forest Service must ensure compliance with applicable laws and
regulations and with conditions on the ground at the time of the
authorization. Even so, after entering into timber sale contracts,
environmental changes may occur such as the listing of a new species on
the endangered species list, or a catastrophic event may occur, such as
a large wildfire, resulting in the need to modify the contracts. Also,
court orders and decisions resulting from environmental litigation may
require making changes to existing contracts even when those contracts
are not specifically named in the litigation if they are similar to
contracts that were named. When this occurs, it is essential for Forest
Service officials to have flexibility to adjust management activities
and contractual arrangements without incurring enormous financial
liability associated with unilateral modifications or contract
cancellations.
At the time a sale is sold, there is no way to predict what future
litigation or environmental changes may occur that will result in the
sale contract needing to be changed. Each occurrence is a unique
situation that constitutes an extraordinary condition. The Forest
Service needs the ability to provide replacement timber or forest
products for contracts that must be modified to prevent environmental
degradation or resource damage, or as a result of administrative
appeals, litigation, court orders, or catastrophic events that occur
after contract award. Thus, the Forest Service promulgated an interim
final rule, published June 16, 2006 (71 FR 34823), on noncompetitive
sale of timber and other forest products based on the Secretary of
Agriculture's determination that extraordinary conditions exist
whenever a timber or forest products contract needs to be modified or
canceled to address such unexpected changes. This benefits the
Government by providing contracting officers with an opportunity to
avert costly claims by providing replacement timber or forest products
from outside the contract area when replacement timber is not available
within the contract area. Replacement timber also helps maintain the
industry infrastructure, which in turn will maintain forest management
options.
Response to Comments
A 60-day comment period on the interim final rule was initiated on
June 16, 2006, (71 FR 34823). Only two respondents replied. One
respondent is an individual and the other respondent is a timber
industry association.
Comment 1: The constraints that the value of replacement material
may not exceed the value of the material it is replacing by more than
10% or $10,000, whichever is less, are too restrictive and will hamper
implementation and use of this valuable tool. On small amounts of
replacement timber, 10% may represent a very small amount of money, and
on large volumes the $10,000 may represent a small percentage of value.
If one or both of these numbers has some basis in law and cannot be
removed, the only fair way to deal with this situation is to have these
be upper and lower limits.
Response 1: The limitations were intended to reduce potential
impacts to other purchasers while making the purchaser of a sale that
must be modified or terminated whole. Replacement timber from outside
the sale area will most likely come from some other sale that would
otherwise be offered competitively on the open market. Offering
substantially more replacement timber than the amount or value being
deleted by a unilateral termination goes beyond making a purchaser
whole, circumvents fair and open competition and could have detrimental
consequences to other purchasers, the public, and Forest Service
program objectives. For the following reasons the Forest Service agrees
that the 10% limit is unnecessary but disagrees that the $10,000 limit
is overly restrictive.
The National Forest Management Act (NFMA) requires advertising
sales greater than $10,000 in appraised value unless the Secretary
determines, as
[[Page 59188]]
defined by regulation, that extraordinary conditions exist (16 U.S.C.
472a(d)). The intent of this rule is to establish the Secretary's
determination of extraordinary conditions so that replacement timber of
similar quantity and value can be obtained from outside the sale area
without advertisement, even when its total value is greater than
$10,000. The Forest Service recognizes, however, that exact matches
with the original contract value, quantity and quality are unlikely and
that a defined measure of acceptable deviation is necessary. The Forest
Service believes that providing replacement timber volume with an
appraised value of no more than $10,000 over the original contract
value is an acceptable amount of deviation. The premise for this is
that the original value of the timber being replaced was established
after advertisement and the opportunity for competitive bidding in
accordance with the advertisement and competition requirements of NFMA
and its implementing regulations. Therefore, only the value of
replacement timber exceeding the value of the original timber volume
being replaced was not previously subject to advertisement and
competition requirements. Advertisement and competition of the excess
replacement timber is not required by NFMA or the regulations so long
as the excess value remains at or below $10,000.
The rules at 36 CFR 223.112 require that contract modifications
must not be done in a manner that would be injurious to the United
States. For the reasons stated above, the Forest Service believes that
replacement timber valued at no more than $10,000 over the original
contract value adequately accounts for differences in contract and
replacement timber value and ensures that contracts are not modified in
a manner that would be injurious to the United States. Imposing the
$10,000 upper limit on the value of replacement timber establishes a
reasonable and acceptable measure of deviation, prevents a purchaser
from getting a potential windfall, and eliminates the need for the
Forest Service to determine, on a case-by-case basis, the level of
acceptable deviation that may result in a modification that is not
injurious to the United States. The Forest Service does not believe
this upper limit is overly restrictive and will retain it in the final
rule. The Forest Service agrees, however, that the 10% limit imposed in
the interim final rule is not necessary for determining an acceptable
level of deviation, and for that reason, it will be eliminated from the
final rule.
The respondent suggested that if there was an upper limit there
should be a corresponding lower limit on the value of replacement
timber. For example, if $50,000 of replacement timber is needed,
applying the $10,000 limit addressed above would require the value of
replacement timber to be no less than $40,000. The Forest Service
disagrees as this would have the effect of guaranteeing replacement
timber which is simply an alternative remedy, when it is available, to
liquidated damages addressed in the contracts. Although the rule
provides broad authority for authorizing replacement timber for a
variety of reasons, neither the rule nor the contracts require the
Forest Service to provide, or the purchaser to agree to replacement
timber. No changes are made in response to this portion of the comment.
Comment 2: The Forest Service should clarify the standard used to
determine what volume will be removed from a contract because of
wildfire or similar catastrophic event.
Response 2: The reference to catastrophic events in the interim
final rule has led to confusion with some interpreting this to mean
that the Forest Service would replace catastrophically damaged timber
with comparable undamaged timber. This was not the intent. Replacement
timber is only a remedy for a contract termination or partial
termination under subsection B/BT8.34 Contract Termination. Replacement
timber is not a remedy for a contract termination or partial
termination under subsection B/BT8.22 Termination for Catastrophe.
However, a single sale could be terminated under both B/BT8.22 and B/
BT8.34.
For example, a fire catastrophically damages 60% of a sale area
including several uncut units and timber between those units. Pursuant
to B/BT8.32 Modification for Catastrophe, the Forest Service and
Purchaser try, but cannot reach agreement on a modification for
harvesting the catastrophically affected timber, and elect termination
under B/BT8.22. The remaining 40% of the sale was not damaged, includes
``green'' units that the purchaser wants to cut, and pursuant to B/
BT8.32 Modification for Catastrophe the parties agree could be logged
separately from the catastrophically damaged timber. But, the Forest
Service determines that because of the changed conditions caused by the
fire, harvesting the remaining green units will cause environmental
degradation and starts the process to terminate that portion of the
contract pursuant to B/BT8.34. Replacement timber from outside the sale
area could be considered for the undamaged timber included under the B/
BT8.34 termination but not for the damaged timber included under the B/
BT8.22 termination. Although the catastrophic event caused the
situation leading to a decision to terminate the undamaged portions of
the sale, the actual reason to terminate is to prevent environmental
degradation. Referencing catastrophic events in the rule is unnecessary
and because the reference can be misinterpreted it has been eliminated
in the final rule.
Contracts awarded prior to the April 2004 version of the Timber
Sale Contract do not contain references to replacement timber in event
of a termination but the rule potentially could be applied to those
contracts as well via a contract modification. The Forest Service
agrees that more clarification of how the rule could be applied to
those contracts would help and will do that with an amendment to the
Timber Sale Administration Handbook FSH 2409.15. But no changes to the
rule are needed to address this situation.
Comment 3: Offering substitute timber outside the sale area
specified in the contract is a common sense approach to meeting
contractual obligations and maintaining an equitable balance of risk.
Replacement timber will help maintain the industry infrastructure which
will maintain forest management options.
Response 3: The Forest Service agrees. No changes are made in
response to this comment.
Comment 4: The respondent opposed the determination of
``extraordinary conditions'' likening it to an environmental assault
emanating from the U.S. Department of Agriculture and suggesting that
the determination is based on the desires of lobbyists working for the
timber industry in corrupt Washington.
Response 4: The Forest Service disagrees that the determination of
extraordinary conditions is made based on the desires of timber
industry lobbyists. The determination has precedent supporting it. In
1996, the Secretary promulgated an interim final rule set out at 36 CFR
223.85(b), that defined extraordinary conditions for sales released
pursuant to section 2001(k) of the 1995 Rescissions Act (61 FR 14618,
April 3, 1996). The 1996 rule has reduced claims by allowing timber
from outside the sale area specified in the contract to be substituted,
without advertisement, on specific timber sales in Washington and
Oregon affected by the 1995 Rescissions Act. A similar result is
anticipated with this rule. The only impact of this determination is to
allow replacement timber or other forest
[[Page 59189]]
products without advertisement. The Forest Service may consider only
such timber or forest products for replacement purposes for which the
agency has completed the appropriate environmental analysis and made a
decision to authorize its harvest. Additionally, any applicable
comment, appeal, or objection process for the harvest must have been
completed. No changes are made in response to this comment.
Comment 5: Respondent supported the concept of replacement timber
in lieu of contract cancellations noting that this will benefit the
public by encouraging on-the-ground resource management while
minimizing taxpayer burdens associated with damage claims.
Response 5: The Forest Service agrees. No changes are made in
response to this comment.
Comment 6: Replacement timber will help maintain the industry
infrastructure, which will in turn maintain forest management options.
Response 6: The Forest Service agrees. No changes are made in
response to this comment.
Explanation of Revisions to 36 CFR Part 223, Subpart B
The interim final rule in Sec. 223.85(c), specified that
extraordinary conditions, as provided for in 16 U.S.C. 472a(d),
includes those conditions under which contracts for the sale or
exchange of timber or other forest products must be suspended,
modified, or terminated under the terms of such contracts to prevent
environmental degradation or resource damage, or as the result of
administrative appeals, litigation, court orders, or catastrophic
events. The reference to catastrophic events in the interim final rule
led to confusion with some interpreting this to mean that the Forest
Service would replace catastrophically damaged timber with comparable
undamaged timber. The intent was to address situations where harvesting
the remaining green timber on a catastrophically damaged sale would
result in environmental degradation or resource damage. In those
situations, replacement timber would be an alternative to harvesting
the remaining green timber or canceling the contract. The intent of the
rule was not to replace catastrophically damaged timber with undamaged
timber. The reference to catastrophically damaged timber has been
removed in this final rule.
Section 223.85(c), of the interim final rule specified that the
value of replacement timber or forest products may not exceed the value
of the material it is replacing by more than 10% or $10,000, whichever
is less as determined by standard Forest Service appraisal methods.
Based on comments received on the interim final rule, and further
evaluation by the Forest Service, the 10% limit has been removed in the
final rule.
Section 223.85(c), of the interim final rule specified that the
replacement timber or forest products must come from the same National
Forest as the original contract. In some cases, several proclaimed
National Forests have been combined under one Forest Supervisor for
administration purposes. The term National Forest in this paragraph
refers to an administrative unit headed by a single Forest Supervisor.
This distinction has been added to the final rule.
Regulatory Certifications
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 Agency has assessed the effects of this rule on State, local,
and tribal governments and the private sector. This rule does not
compel the expenditure of $100 million or more by any State, local, or
tribal governments or anyone in the private sector. Therefore, a
statement under section 202 of the Act is not required.
Regulatory Impact
This rule has been reviewed under USDA procedures and Executive
Order 12866, Regulatory Planning and Review, as amended by E.O. 13422
on January 23, 2007. The Office of Management and Budget (OMB) has
determined that this is not a significant rule. 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. 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 rule is not subject to OMB review under Executive Order 12866.
Moreover, this 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.). A final
regulatory flexibility assessment has been made and it has been
determined that this action will not have a significant economic impact
on a substantial number of small entities as defined by SBREFA. The
rule has no adverse or special impacts on small business, small not-
for-profit organizations, or small units of the Government because it
imposes no additional requirements on the affected public.
Environmental Impact
Section 31.12 of Forest Service Handbook 1909.15 (57 FR 43180,
September 18, 1992) excludes from documentation in an environmental
assessment or impact statement ``rules, regulations, or policies to
establish Servicewide 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,
and therefore, the preparation of an environmental assessment or
environmental impact statement for this rule is not required.
No Takings Implications
This rule has been analyzed in accordance with the principles and
criteria contained in Executive Order 12360, and it has been determined
that the rule will not pose the risk of a taking of private property,
as the rule is limited to the establishment of administrative
procedures.
Civil Justice Reform
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. After adoption of this rule, (1) all State and local
laws and regulations that conflict with this rule or that would impede
full implementation of this rule will be preempted; (2) no retroactive
effect will be given to this rule; and (3) this rule would not require
the use of administrative proceedings before parties could file suit in
court challenging its provisions.
Federalism
The Agency has considered this rule under the requirements of
Executive Order 13132, Federalism. The Agency has made an assessment
that the 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.
[[Page 59190]]
Consultation and Coordination with Indian Tribal Governments
This rule does not have tribal implications as defined by Executive
Order 13175, Consultation and Coordination with Indian Tribal
Governments. Therefore, advance consultation with Tribes is not
required.
Controlling Paperwork Burdens on the Public
This rule does not require any record keeping or reporting
requirements or other information collection requirements as defined in
5 CFR part 1320 not already approved for use and, therefore, imposes no
additional paperwork burden on the public. 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 do not apply.
List of Subjects in 36 CFR Part 223
Administrative practice and procedures, Forests and forest
products, Exports, Government contracts, National forests, Reporting
and record keeping requirements.
0
For the reasons set forth in the preamble, the Forest Service is
amending part 223 of title 36 of the Code of Federal Regulations 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.
Subpart B--Timber Sale Contracts
0
2. Revise Sec. 223.85(c) to read as follows:
Sec. 223.85 Noncompetitive sale of timber.
* * * * *
(c) Extraordinary conditions, as provided for in 16 U.S.C. 472a(d),
includes those conditions under which contracts for the sale or
exchange of timber or other forest products must be suspended,
modified, or terminated under the terms of such contracts to prevent
environmental degradation or resource damage, or as the result of
administrative appeals, litigation, or court orders. Notwithstanding
the provisions of paragraph (a) of this section or any other regulation
in this part, when such extraordinary conditions exist on sales not
addressed in paragraph (b) of this section, the Secretary of
Agriculture may allow forest officers to, without advertisement, modify
those contracts by substituting timber or other forest products from
outside the contract area specified in the contract for timber or
forest products within the area specified in the contract. When such
extraordinary conditions exist, the Forest Service and the purchaser
shall make good faith efforts to identify replacement timber or forest
products of similar volume, quality, value, access, and topography.
When replacement timber or forest products agreeable to both parties is
identified, the contract will be modified to reflect the changes
associated with the substitution, including a rate redetermination.
Concurrently, both parties will sign an agreement waiving any future
claims for damages associated with the deleted timber or forest
products, except those specifically provided for under the contract up
to the time of the modification. If the Forest Service and the
purchaser cannot reach agreement on satisfactory replacement timber or
forest products, or the proper value of such material, either party may
opt to end the search. Replacement timber or forest products must come
from the same National Forest as the original contract. The term
National Forest in this paragraph refers to an administrative unit
headed by a single Forest Supervisor. Only timber or forest products
for which a decision authorizing its harvest has been made and for
which any applicable appeals or objection process has been completed
may be considered for replacement pursuant to this paragraph. The value
of replacement timber or forest products may not exceed the value of
the material it is replacing by more than $10,000, as determined by
standard Forest Service appraisal methods.
Dated: October 12, 2007.
Mark Rey,
Under Secretary, Natural Resources and Environment.
[FR Doc. E7-20625 Filed 10-18-07; 8:45 am]
BILLING CODE 3410-11-P