Sale and Disposal of National Forest Service System Timber; Timber Sale Contracts; Market-Related Contract Term Additions, 51388-51393 [E8-20301]
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Federal Register / Vol. 73, No. 171 / Wednesday, September 3, 2008 / Proposed Rules
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in certain sleeping environments.
Physiological abnormalities and delays
in the development of vital systems can
further hamper an infant’s ability to
react to a hazardous condition. Infants
who are not placed on their backs are
especially at risk for suffocation on any
type of soft pillow, regardless of the
type of filling.
In 1992, the American Academy of
Pediatrics, in an effort to reduce the risk
of SIDS, recommended that babies
always be placed on their backs when
put to sleep. As a result of this
campaign, Sudden Infant Death
Syndrome (SIDS) deaths between 1992
and 2004 in the United States decreased
from 5,000 per year to 2,246 per year
(based on vital statistics data of the
United States). Although there has been
a steady decrease in SIDS deaths, staff
found there has not been a similar
decrease in infant deaths associated
with pillows and cushions. Even though
the recommendation to place infants to
sleep on their backs is being promoted,
staff believes that the data indicates that
there are still a significant number of
people who continue to place infants to
sleep in the prone position. For this
reason, staff recommends increased
information dissemination targeted at
the population of caregivers whose
infants are not placed to sleep in the
supine position. Increased compliance
with the recommendation for supine
sleep, as well as continued vigilance in
ensuring a safe sleeping environment
would have benefits in reducing the risk
of infant suffocation deaths caused by
adult pillows, sofa cushions, and other
pillows as well as further reducing
incidents involving SIDS.
D. Conclusion
In light of the ongoing risks posed by
infant cushions/pillows when used in
the sleep environment, the Commission
finds no justification for repealing the
ban on infant cushions/pillows at this
time. Moreover, after review of the
comments, incident reports and other
available information, the Commission
determines there is insufficient data or
product information on infant cushions/
pillows or pillow-like products
intended for infants, other than with
respect to the Boston Billow Nursing
Pillow and substantially similar nursing
pillows, to proceed with further
rulemaking on those products at this
time. Thus, the Commission is
terminating the rulemaking on infant
cushions/pillows or pillow-like
products, other than with respect to the
Boston Billow Nursing Pillow and
substantially similar nursing pillows
effective upon publication in the
Federal Register for good cause shown
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in accordance with 5 U.S.C. 553(d)(3).1
A proposed exemption from the ban for
the Boston Billow Nursing Pillow and
substantially similar nursing pillows
appears elsewhere in this Federal
Register.2
Dated: August 27, 2008.
Todd A. Stevenson,
Secretary, Consumer Product Safety
Commission.
[FR Doc. E8–20282 Filed 9–2–08; 8:45 am]
BILLING CODE 6355–01–P
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
Forest Service, USDA.
Proposed rule; request for
public comment.
AGENCY:
ACTION:
The Forest Service proposes
amending its regulations to expand the
maximum amount of additional time
certain contracts may receive when
there is a continuous and prolonged
drastic reduction in wood product
prices for 21⁄2 years or longer.
Additionally, the proposed rule
modifies the procedure for selecting the
producer price index to be used in
establishing market-related contract
term additions and emergency rate
redeterminations. Finally, this proposed
rule makes a change to the amount of
additional market-related contract term
addition time that may be added to
timber sale contracts when the normal
operating season specified in a contract
is less than three months.
DATES: Comments must be received in
writing on or before October 3, 2008.
ADDRESSES: Written comments
concerning this notice should be
addressed to USDA Forest Service,
Director of Forest Management, 1400
SUMMARY:
1 On February 1, 2008, Acting Chairman Nancy
Nord and Commissioner Thomas Moore voted 2–0
to direct the Office of the General Counsel to
prepare a notice terminating the rulemaking other
than with respect to the Boston Billow Nursing
Pillow and substantially similar nursing pillows.
2 On February 1, 2008, Acting Chairman Nancy
Nord and Commissioner Thomas Moore voted 2–0
to direct the Office of the General Counsel to
prepare a notice of proposed rulemaking proposing
an exemption for the Boston Billow Nursing Pillow
and substantially similar nursing pillows. Acting
Chairman Nord also voted to request ASTM to
develop a product warning label for the product
class.
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Independence Avenue, SW., Mail Stop
1103, Washington, DC 20250–1103.
Comments may also be sent via e-mail
to mrcta@fs.fed.us, or via facsimile to
Lathrop Smith at (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 at the office
of the Director of Forest Management,
Third Floor, Southwest Wing, Yates
Building, 201 14th Street, SW.,
Washington, DC. Visitors are
encouraged to call ahead to (202) 205–
1496 to facilitate entry to the building.
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
Prior to 1980, purchasers of National
Forest timber defaulted very few timber
sale contracts. Cyclic fluctuations in
forest products markets occurred but
were of comparatively short duration
and limited impact. Forest Service
timber sale contract terms were often as
long as the cycles making it possible to
overlap the market price cycles. Prior to
1980, it also was believed that the longterm projection for forest products
prices indicated a continuing trend of
price increases. Under those
circumstances a purchaser could
usually schedule a sale’s harvest for a
time when the markets were good or
were at least good enough that the
purchaser would not lose more money
operating a sale than would be lost in
a default.
Beginning in 1980, the forest products
market began a serious and dramatic
decline, leaving a large number of
purchasers with timber sales bid at
prices far higher than the market was
bringing. Faced with the likelihood of
massive defaults and attendant adverse
economic impacts on industry and
dependent communities, the
government began taking steps to
respond to the adverse economic
impacts. In 1980, 1981, and 1982, the
Chief of the Forest Service granted
timber sale contract term extensions
based on findings of substantial
overriding public interest (48 FR 38862).
The intent of these extensions was to
provide purchasers additional contract
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time until the markets improved.
Unfortunately, the adverse market
conditions continued.
On October 16, 1984, the President
signed into law the Federal Timber
Contract Payment Modification Act (16
U.S.C. 618) (Buy-Out Act). The Buy-Out
Act allowed purchasers of Federal
timber to return certain sales to the
government upon payment of a ‘‘buyout charge’’ and, thus, avoid default.
Both the Congress and the
Administration viewed this legislation
as an extraordinary measure to respond
to a one-time crisis and recognized the
need to develop mechanisms to avoid
such a crisis in the future.
On November 6, 1987, the Forest
Service published a proposed rule (52
FR 43020) to establish procedures for
extending contract termination dates in
response to adverse conditions in the
timber market. This proposed MarketRelated Contract Term Addition rule
was published as part of a larger
proposal that included rules for
implementing downpayment and
periodic payment procedures as
required by the Federal Timber Contract
Modification Act. The intent of these
rules was to encourage orderly harvest
of national forest timber sales, ensure
the government’s financial security, and
avoid the need for future buyouts in
periods of severe market decline.
Market declines sufficient to trigger a
market-related contract term addition
generally coincide with downturns in
housing starts in conjunction with
national economic slowdowns. In the
early 1980s, such economic distress
broadly affected community stability
and the ability of industry to supply
construction lumber and other products
for public use and threatened the
maintenance of plant capacity necessary
to meet the Nation’s needs for wood
products from domestic sources.1
Accordingly, in order to ensure 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 on December
7, 1990, finding that the substantial
overriding public interest justifies
market-related contract term additions
whenever there is a drastic reduction in
wood product prices (55 FR 50643).
The Chief’s finding was based on the
fact that market-related contract term
additions: (1) Help purchasers avoid
severe financial hardship; (2) ensure
that the Federal government receives
payments due from purchasers by
1 Forest Service paper Policy Alternatives for
Market-Related Contract Term Additions, June 27,
1996.
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reducing the likelihood of default; and
(3) help ensure that receipts to States
and counties from timber sales are not
adversely affected by contract defaults.
Additionally, market-related contract
term additions help promote stability in
the wood products industry. This in
turn helps ensure community stability,
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.
In accordance with the December 7,
1990, final rule, the Forest Service
monitors and uses producer price
indices for wood products as prepared
by the Bureau of Labor Statistics 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). Each index
monitors different segments of the wood
products industry. Each contract over
one 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 one
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 market-related
contract term addition. 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 market-related contract term
addition. Further, market-related
contract time may not be granted for
those portions of the contract that (1)
have a required completion date, (2) the
Forest Service determines that the
timber is in need of urgent removal, or
(3) timber deterioration or resource
damage will result from delay.
Since the market-related contract term
addition rule was adopted, 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 11 quarters
beginning in September 2005, through
March 2008. The hardwood index has
also shown a drastic reduction in the
first two quarters of 2008. As a result,
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many purchasers requested and
received additional contract time for
qualifying timber sales.
The drastic decline in softwood
lumber prices in the early 1980s began
following a peak in the softwood lumber
index in the third quarter of 1978 and
bottomed out four years later in the
third quarter of 1982. During that
decline the index, adjusted to a constant
dollar basis, lost 56 points or 36 percent
of its value. By comparison, the current
decline of the softwood lumber index is
already greater in magnitude. The
current decline began following a peak
in August 2004, and by March 2008, the
index, adjusted to a constant dollar
basis, had lost 76 points or 48.5 percent
of its value. It is unknown when the
current decline will end.
The intent of the market-related
contract term addition regulations are to
avert massive defaults and attendant
adverse economic impacts on industry
and dependent communities by
providing purchasers additional
contract time until markets improve.
Since adoption of the regulations in
1990, the three-year limit on marketrelated contract term additions has met
that objective in the three previous
periods when a drastic reduction in
wood prices occurred. But, when a
drastic decline in wood prices continues
for over three years as it currently has
and the market-related contract term
additions run out before markets
improve, purchasers holding high
priced sales bid when the markets were
stronger are likely to face severe
economic hardship without some form
of relief.
As of May 1, 2008, there were 1,030
non-salvage sales awarded prior to April
1, 2007, that were over one year in
original contract length and with
volume remaining to remove.
Approximately twenty-three percent, or
239 of those sales, have received
additional contract time totaling three
years or more, and over half of those
sales were awarded prior to the
softwood index peaking in August 2004.
The additional time granted in excess of
the maximum market-related contract
term addition time was for reasons
unrelated to market conditions such as
adverse weather conditions that
prevented operations.
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 110–246, 122
Stat. 1651 (June 18, 2008), authorized
the Forest Service to add up to four
years of market-related contract term
addition to contracts awarded prior to
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Federal Register / Vol. 73, No. 171 / Wednesday, September 3, 2008 / Proposed Rules
January 1, 2007. While section 8401
provides immediate relief to contracts
that had or were about to reach the
three-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 light of the managers’ statement,
and to address prolonged adverse
market conditions in the future, the
Forest Service proposes amending the
market-related contract term addition
regulations at 36 CFR 223.52 to allow
certain contracts to receive more than
three years of additional time when
there is a prolonged drastic reduction in
wood product prices. To be eligible for
market-related contract term addition
time in excess of three years, contracts
must meet the conditions for marketrelated contract term addition in
§ 223.52, and the index specified in the
contract must trigger for eleven
consecutive quarters following the
award date in the contract. The criteria
of eleven consecutive quarters was
selected because under the formula for
granting market-related contract term
additions, all sales will have reached
the three year limit, prior to, but no later
than, the tenth consecutive quarter
(§ 223.52(c)(3)). Beginning with the
eleventh consecutive qualifying quarter,
and for each subsequent consecutive
qualifying quarter, the contract may
receive an additional three months of
normal operating season time. Contracts
where all biddable species were at base
rates during any quarter between the
original contract termination date and
any adjusted termination date will not
be eligible for more than three years of
market-related contract term addition.
The rationale for this criterion is that
sales at base rates have stumpage prices
as low as permitted, so additional time
for market conditions to improve is not
needed.
Under this proposed rule, the
maximum amount of market-related
contract term addition time a contract
awarded after December 31, 2006, may
receive will be controlled by the 10-year
limit on total contract length established
under the National Forest Management
Act of 1976 (16 U.S.C. 472a(c)). But,
pursuant to the 2008 Farm Bill, sales
awarded prior to January 1, 2007, may
only have the termination date adjusted
by up to four calendar years as the result
of market-related contract term addition.
An additional proposed amendment
to the market-related contract term
addition regulations at 36 CFR 223.52
will authorize contracting officers to
select an index at the time certain
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contracts are awarded that is different
from the one identified in the sample
contract. Each timber sale contract over
one year in length includes one of three
producer price indices (softwood
lumber, hardwood lumber or wood
chips) updated monthly by the Bureau
of Labor Statistics. The index selected
for each sale is based on the species and
product characteristics that represent
more than one-half of the advertised
volume. The index is used to determine
when the contract is eligible for a
market-related contract term addition
and/or an emergency rate
redetermination. This proposed rule
change would authorize contracting
officers to select an alternative producer
price index at the time a contract is
awarded when the appropriate Forest
Supervisor has determined, prior to
advertising the contract, that the species
and potential product characteristics are
such that more than one index could
represent more than one-half of the
advertised volume. Upon a purchaser’s
written request, the contracting officer
could select an alternative index to the
one identified in the sample contract if
the contracting officer determines that
the alternative index better represents
the highest percentage of the products
the successful bidder intends to produce
or have produced from the sale.
On sales providing this alternative
index option, all bidders will have an
equal opportunity to substitute a more
representative index, which should
reduce the risk of potential bid protests
over this change. Providing bidders with
a process for changing the index on
sales where more than one index may be
applicable may also result in higher
bids. For these sales, the prospectus will
state that the contracting officer may,
upon the purchaser’s written request,
select an alternative index from
paragraph (b), and may modify the
contract by mutual agreement, at time of
contract award, to include an alternative
index that the contracting officer has
determined represents the highest
percentage of products the purchaser
intends to produce or have produced
from the sale. The purchaser will be
required to make a written request for
an index change that includes
documentation showing how the
purchaser anticipates the timber will be
processed. If the purchaser is a nonmanufacturer, the written request
should show the percentage of sale
volume the purchaser intends to deliver
to different manufactures, such as 75
percent to an oriented strand board
processor (OSB) and 25 percent to a
pulp mill.
This change to the regulation is
needed because different uses of
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technology for processing forest
products continue to evolve. Thus
selecting the appropriate index prior to
knowing who the purchaser will be and
what products will be produced may
not be possible when a sale is offered.
For example, a sale that is
predominantly aspen may be sold in a
market area that has a pulp mill, an OSB
mill, and a sawmill capable of
processing aspen lumber. Since the pulp
mill is the closest mill to the sale, it is
used as the appraisal under the current
regulation. Consequently, the Forest
Service assigns the wood chips index to
the sale when it is advertised. If the
pulp mill owner buys the sale, the wood
chips index is the correct index for the
product that will be produced and a
change of index would not be
appropriate. However, if the OSB mill
owner buys the sale, the softwood
lumber index would be more
appropriate since OSB is a building
material that tends to follow softwood
lumber prices. Further, if the sawmill
owner buys the sale, the hardwood
lumber index may be most appropriate,
unless the principal aspen product is
pannelling, in which case the softwood
lumber index may be most appropriate.
In addition, if a non-manufacturer buys
the sale with the intention of
merchandizing the wood to all three
mills, the most appropriate index would
be based on which mill is expected to
process the highest percentage of the
sale volume. In this example, if the
purchaser intended to sell 40 percent of
the sale volume to the OSB mill, 30
percent to the pulp mill and 30 percent
to the hardwood lumber mill, the
appropriate index would be softwood
lumber as it is the index representing
the single greatest percentage of volume.
While this estimate is based on market
conditions at the time the contract is
awarded, the purchaser can change the
mix of products produced during the
life of the sale. However, the purchaser
will not be permitted to change the
index after award unless that index is
discontinued and/or the Forest Service
adopts and offers replacement indices.
Another example occurred in 2006
and 2007 on certain sales using the
wood chips index. In November 2006
(71 FR 66160) and again in November
2007 (72 FR 64991), specified timber
sales were granted one year extensions
based on a determination of substantial
overriding public interest. Excluded
from these extensions were sales on the
softwood lumber index because those
sales were already receiving marketrelated contract term additions. Most of
the substantial overriding public
interest extensions granted went to sales
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in the lake states region (predominately
Minnesota) that were on the wood chips
index despite the fact that most of the
wood was actually being manufactured
into oriented strand board. Although
oriented strand board prices were
plummeting along with softwood
lumber prices, these sales were not
eligible for market-related contract term
additions because the wood chips index
remained high. If the index on those
sales had been changed from wood
chips to softwood lumber when those
contracts were awarded, the substantial
overriding public interest extensions
would not have been needed. To avert
that situation in the future, and to
implement the Managers’ direction for
the 2008 Farm Bill, a process for
changing the index at the time of award
when more than one index may be
appropriate is needed.
Expanding existing rights to marketrelated contract term addition to include
a procedure for changing the index at
the time of contract award is in the
public interest. In most market areas,
the species product combinations are
easy to identify prior to offering a sale,
and there will be little need or
justification to change the index at the
time of contract award. However, in
situations such as the examples
described above where more than one
index may apply, a procedure for
changing the index when the contract is
awarded to reflect the principal product
the purchaser intends to produce is
needed. The objective is to allow the
parties to enter into contracts under
terms that reflect market conditions at
the time of award; it is not to guarantee
profitable market conditions or a certain
level of profit throughout the life of the
contract. The intended effect is to avert
the need for substantial overriding
public interest extensions,
determinations, as well as legislation
like the 2008 Farm Bill, which provides
relief to contracts with indices that
became mismatched with, or did not
reflect, the products the purchaser
produced.
Currently, 36 CFR 223.52(a)(2)
provides that the Forest Supervisor shall
select from the available indices in
§ 223.52(b) the index to be used in each
contract based on the species and
product characteristics, by volume,
included in a contract. The existing rule
also provides that the index selected
shall represent more than one-half of the
advertised volume. The existing rule is
silent as to when Forest Supervisors
must choose an appropriate index but
the practice has been to identify the
index when a contract is advertised.
Buying a sale that uses an index that
does not represent the principal product
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a purchaser intends to produce
increases the purchaser’s risk that a
drastic reduction in the prices of the
wood products it is producing will not
result in a market-related contract term
addition. Providing a procedure to
change the index once the purchaser
and the principal product it intends to
produce are identified will have the
effect of reducing the purchaser’s risk,
which may also increase bids.
Finally, under the current regulation,
a contract may receive a one year
market-related contract term addition
when there are two consecutive
qualifying quarters and may receive
three months of additional time within
the contract’s normal operating season
for each subsequent consecutive
qualifying quarter subject to the limits
on total additional contract time. Some
sales have a normal operating season
that is less than three months resulting
in a situation where the contract could
be extended for more than one year if
three months of normal operating
season is added to the contract term.
This proposed change will limit the
amount of additional time to no more
than one-calendar year when the normal
operating season is less than three
months.
51391
such programs. Accordingly, this
proposed rule is not subject to OMB
review under Executive Order 12866.
Moreover, this proposed 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
will not have a significant economic
impact on a substantial number of small
entities as defined by that act. As
revised in this proposed 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.
Regulatory Certifications
Regulatory Impact
This proposed rule has been reviewed
under USDA procedures and Executive
Order 12866 on Regulatory Planning
and Review. It has been determined that
this proposed rule is not a significant
regulatory action and is not subject to
Office of Management and Budget
(OMB) review. This proposed 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 proposed 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 proposed 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
Proper Consideration of Small Entities
This proposed 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 proposed 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
proposed 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.
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Environmental Impact
This proposed 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. Section 31.1b of Forest
Service Handbook 1909.15 (57 FR
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43180; September 18, 1992) 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 proposed 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. This collection of
information was submitted to the Office
of Management and Budget (OMB) and
received emergency approval under
OMB No. 0596–0212. Notice of this
information collection and request for
comment was published in the Federal
Register on July 22, 2008 (73 FR 42542).
This rule contains no additional
information collection under the
Paperwork Reduction Act.
Energy Effects
This proposed 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 proposed rule does
not constitute a significant energy action
as defined in the Executive order.
yshivers on PROD1PC62 with PROPOSALS
Federalism
The agency has considered this
proposed rule under the requirements of
Executive Order 13132, Federalism. The
agency has made an assessment that the
proposed 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 proposed 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.
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15:14 Sep 02, 2008
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No Takings Implications
This proposed 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 proposed 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 proposed
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
proposed 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.
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
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.
2. Amend § 223.52 by revising
paragraphs (a)(2) and (c)(2) through (4)
to read as follows:
§ 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 onehalf of the advertised volume. If none of
the indices in paragraph (b) represent
more than one half of the advertised
volume, the index specified shall
PO 00000
Frm 00015
Fmt 4702
Sfmt 4702
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),
and may modify the contract by mutual
agreement, at time of contract award, to
include an alternative index that the
Contracting Officer has determined
represents the 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 including a list of
products by volume it 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 award, the
index specified in the sample contract
shall apply.
*
*
*
*
*
(c) * * *
(2) For each additional consecutive
quarter in which a contract qualifies for
a 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 sales with a normal operating
season of less than 3 months may only
receive additional time equal to their
normal operating season.
(3) No more than 3 years of MRCTA
time 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) During each quarter between the
original contract termination date and
the current termination date, contract
rates for one or more of the biddable
species exceeded base rates; and
(iii) A drastic reduction in wood
product prices occurred for eleven
consecutive qualifying quarters.
(4) For contracts eligible for more than
3 calendar years of market-related
contract term addition under
§ 223.52(c)(3), beginning with the
eleventh consecutive qualifying quarter,
and for each subsequent consecutive
qualifying quarter, the Forest Service
will, upon the purchaser’s written
request, add an additional 3 months
during the normal operating season to
E:\FR\FM\03SEP1.SGM
03SEP1
Federal Register / Vol. 73, No. 171 / Wednesday, September 3, 2008 / Proposed Rules
51393
releases or threatened releases of
hazardous substances, pollutants, or
contaminants throughout the United
40 CFR Part 300
States. The National Priorities List
(‘‘NPL’’) constitutes this list. The NPL is
[EPA–HQ–SFUND–2008–0574, EPA–HQ–
SFUND–2008–0575, EPA–HQ–SFUND–2008– intended primarily to guide the
Environmental Protection Agency
0576, EPA–HQ–SFUND–2008–0577, EPA–
HQ–SFUND–2008–0579, EPA–HQ–SFUND–
(‘‘EPA’’ or ‘‘the Agency’’) in determining
2008–0580, EPA–HQ–SFUND–2008–0581,
which sites warrant further
EPA–HQ–SFUND–2008–0582, EPA–HQ–
investigation. These further
SFUND–2008–0583, EPA–HQ–SFUND–2008–
investigations will allow EPA to assess
0584, EPA–HQ–SFUND–2008–0585, EPA–
the nature and extent of public health
HQ–SFUND–2008–0586; FRL–8710–7]
and environmental risks associated with
RIN 2050–AD75
the site and to determine what CERCLAfinanced remedial action(s), if any, may
National Priorities List, Proposed Rule be appropriate. This rule proposes to
No. 49
add 11 sites to the NPL, 10 to the
General Superfund Section and 1 to the
AGENCY: Environmental Protection
Federal Facilities Section. This rule also
Agency.
withdraws one site from proposal to the
ACTION: Proposed rule.
NPL.
SUMMARY: The Comprehensive
DATES: Comments regarding any of these
Environmental Response,
proposed listings must be submitted
Compensation, and Liability Act
(postmarked) on or before November 3,
(‘‘CERCLA’’ or ‘‘the Act’’), as amended,
2008.
requires that the National Oil and
Hazardous Substances Pollution
ADDRESSES: Identify the appropriate
Contingency Plan (‘‘NCP’’) include a list FDMS Docket Number from the table
of national priorities among the known
below.
the contract, except that sales with a
normal operating season of less than 3
months may only receive additional
time equal to their normal operating
season.
*
*
*
*
*
ENVIRONMENTAL PROTECTION
AGENCY
Dated: August 26, 2008.
Sally Collins,
Associate Chief, Forest Service.
[FR Doc. E8–20301 Filed 9–2–08; 8:45 am]
BILLING CODE 3410–11–P
FDMS DOCKET IDENTIFICATION NUMBERS BY SITE
City/state
B.F. Goodrich ............................................................
Raleigh Street Dump .................................................
Arkla Terra Property ..................................................
U.S. Smelter and Lead Refinery, Inc ........................
Fort Detrick Area B Ground Water ............................
Curtis Papers, Inc ......................................................
Behr Dayton Thermal System VOC Plume ...............
New Carlisle Landfill ..................................................
Borit Asbestos Tailings Pile .......................................
Barite Hill/Nevada Goldfields .....................................
U.S. Magnesium ........................................................
Kennecott (South Zone) ............................................
yshivers on PROD1PC62 with PROPOSALS
Site name
Rialto, CA ..................................................................
Tampa, FL .................................................................
Thonotosassa, FL .....................................................
East Chicago, IN .......................................................
Frederick, MD ...........................................................
Milford, NJ .................................................................
Dayton, OH ...............................................................
New Carlisle, OH ......................................................
Ambler, PA ................................................................
McCormick, SC .........................................................
Tooele County, UT ....................................................
Copperton, UT ..........................................................
Submit your comments, identified by
the appropriate FDMS Docket number,
by one of the following methods:
• www.regulations.gov: Follow the
online instructions for submitting
comments.
• E-mail: superfund.Docket@epa.gov.
• Mail: Mail comments (no facsimiles
or tapes) to Docket Coordinator,
Headquarters; U.S. Environmental
Protection Agency; CERCLA Docket
Office; (Mail Code 5305T); 1200
Pennsylvania Avenue, NW.,
Washington, DC 20460.
• Hand Delivery or Express Mail:
Send comments (no facsimiles or tapes)
to Docket Coordinator, Headquarters;
U.S. Environmental Protection Agency;
CERCLA Docket Office; 1301
Constitution Avenue; EPA West, Room
3340, Washington, DC 20004. Such
deliveries are only accepted during the
VerDate Aug<31>2005
15:14 Sep 02, 2008
Jkt 214001
Docket’s normal hours of operation
(8:30 a.m. to 4:30 p.m., Monday through
Friday excluding Federal holidays).
Special arrangements should be made
for deliveries of boxed information.
Instructions: Direct your comments to
the appropriate FDMS Docket number
(see table above). EPA’s policy is that all
comments received will be included in
the public Docket without change and
may be made available online at
www.regulations.gov, including any
personal information provided, unless
the comment includes information
claimed to be Confidential Business
Information (CBI) or other information
whose disclosure is restricted by statute.
Do not submit information that you
consider to be CBI or otherwise
protected through www.regulations.gov
or e-mail. The www.regulations.gov Web
site is an ‘‘anonymous access’’ system;
PO 00000
Frm 00016
Fmt 4702
Sfmt 4702
FDMS Docket ID No.
EPA–HQ–SFUND–2008–0574.
EPA–HQ–SFUND–2008–0575.
EPA–HQ–SFUND–2008–0576.
EPA–HQ–SFUND–2008–0577.
EPA–HQ–SFUND–2008–0585.
EPA–HQ–SFUND–2008–0579.
EPA–HQ–SFUND–2008–0580.
EPA–HQ–SFUND–2008–0581.
EPA–HQ–SFUND–2008–0582.
EPA–HQ–SFUND–2008–0583.
EPA–HQ–SFUND–2008–0584.
EPA–HQ–SFUND–2008–0586.
that means EPA will not know your
identity or contact information unless
you provide it in the body of your
comment. If you send an e-mail
comment directly to EPA without going
through www.regulations.gov, your email address will be automatically
captured and included as part of the
comment that is placed in the public
Docket and made available on the
Internet. If you submit an electronic
comment, EPA recommends that you
include your name and other contact
information in the body of your
comment and with any disk or CD–ROM
you submit. If EPA cannot read your
comment due to technical difficulties
and cannot contact you for clarification,
EPA may not be able to consider your
comment. Electronic files should avoid
the use of special characters, any form
of encryption, and be free of any defects
E:\FR\FM\03SEP1.SGM
03SEP1
]]>Agencies
[Federal Register Volume 73, Number 171 (Wednesday, September 3, 2008)]
[Proposed Rules]
[Pages 51388-51393]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-20301]
=======================================================================
-----------------------------------------------------------------------
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: Proposed rule; request for public comment.
-----------------------------------------------------------------------
SUMMARY: The Forest Service proposes amending its regulations to expand
the maximum amount of additional time certain contracts may receive
when there is a continuous and prolonged drastic reduction in wood
product prices for 2\1/2\ years or longer. Additionally, the proposed
rule modifies the procedure for selecting the producer price index to
be used in establishing market-related contract term additions and
emergency rate redeterminations. Finally, this proposed rule makes a
change to the amount of additional market-related contract term
addition time that may be added to timber sale contracts when the
normal operating season specified in a contract is less than three
months.
DATES: Comments must be received in writing on or before October 3,
2008.
ADDRESSES: Written comments concerning this notice should be addressed
to USDA Forest Service, Director of Forest Management, 1400
Independence Avenue, SW., Mail Stop 1103, Washington, DC 20250-1103.
Comments may also be sent via e-mail to mrcta@fs.fed.us, or via
facsimile to Lathrop Smith at (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 at the office of the
Director of Forest Management, Third Floor, Southwest Wing, Yates
Building, 201 14th Street, SW., Washington, DC. Visitors are encouraged
to call ahead to (202) 205-1496 to facilitate entry to the building.
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
Prior to 1980, purchasers of National Forest timber defaulted very
few timber sale contracts. Cyclic fluctuations in forest products
markets occurred but were of comparatively short duration and limited
impact. Forest Service timber sale contract terms were often as long as
the cycles making it possible to overlap the market price cycles. Prior
to 1980, it also was believed that the long-term projection for forest
products prices indicated a continuing trend of price increases. Under
those circumstances a purchaser could usually schedule a sale's harvest
for a time when the markets were good or were at least good enough that
the purchaser would not lose more money operating a sale than would be
lost in a default.
Beginning in 1980, the forest products market began a serious and
dramatic decline, leaving a large number of purchasers with timber
sales bid at prices far higher than the market was bringing. Faced with
the likelihood of massive defaults and attendant adverse economic
impacts on industry and dependent communities, the government began
taking steps to respond to the adverse economic impacts. In 1980, 1981,
and 1982, the Chief of the Forest Service granted timber sale contract
term extensions based on findings of substantial overriding public
interest (48 FR 38862). The intent of these extensions was to provide
purchasers additional contract
[[Page 51389]]
time until the markets improved. Unfortunately, the adverse market
conditions continued.
On October 16, 1984, the President signed into law the Federal
Timber Contract Payment Modification Act (16 U.S.C. 618) (Buy-Out Act).
The Buy-Out Act allowed purchasers of Federal timber to return certain
sales to the government upon payment of a ``buy-out charge'' and, thus,
avoid default. Both the Congress and the Administration viewed this
legislation as an extraordinary measure to respond to a one-time crisis
and recognized the need to develop mechanisms to avoid such a crisis in
the future.
On November 6, 1987, the Forest Service published a proposed rule
(52 FR 43020) to establish procedures for extending contract
termination dates in response to adverse conditions in the timber
market. This proposed Market-Related Contract Term Addition rule was
published as part of a larger proposal that included rules for
implementing downpayment and periodic payment procedures as required by
the Federal Timber Contract Modification Act. The intent of these rules
was to encourage orderly harvest of national forest timber sales,
ensure the government's financial security, and avoid the need for
future buyouts in periods of severe market decline.
Market declines sufficient to trigger a market-related contract
term addition generally coincide with downturns in housing starts in
conjunction with national economic slowdowns. In the early 1980s, such
economic distress broadly affected community stability and the ability
of industry to supply construction lumber and other products for public
use and threatened the maintenance of plant capacity necessary to meet
the Nation's needs for wood products from domestic sources.\1\
Accordingly, in order to ensure 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 on December 7, 1990, finding that the substantial overriding
public interest justifies market-related contract term additions
whenever there is a drastic reduction in wood product prices (55 FR
50643).
---------------------------------------------------------------------------
\1\ Forest Service paper Policy Alternatives for Market-Related
Contract Term Additions, June 27, 1996.
---------------------------------------------------------------------------
The Chief's finding was based on the fact that market-related
contract term additions: (1) Help purchasers avoid severe financial
hardship; (2) ensure that the Federal government receives payments due
from purchasers by reducing the likelihood of default; and (3) help
ensure that receipts to States and counties from timber sales are not
adversely affected by contract defaults. Additionally, market-related
contract term additions help promote stability in the wood products
industry. This in turn helps ensure community stability, 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.
In accordance with the December 7, 1990, final rule, the Forest
Service monitors and uses producer price indices for wood products as
prepared by the Bureau of Labor Statistics 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). Each index
monitors different segments of the wood products industry. Each
contract over one 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 one 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 market-related contract term addition. 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 market-related contract
term addition. Further, market-related contract time may not be granted
for those portions of the contract that (1) have a required completion
date, (2) the Forest Service determines that the timber is in need of
urgent removal, or (3) timber deterioration or resource damage will
result from delay.
Since the market-related contract term addition rule was adopted, 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 11 quarters beginning in September 2005, through March 2008. The
hardwood index has also shown a drastic reduction in the first two
quarters of 2008. As a result, many purchasers requested and received
additional contract time for qualifying timber sales.
The drastic decline in softwood lumber prices in the early 1980s
began following a peak in the softwood lumber index in the third
quarter of 1978 and bottomed out four years later in the third quarter
of 1982. During that decline the index, adjusted to a constant dollar
basis, lost 56 points or 36 percent of its value. By comparison, the
current decline of the softwood lumber index is already greater in
magnitude. The current decline began following a peak in August 2004,
and by March 2008, the index, adjusted to a constant dollar basis, had
lost 76 points or 48.5 percent of its value. It is unknown when the
current decline will end.
The intent of the market-related contract term addition regulations
are to avert massive defaults and attendant adverse economic impacts on
industry and dependent communities by providing purchasers additional
contract time until markets improve. Since adoption of the regulations
in 1990, the three-year limit on market-related contract term additions
has met that objective in the three previous periods when a drastic
reduction in wood prices occurred. But, when a drastic decline in wood
prices continues for over three years as it currently has and the
market-related contract term additions run out before markets improve,
purchasers holding high priced sales bid when the markets were stronger
are likely to face severe economic hardship without some form of
relief.
As of May 1, 2008, there were 1,030 non-salvage sales awarded prior
to April 1, 2007, that were over one year in original contract length
and with volume remaining to remove. Approximately twenty-three
percent, or 239 of those sales, have received additional contract time
totaling three years or more, and over half of those sales were awarded
prior to the softwood index peaking in August 2004. The additional time
granted in excess of the maximum market-related contract term addition
time was for reasons unrelated to market conditions such as adverse
weather conditions that prevented operations.
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 110-246, 122
Stat. 1651 (June 18, 2008), authorized the Forest Service to add up to
four years of market-related contract term addition to contracts
awarded prior to
[[Page 51390]]
January 1, 2007. While section 8401 provides immediate relief to
contracts that had or were about to reach the three-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 light of the managers' statement, and to address prolonged
adverse market conditions in the future, the Forest Service proposes
amending the market-related contract term addition regulations at 36
CFR 223.52 to allow certain contracts to receive more than three years
of additional time when there is a prolonged drastic reduction in wood
product prices. To be eligible for market-related contract term
addition time in excess of three years, contracts must meet the
conditions for market-related contract term addition in Sec. 223.52,
and the index specified in the contract must trigger for eleven
consecutive quarters following the award date in the contract. The
criteria of eleven consecutive quarters was selected because under the
formula for granting market-related contract term additions, all sales
will have reached the three year limit, prior to, but no later than,
the tenth consecutive quarter (Sec. 223.52(c)(3)). Beginning with the
eleventh consecutive qualifying quarter, and for each subsequent
consecutive qualifying quarter, the contract may receive an additional
three months of normal operating season time. Contracts where all
biddable species were at base rates during any quarter between the
original contract termination date and any adjusted termination date
will not be eligible for more than three years of market-related
contract term addition. The rationale for this criterion is that sales
at base rates have stumpage prices as low as permitted, so additional
time for market conditions to improve is not needed.
Under this proposed rule, the maximum amount of market-related
contract term addition time a contract awarded after December 31, 2006,
may receive will be controlled by the 10-year limit on total contract
length established under the National Forest Management Act of 1976 (16
U.S.C. 472a(c)). But, pursuant to the 2008 Farm Bill, sales awarded
prior to January 1, 2007, may only have the termination date adjusted
by up to four calendar years as the result of market-related contract
term addition.
An additional proposed amendment to the market-related contract
term addition regulations at 36 CFR 223.52 will authorize contracting
officers to select an index at the time certain contracts are awarded
that is different from the one identified in the sample contract. Each
timber sale contract over one year in length includes one of three
producer price indices (softwood lumber, hardwood lumber or wood chips)
updated monthly by the Bureau of Labor Statistics. The index selected
for each sale is based on the species and product characteristics that
represent more than one-half of the advertised volume. The index is
used to determine when the contract is eligible for a market-related
contract term addition and/or an emergency rate redetermination. This
proposed rule change would authorize contracting officers to select an
alternative producer price index at the time a contract is awarded when
the appropriate Forest Supervisor has determined, prior to advertising
the contract, that the species and potential product characteristics
are such that more than one index could represent more than one-half of
the advertised volume. Upon a purchaser's written request, the
contracting officer could select an alternative index to the one
identified in the sample contract if the contracting officer determines
that the alternative index better represents the highest percentage of
the products the successful bidder intends to produce or have produced
from the sale.
On sales providing this alternative index option, all bidders will
have an equal opportunity to substitute a more representative index,
which should reduce the risk of potential bid protests over this
change. Providing bidders with a process for changing the index on
sales where more than one index may be applicable may also result in
higher bids. For these sales, the prospectus will state that the
contracting officer may, upon the purchaser's written request, select
an alternative index from paragraph (b), and may modify the contract by
mutual agreement, at time of contract award, to include an alternative
index that the contracting officer has determined represents the
highest percentage of products the purchaser intends to produce or have
produced from the sale. The purchaser will be required to make a
written request for an index change that includes documentation showing
how the purchaser anticipates the timber will be processed. If the
purchaser is a non-manufacturer, the written request should show the
percentage of sale volume the purchaser intends to deliver to different
manufactures, such as 75 percent to an oriented strand board processor
(OSB) and 25 percent to a pulp mill.
This change to the regulation is needed because different uses of
technology for processing forest products continue to evolve. Thus
selecting the appropriate index prior to knowing who the purchaser will
be and what products will be produced may not be possible when a sale
is offered. For example, a sale that is predominantly aspen may be sold
in a market area that has a pulp mill, an OSB mill, and a sawmill
capable of processing aspen lumber. Since the pulp mill is the closest
mill to the sale, it is used as the appraisal under the current
regulation. Consequently, the Forest Service assigns the wood chips
index to the sale when it is advertised. If the pulp mill owner buys
the sale, the wood chips index is the correct index for the product
that will be produced and a change of index would not be appropriate.
However, if the OSB mill owner buys the sale, the softwood lumber index
would be more appropriate since OSB is a building material that tends
to follow softwood lumber prices. Further, if the sawmill owner buys
the sale, the hardwood lumber index may be most appropriate, unless the
principal aspen product is pannelling, in which case the softwood
lumber index may be most appropriate. In addition, if a non-
manufacturer buys the sale with the intention of merchandizing the wood
to all three mills, the most appropriate index would be based on which
mill is expected to process the highest percentage of the sale volume.
In this example, if the purchaser intended to sell 40 percent of the
sale volume to the OSB mill, 30 percent to the pulp mill and 30 percent
to the hardwood lumber mill, the appropriate index would be softwood
lumber as it is the index representing the single greatest percentage
of volume. While this estimate is based on market conditions at the
time the contract is awarded, the purchaser can change the mix of
products produced during the life of the sale. However, the purchaser
will not be permitted to change the index after award unless that index
is discontinued and/or the Forest Service adopts and offers replacement
indices.
Another example occurred in 2006 and 2007 on certain sales using
the wood chips index. In November 2006 (71 FR 66160) and again in
November 2007 (72 FR 64991), specified timber sales were granted one
year extensions based on a determination of substantial overriding
public interest. Excluded from these extensions were sales on the
softwood lumber index because those sales were already receiving
market-related contract term additions. Most of the substantial
overriding public interest extensions granted went to sales
[[Page 51391]]
in the lake states region (predominately Minnesota) that were on the
wood chips index despite the fact that most of the wood was actually
being manufactured into oriented strand board. Although oriented strand
board prices were plummeting along with softwood lumber prices, these
sales were not eligible for market-related contract term additions
because the wood chips index remained high. If the index on those sales
had been changed from wood chips to softwood lumber when those
contracts were awarded, the substantial overriding public interest
extensions would not have been needed. To avert that situation in the
future, and to implement the Managers' direction for the 2008 Farm
Bill, a process for changing the index at the time of award when more
than one index may be appropriate is needed.
Expanding existing rights to market-related contract term addition
to include a procedure for changing the index at the time of contract
award is in the public interest. In most market areas, the species
product combinations are easy to identify prior to offering a sale, and
there will be little need or justification to change the index at the
time of contract award. However, in situations such as the examples
described above where more than one index may apply, a procedure for
changing the index when the contract is awarded to reflect the
principal product the purchaser intends to produce is needed. The
objective is to allow the parties to enter into contracts under terms
that reflect market conditions at the time of award; it is not to
guarantee profitable market conditions or a certain level of profit
throughout the life of the contract. The intended effect is to avert
the need for substantial overriding public interest extensions,
determinations, as well as legislation like the 2008 Farm Bill, which
provides relief to contracts with indices that became mismatched with,
or did not reflect, the products the purchaser produced.
Currently, 36 CFR 223.52(a)(2) provides that the Forest Supervisor
shall select from the available indices in Sec. 223.52(b) the index to
be used in each contract based on the species and product
characteristics, by volume, included in a contract. The existing rule
also provides that the index selected shall represent more than one-
half of the advertised volume. The existing rule is silent as to when
Forest Supervisors must choose an appropriate index but the practice
has been to identify the index when a contract is advertised.
Buying a sale that uses an index that does not represent the
principal product a purchaser intends to produce increases the
purchaser's risk that a drastic reduction in the prices of the wood
products it is producing will not result in a market-related contract
term addition. Providing a procedure to change the index once the
purchaser and the principal product it intends to produce are
identified will have the effect of reducing the purchaser's risk, which
may also increase bids.
Finally, under the current regulation, a contract may receive a one
year market-related contract term addition when there are two
consecutive qualifying quarters and may receive three months of
additional time within the contract's normal operating season for each
subsequent consecutive qualifying quarter subject to the limits on
total additional contract time. Some sales have a normal operating
season that is less than three months resulting in a situation where
the contract could be extended for more than one year if three months
of normal operating season is added to the contract term. This proposed
change will limit the amount of additional time to no more than one-
calendar year when the normal operating season is less than three
months.
Regulatory Certifications
Regulatory Impact
This proposed rule has been reviewed under USDA procedures and
Executive Order 12866 on Regulatory Planning and Review. It has been
determined that this proposed rule is not a significant regulatory
action and is not subject to Office of Management and Budget (OMB)
review. This proposed 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 proposed 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 proposed 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 proposed
rule is not subject to OMB review under Executive Order 12866.
Moreover, this proposed 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 will not have a significant economic impact
on a substantial number of small entities as defined by that act. As
revised in this proposed 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 proposed 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 proposed 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 proposed 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 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. Section 31.1b of Forest Service Handbook
1909.15 (57 FR
[[Page 51392]]
43180; September 18, 1992) 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 proposed 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. This collection of
information was submitted to the Office of Management and Budget (OMB)
and received emergency approval under OMB No. 0596-0212. Notice of this
information collection and request for comment was published in the
Federal Register on July 22, 2008 (73 FR 42542). This rule contains no
additional information collection under the Paperwork Reduction Act.
Energy Effects
This proposed 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 proposed rule
does not constitute a significant energy action as defined in the
Executive order.
Federalism
The agency has considered this proposed rule under the requirements
of Executive Order 13132, Federalism. The agency has made an assessment
that the proposed 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 proposed 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 proposed 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 proposed 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 proposed 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
proposed 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.
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
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.
2. Amend Sec. 223.52 by revising paragraphs (a)(2) and (c)(2)
through (4) 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) 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), and may modify the contract by
mutual agreement, at time of contract award, to include an alternative
index that the Contracting Officer has determined represents the
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 including a list of
products by volume it 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
award, the index specified in the sample contract shall apply.
* * * * *
(c) * * *
(2) For each additional consecutive quarter in which a contract
qualifies for a 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
sales with a normal operating season of less than 3 months may only
receive additional time equal to their normal operating season.
(3) No more than 3 years of MRCTA time 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) During each quarter between the original contract termination
date and the current termination date, contract rates for one or more
of the biddable species exceeded base rates; and
(iii) A drastic reduction in wood product prices occurred for
eleven consecutive qualifying quarters.
(4) For contracts eligible for more than 3 calendar years of
market-related contract term addition under Sec. 223.52(c)(3),
beginning with the eleventh consecutive qualifying quarter, and for
each subsequent consecutive qualifying quarter, the Forest Service
will, upon the purchaser's written request, add an additional 3 months
during the normal operating season to
[[Page 51393]]
the contract, except that sales with a normal operating season of less
than 3 months may only receive additional time equal to their normal
operating season.
* * * * *
Dated: August 26, 2008.
Sally Collins,
Associate Chief, Forest Service.
[FR Doc. E8-20301 Filed 9-2-08; 8:45 am]
BILLING CODE 3410-11-P
