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