[Federal Register Volume 66, Number 51 (Thursday, March 15, 2001)]
[Notices]
[Pages 15067-15069]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-6451]


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 Notices
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains documents other than rules 
 or proposed rules that are applicable to the public. Notices of hearings 
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  Federal Register / Vol. 66, No. 51 / Thursday, March 15, 2001 / 
Notices  

[[Page 15067]]



DEPARTMENT OF AGRICULTURE

Forest Service


Information Collection; Request for Comment; Forms FS-6500-11, 
FS-6500-12, and FS-6500-12a

AGENCY: Forest Service, USDA.

ACTION: Notice.

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SUMMARY: In accordance with the Paperwork Reduction Act of 1995, the 
Forest Service announces its intention to establish a new information 
collection. The collected information will enable the agency to ensure 
that holders of National Forest System timber sale contracts provide 
performance guarantees and payment guarantees. The collected 
information also will ensure effective implementation of the Debt 
Collection Act of 1982, as amended.

DATES: Comments must be received in writing on or before May 14, 2001.

ADDRESSES: Send written comments to Clarice Wesley, Financial 
Management Staff (MAIL STOP 1139), P.O. Box 96090, Forest Service, 
USDA, Washington, DC 20090-6090.
    Comments also may be submitted via facsimile to (703) 605-5102 or 
by email to [email protected].
    The public may inspect comments in the Office of the Director, 
Financial Management Staff, Forest Service, USDA, 6th FL, 1601 N. Kent 
Street, Arlington, Virginia, between the hours of 8:30 a.m. and 4:30 
p.m.

FOR FURTHER INFORMATION CONTACT: Clarice M. Wesley, Financial 
Management Staff, (703) 605-4983.

SUPPLEMENTARY INFORMATION:

Background

    The Multiple-Use Sustained Yield Act of 1960 (16 U.S.C. 528-531, as 
amended) and the Forest and Rangeland Renewable Resources Planning Act 
of 1974 (16 U.S.C. 1600-1614, as amended) authorize the Forest Service 
to sell National Forest System timber to private purchasers through a 
competitive bidding process. Bidders are required to provide a bid 
guarantee and a performance guarantee to protect against damage to the 
natural resources and financial loss to the Federal government. The 
bidders, however, are not required to provide a payment guarantee.
    To satisfy the requirement for performance guarantees for National 
Forest System timber sale contracts, the Forest Service currently uses 
Standard Form 25--Performance Bond (SF-25). This form was developed by 
the General Services Administration in response to the Miller Act (40 
U.S.C. 270a-270f) and is unique to construction contracts. SF-25 was 
intended for use in conjunction with the Federal government's purchase 
of a product or service rather than the sale of a product, as is the 
case in the sale of National Forest System timber.
    SF-25 does not guarantee payment from a holder of a timber sale 
contract or from a surety company, if a holder of a timber sale 
contract defaults on the contract. SF-25 also does not incorporate 
requirements of the Debt Collection Act of 1982, as amended, which 
specifies that a surety company be assessed for additional charges of 
interest, late-payment penalties, and administrative costs, if a 
payment is not made by a specified date. (31 U.S.C. 3717)
    The Forest Service addressed the issue of no guarantee of payment 
by holders of timber sale contracts by proposing a new form, FS-6500-
11-Performance Bond, in a proposed policy, Timber Sale Performance and 
Payment Bond Form Revision, with a request for comments that was 
published in the Federal Register on January 17, 1989 (54 FR 1742). The 
Forest Service would require timber sale contractors to use FS-6500-11, 
in lieu of SF-25, to meet the requirement to provide a surety to 
guarantee a bid payment. FS-6500-11 would clarify: (1) What the surety 
company would be guaranteeing, (2) when payment would be due from a 
surety company in case of default of the contract by the principal, and 
(3) the additional charges that include interest, penalties, and 
administrative costs, that would be assessed if payment had not been 
received from the surety company by a specified date. (31 U.S.C. 3717) 
(FSH 6509.11h, chapter 20)
    In the proposed policy, the agency also had proposed revising the 
FS-6500-12--Payment Bond Form and FS-6500-12a--Blanket Payment Bond 
Form to provide for assessment of interest, penalties and 
administrative costs for late payment, as required by the Debt 
Collection Act of 1982, as amended. (31 U.S.C. 3717) The agency 
received comments from 21 respondents: 10 from timber companies and 11 
from surety companies. Twenty of the 21 respondents opposed revising 
the bond forms.
    The surety companies maintained that, under the tenets of 
suretyship, by making payment before a dispute has been settled, a 
surety may be viewed by the court as a ``volunteer.'' According to the 
sureties, by being viewed as a ``volunteer,'' a surety would lose its 
right to reimbursement by the principal. Sureties further maintained 
that being viewed as a ``volunteer'' also would create an open-ended 
bond liability for sureties that would include assessment of interest, 
penalties, and administrative costs. Sureties maintained that 
unliquidated damages should not be due and interest should not begin to 
accrue, in the case of a dispute and appeal, until a board or court has 
decided that a damage amount was properly due and owing. Sureties 
maintained they should only be obligated, if so determined by a court 
or board in the case of a dispute, to pay the amounts owed by the 
principal, including interest owed by the principal, up to the penal 
sum of the bond.
    Sureties also maintained that the Forest Service has been acting as 
judge and jury in denying a surety due process by prejudging which 
defenses have been valid for contesting a billing. Sureties maintained 
that the Forest Service has refused to recognize the ``normal concept'' 
of suretyship and has attempted to turn a bond into a demand 
instrument, such as a Letter of Credit.
    The 10 timber companies maintained, if the Forest Service proceeded 
with revisions to FS-6500-12 and FS-6500-12a, surety bonds would be too 
costly for small timber companies.
    One respondent wanted to eliminate performance bonding.
    Because of the nature of the comments, the Chief of the Forest

[[Page 15068]]

Service determined that further review would be necessary.
    Subsequently, the Forest Service had requested an opinion from the 
Comptroller General on whether the agency could assess interest, 
penalties, and administrative costs on delinquent debts during the 
pendency of appeals taken pursuant to the Contracts Disputes Act of 
1978. The Forest Service also had requested an opinion as to whether 
corporate sureties, providing performance bonds for timber sale 
contracts, would be subject to the assessment of interest, penalties, 
and administrative costs, in addition to the penal sums owed under 
their bonds.
    The Comptroller General published the following decision in 1991 
(70 Comp. Gen. 517, 518):
    (a) Under the Debt Collection Act of 1982, as amended, the Forest 
Service should assess interest, late-payment penalties, and 
administrative costs on delinquent contract debts during the pendency 
of appeal by debtors under the Contract Disputes Act of 1978; and
    (b) If it becomes necessary or appropriate to invoke the surety's 
bond, the surety would be liable for charges against the contractor 
assessed under the Debt Collection Act of 1982, as amended. The surety 
also would be liable for charges assessed against the surety itself, 
interest, penalties, and administrative costs, after the surety's 
obligation under the bond has been invoked.
    Soon after the decision of the Comptroller General was published, 
the United States Court of Appeals for the Federal Circuit issued a 
significant decision in the case, Insurance Company of North America 
vs. United States, 951 F.2d 1244 (Fed. Cir. 1991), which held a surety 
company liable for interest that accrued from the time the Federal 
government properly demanded payment from the surety, throughout the 
pending litigation, and until the Federal government received payment 
in full, even when the amount of interest increased the surety's 
obligation beyond the penal amount of the bond. The court decided that 
``[t] he surety's obligation to pay does not wait for completion of 
legal contests between the principal and the creditor.'' The surety's 
obligation to pay continues to accrue during litigation between the 
principal and the creditor.
    Additionally, the General Accounting Office, in a report to 
Congress in October of 1993 entitled ``Timber Sale Contract Defaults--
Forest Service Needs to Strengthen Its Performance Bond and Contract 
Provisions,'' recommended that the Forest Service clarify the liability 
provisions in a new performance bond, which would clearly make plain 
that the surety company would be liable for damages at the time of 
default, as well as for interest, penalties, and administrative costs 
on delinquent debts from the time the default occurs.
    In response to the decision of the Comptroller General, the 
decision of the United States Court of Appeals for the Federal Circuit 
in the case, Insurance Company of North America vs. United States, and 
the recommendations of the United States General Accounting Office, the 
Forest Service proposes to use FS-6500-11-Performance Bond, FS-6500-12-
Payment Bond, and FS-6500-12a-Blanket Payment Bond to meet the 
requirements of the Debt Collection Act of 1982, as amended.
    FS-6500-11, FS-6500-12, and FS-6500-12a would set forth a surety's 
obligation and potential liability at the time a timber sale purchaser 
obtains a performance guarantee or payment guarantee. These forms would 
ensure that surety companies know their obligations to safeguard the 
interests of the public and would meet the requirements of the payment 
or performance bond, if a purchaser failed to fulfill the terms and 
conditions of a timber sale contract. (31 U.S.C. 3717) (FSH 6509.11h, 
chapter 20)
    Timber sale contractors must provide certain information to the 
Forest Service. The following forms are designed to provide this 
information: FS-6500-11, FS6500-12, and FS-6500-12a. The request for 
information meets the information collection requirements of the 
Paperwork Reduction Act of 1996. Therefore, the agency has withdrawn 
the proposed policy, Timber Sale Performance Bond and Payment Bond Form 
Revision, and is now requesting approval from the Office of Management 
and Budget to collect this information. (withdrawn on April 27, 1998 
(63 FR 21773))
    Respondents would be holders of National Forest System timber sale 
contracts. They would be asked to provide the following same 
information on all three forms: the name and address of the principal 
that has entered into or assumed a timber sale contract; the name and 
address of the surety that would guarantee the performance of the 
principal; the penal sum of the bond; the timber sale contract number 
and name; the period for which the performance would be guaranteed; and 
the signatures, certifications, dates, and seals, as appropriate, for 
principal, surety, and witnesses.

Description of Information Collection

    The following describes the new information collection:
    Title: FS-6500-11-Performance Bond.
    OMB Number: New.
    Expiration Date of Approval: New.
    Type of Request: This is a new information collection that has not 
received approval from the Office of Management and Budget.
    Abstract: FS-6500-11-Performance Bond will replace Standard Form 
25-Performance Bond and will guarantee the faithful performance and 
fulfillment of the terms and conditions of the contract.
    FS-6500-11 (a) will provide for a surety company to become liable 
for the default of a timber sale contract by its principal, (b) will 
provide when such payment is due from the surety company, and (c) will 
incorporate requirements of the Debt Collection Act of 1982, as 
amended, which specify that the surety company be assessed for 
additional charges of interest, late-payment penalties, and 
administrative costs, if payment is not made by a specified date.
    FS-6500-11 will ensure that bidders provide a corporate surety 
bond, cash, certified check, cashier check, bank draft, postal money 
order, assigned savings account, certificate of deposit, securities, or 
an irrevocable letter of credit to address the issues of payment 
guarantees, blanket payment guarantees, and performance guarantees.
    FS-6500-11 also will meet the requirements of the Debt Collection 
Act of 1982, as amended, and will incorporate the decisions of the 
Comptroller General of the United States, the United States Court of 
Appeals for the Federal Circuit, and the recommendations of the United 
States General Accounting Office.
    Respondents will be holders of National Forest System timber sale 
contracts.
    Estimate of Burden: 15 minutes.
    Type of Respondents: Individuals, large and small businesses, and 
corporations that hold a timber sale contract and use performance bonds 
to guarantee performance.
    Estimated Number of Respondents: 3,000.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 750 hours.

Description of Information Collection

    The following describes the new information collection:
    Title: FS-6500-12-Payment Bond.
    OMB Number: New.
    Expiration Date of Approval: New.
    Type of Request: This is an information collection that has not 
received approval from the Office of Management and Budget.

[[Page 15069]]

    Abstract: FS-6500-12-Payment Bond will guarantee that holders of 
timber sale contracts pay the Federal government the agreed upon amount 
as required under the contract.
    Respondents will be holders of National Forest System timber sale 
contracts.
    Estimate of Burden: 15 minutes.
    Type of Respondents: Individuals, large and small businesses, and 
corporations that hold a timber sale contract and use payment bonds to 
guarantee payment for timber.
    Estimated Number of Respondents: 1,350.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 338 hours.

Description of Information Collection

    The following describes the new information collection:
    Title: FS-6500-12a-Blanket Payment Bond.
    OMB Number: New.
    Expiration Date of Approval: New.
    Type of Request: This is an information collection that has not 
received approval from the Office of Management and Budget.
    Abstract: FS-6500-12a-Blanket Payment Bond will guarantee that, if 
the principal fails for any reason to make any payment, the surety will 
make the payment.
    Respondents will be holders of National Forest System timber sale 
contracts.
    Estimate of Burden: 15 minutes.
    Type of Respondents: Individuals, large and small businesses, and 
corporations that hold a timber sale contract and use blanket payment 
bonds to guarantee payment for timber.
    Estimated Number of Respondents: 150.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 38 hours.

Comment Is Invited

    The agency invites comment on the following: (a) Whether the 
proposed collection of information is necessary for the proper 
performance of the functions of the agency, including whether the 
information will have practical or scientific utility; (b) the accuracy 
of the Agency's estimate of the burden of the proposed collection of 
information, including the validity of the methodology and assumptions 
used; (c) ways to enhance the quality, utility, and clarity of the 
information to be collected; and (d) ways to minimize the burden of the 
collection of information on respondents, including the use of 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology.

Use of Comments

    All comments received in response to this notice, including name 
and address when provided, will become a matter of public record. 
Comments will be summarized and included in the request for Office of 
Management and Budget approval.

    Dated: February 15, 2001.
Paul Brouha,
Associate Deputy Chief for National Forest Systems.
[FR Doc. 01-6451 Filed 3-14-01; 8:45 am]
BILLING CODE 3410-11-P