[Federal Register Volume 71, Number 147 (Tuesday, August 1, 2006)]
[Notices]
[Pages 43435-43438]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-12310]


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DEPARTMENT OF AGRICULTURE

Forest Service

[RIN 0596-AC46]


Small Business Timber Sale Set-Aside Program Share Recomputation

AGENCY: Forest Service, USDA.

ACTION: Notice of proposed policy directive; request for public 
comment.

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SUMMARY: The Forest Service proposes to remove structural change 
recomputation direction contained in Forest Service Timber Sale 
Preparation Handbook (FSH) 2409.18 (applicable in Forest Service 
Regions 1 through 6 only) as one of the means of recomputing timber 
sale set-aside market share allocation to small business mills within a 
market area. This change is needed to make the recomputation process as 
accurate as possible by making market shares more reflective of current 
market conditions, in terms of volume and business capacity, as well as 
to simplify the process by which market share is determined. The 
direction on scheduled recomputation of market shares and special 
recomputations would be retained. Additionally, the Forest Service is 
proposing to include volumes sold or disposed of via stewardship 
contracting (Integrated Resource Contract, 2400-13 & 13T) in the 
volumes used to calculate market shares pursuant to the small business 
timber sale set-aside program.

DATES: Comments must be received in writing by October 2, 2006.

ADDRESSES: The full text of FSH 2409.18, chapter 90 is available 
electronically on the World Wide Web/Internet at http://www.fs.fed.us/im/directives.

FOR FURTHER INFORMATION CONTACT: Richard Fitzgerald, Assistant 
Director, Forest Management Staff, by telephone at (202) 205-1753 or by 
Internet at [email protected].

SUPPLEMENTARY INFORMATION: Developed in cooperation with the Small 
Business Administration, the Forest Service Small Business Timber Sale 
Set-aside Program is designed to ensure that qualifying small business 
timber purchasers have the opportunity to purchase a fair proportion of 
National Forest System timber offered for sale. The current Small 
Business Timber Sale Set-aside Program was adopted July 26, 1990 (55 FR 
30485). Direction that guides Forest Service employees in administering 
the Small Business Timber Sale Set-aside Program is issued in the 
Forest Service Manual (FSM), Chapter 2430, and in Chapter 90 of the 
Forest Service Timber Sale Preparation Handbook (FSH 2409.18).
    According to the guidelines of the set-aside program, the Forest 
Service recomputes the shares of timber sales to be set aside for 
bidding by qualifying small businesses every 5 years. The share 
percentage is based on the actual volume of sawtimber that has been 
purchased and/or harvested by small businesses during a 5-year period. 
In addition to the 5-year scheduled recomputation requirement, in 
Forest Service Regions 1 through 6, small business shares currently 
must be recomputed whenever a structural change occurs (see FSH 
2409.18, chapter 90, section 91.22).
    Structural change (applicable to Regions 1 through 6 only) is 
defined at FSH 2409.18, chapter 90, section 90.5, paragraph 8b as a 
change that ``may occur during a recomputation period when a small or 
large business firm that purchased at least 10 percent of the total 
sawlog volume during the last recomputation period discontinues 
operations or changes its size status

[[Page 43436]]

through the sale or purchase of manufacturing capacity. When a 
structural change occurs, the small business share must be recomputed 
in accordance with the procedure set out in section 91.22b.''
    In the past, the adjustment of market shares, based on scheduled 
recomputations and structural change recomputation where warranted, 
functioned acceptably, when the timber sale program operated at its 
historic levels of annual sell volume. However, in the past 15 years, 
annual volume of timber sold in all Forest Service regions has declined 
substantially. For example, the annual volume of Forest Service timber 
offered for sale has decreased from 12 billion board feet in fiscal 
year 1990 to around 2 billion board feet in fiscal year 2004.
    Presently, nearly half of the National Forest timber volume sold 
has been salvaged from areas damaged by fire and other catastrophic 
events. The current annual timber sale program is characterized by this 
increase in salvage timber, a much reduced number of advertisements of 
timber for sale, a relatively sporadic release of the available timber 
sales for bidding, and the overall substantial decline in saw timber 
volume for sale.
    Structural change recomputations, which occur at unpredictable 
times, may be (and have been) followed by years of minimal or no timber 
volume offered for sale by the Forest Service that is suitable for 
purchase by qualified small businesses in a market area. This results 
in a significantly distorted database in a 3-year period on which to 
base a structural change share recomputation. The problem is compounded 
by existing set-aside guidelines which place no limit on the amount of 
share change that may occur as a result of a structural change 
recomputation. Establishment of a new small business share through a 
structural change recomputation can lock in a share change based on 
distorted data for an inordinate period of time.
    The procedure for recomputation of shares following a structural 
change is designed to provide small business firms the opportunity to 
maintain their historical share when a firm changes size, but provides 
for a reasonably rapid adjustment of shares to reflect the actual 
purchase and harvest patterns which develop (FSH 2409.18, chapter 90, 
section 91.22b). With changes in the timber sale program and the amount 
and type of timber offered for sale, structural change recomputations 
no longer appear to adequately accomplish these goals.
    Thus, the Forest Service proposes to drop the structural change 
recomputation from the direction in FSH 2409.18. Any structural changes 
which were previously announced and are underway would be dropped. When 
a 5-year recomputation was skipped because of the structural change, 
the 5-year recomputation would be completed and the results made 
retroactive to the normal 5-year recomputation schedule.
    Special recomputations of market share, as defined at FSH 2409.18, 
chapter 90, section 91.23, would remain in effect to deal with unique 
and unforeseen circumstances which may require departure from 
established procedure.
    The directive text being proposed for removal (FSH 2409.18, chapter 
90) includes section 90.5, paragraph 8b (definition for structural 
change) and section 90.41, paragraphs 4 and 9 (Forest Supervisor 
responsibilities), as well as references to structural changes in 
sections 91.17, 91.22, 91.22a, 91.22b, and 91.3.
    The directive text being proposed for removal may be found on the 
World Wide Web/Internet at http://www.fs.fed.us/cgi-bin/Directives/get_dirs/fsh?2409.18/ in the file named 2409.18--90.doc.
    Section 347 of the Department of the Interior and Related Agencies 
Appropriations Act, 1999 (as contained in section 101(e) of division A 
of Public Law 105-277), as amended by section 323 of the Department of 
the Interior and Related Agencies Appropriations Act, 2003 (as 
contained in division F of Public Law 108-7; 16 U.S.C. note), 
authorizes the Forest Service (FS) and the Bureau of Land Management 
(BLM), until September 30, 2013, to enter into stewardship contracting 
projects (stewardship projects) with private persons or public or 
private entities, by contract or by agreement, to perform services to 
achieve land management goals for the national forests or public lands 
that meet local and rural community needs.
    The land management goals for stewardship projects may include 
treatments to improve, maintain, or restore forest or rangeland health; 
restore or maintain water quality; improve fish and wildlife habitat; 
and reduce hazardous fuels that pose risks to communities and ecosystem 
values, reestablish native plant species, or other land management 
objectives. Stewardship projects are not a replacement for agencies' 
existing timber sale programs. Stewardship contracting may differ from 
other contracting authorities in the following manner:

--A source for performance of contracts shall be selected on a best 
value basis;
--Contract length may exceed 5 years but may not exceed 10 years;
--The agencies may apply the value of timber or other forest products 
removed as an offset against the costs of any services received;
--The agencies may collect monies from a stewardship contract so long 
as the collection is a secondary objective of negotiating contracts 
that best achieve the purposes of section 347, as amended by section 
323;
--Monies received from the sale of timber, forest products, or 
vegetation via a stewardship contract may be retained by the agencies 
and available for expenditure at the project site or at another 
stewardship project site without further appropriation;
--A multiparty monitoring and evaluation process is required.

    The Forest Service has issued guidance in Forest Service Handbook 
2409.19, chapter 60. Stewardship projects are authorized on all Forest 
Service units. Forest Supervisors select the projects for their 
respective units and Regional Foresters provide oversight of the 
program.
    The Forest Service has sold some sawlog volume from stewardship 
projects on National Forest System lands under its integrated resource 
contracts (IRC). Sawlog volume from the IRC was tracked, but not 
included in the volumes used to calculate the small business timber 
sale set-aside program for the recomputation period ending in 2005. 
Some sawlogs disposed of via stewardship contracts have been purchased 
by small and large timber industry businesses.
    The Forest Service has four IRCs. Two are designed for use when the 
value of the timber to be disposed of in the project exceeds the value 
of the services received in the project (2400-13 & 13T). These two 
contracts are generally referred to as integrated resource timber 
contracts (IRTC). The other two contracts used for stewardship are used 
when the value of the services received exceeds the value of the timber 
to be disposed, and are generally referred to as integrated resource 
service contracts (IRSC). These contracts are primarily considered 
procurement contracts and include contract provisions required by the 
Federal Acquisition Regulations and other procurement related laws and 
regulations. However, the IRSC also contains some provisions necessary 
to govern the disposal of the timber.
    The amount of timber volume offered under traditional timber sale 
contracts has declined significantly over the past

[[Page 43437]]

decade. Consequently, the sawlog volumes used to calculate market 
shares also have declined. In light of these significant declines and 
the need to adequately and fully consider sawlog volumes disposed of 
via contracts with the timber industry, the Forest Service proposes to 
include sawlog volumes from IRTC (2400-13 & 13T) in the volumes used to 
calculate market shares pursuant to the small business timber sale set-
aside program. Since new market shares recently have been recomputed 
and announced for the 5-year period ending in 2010, the Forest Service 
proposes to include volumes sold via the IRTC in the operation of the 
regular set-aside program for the 2005-2010 period. The volumes will be 
tracked and used to establish new market shares at the end of the 2010 
period, as well as for special recomputations that may occur prior to 
scheduled recomputations.
    The Forest Service is proposing to include only the IRTCs in the 
set-aside program as these are the contracts that have significant 
timber volumes and the logs generally are of sufficient size to produce 
sawlogs, the primary focus of the set-aside program. The Forest Service 
does not propose to include the IRTCs as they generally have lesser 
quantities of timber volume and they are governed by the Federal 
Acquisition Regulation and other procurement related statutes and 
regulations, as well as the laws and regulations governing set asides 
for small businesses seeking procurement contracts. The Department of 
Agriculture already has requirements for small business consideration 
for service contracts; therefore, there is no need to include the IRSCs 
in the small business timber sale set-aside program.
    New market shares recently have been recomputed and announced for 
the next 5-year period ending in 2010. The Forest Service believes it 
now is appropriate to include stewardship contract sawlog volumes from 
2400-13 and 13T contracts in the implementation of the small business 
timber sale set-aside program for 2005-2010, and including the results 
of these sales along with the regular timber sale program results when 
recomputing market shares for the period ending 2015.
    The 70/30 rule for traditional timber sale contracts requires that 
at least 70 percent of the sawlog volume sold via a timber sale 
contract be processed by a small business manufacturer (FSH 2409.18, 
chapter 90). Because of unique aspects of stewardship contracting (such 
as offsetting the costs of services received by the value of timber or 
forest products contained in a stewardship contract; and the nature of 
stewardship contracting which makes collection of money from a 
stewardship contract a secondary objective), it would not be 
appropriate to include the 70/30 requirement in the small business 
timber sale set-aside program.
    Thus, the Forest Service proposes to amend the direction in FSH 
2409.18, chapter 90 (the direction for the timber sale set-aside 
program) and the direction in FSH 2409.19, chapter 60--Stewardship 
Contracting, to include the sawlog volumes from projects sold as 
integrated resource contracts 2400-13 and 13T in the small business 
timber sale set-aside program. Further, disposal of the logs from IRCs 
would not be subject to the 70/30 processing requirement.

Regulatory Certifications

Regulatory Impact

    This proposed directive change has been reviewed under USDA 
procedures and Executive Order 12866 on Regulatory Planning and Review. 
It has been determined that this is not a significant policy. This 
proposed change will not have an annual effect of $100 million or more 
on the economy nor adversely affect productivity, competition, jobs, 
the environment, public health or safety, nor State or local 
governments. This proposed policy will not interfere with an action 
taken or planned by another agency nor raise new legal or policy 
issues. Finally, this action will not alter the budgetary impact of 
entitlements, grants, user fees, or loan programs or the rights and 
obligations of recipients of such programs. Accordingly, this policy is 
not subject to OMB review under Executive Order 12866.
    Moreover, this proposed directive change has been considered in 
light of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), and it 
has been determined that this action will not have a significant 
economic impact on a substantial number of small entities as defined by 
that Act.

Environmental Impact

    Section 31.1b of Forest Service Handbook 1909.15 (57 FR 43180; 
September 18, 1992) excludes from documentation in an environmental 
assessment or impact statement ``rules, regulations, or policies to 
establish service-wide administrative procedures, program processes, or 
instructions.'' The agency's assessment is that this proposed directive 
change falls within this category of actions and that no extraordinary 
circumstances exist which would require preparation of an environmental 
assessment or environmental impact statement.

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 Department has assessed the effects of this proposed policy 
on State, local, and tribal governments and the private sector. This 
proposed directive change does not compel the expenditure of $100 
million or more by any State, local, or tribal governments, or anyone 
in the private sector. Therefore, a statement under section 202 of the 
Act is not required.

Controlling Paperwork Burdens on the Public

    This proposed directive change does not contain any recordkeeping 
or reporting requirements or other information collection requirements 
as defined in 5 CFR 1320 and, therefore, imposes no paperwork burden on 
the public. Accordingly, the review provisions of the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501 et seq.) and implementing 
regulations at 5 CFR part 1320 do not apply.

No Takings Implications

    This proposed directive change has been analyzed in accordance with 
the principles and criteria contained in Executive Order 12630, 
Governmental Actions and Interference with Constitutionally Protected 
Property Rights, and it has been determined that it would not pose the 
risk of a taking of private property as they are limited to the 
revision of administrative procedures.

Civil Justice Reform

    This proposed directive change has been reviewed under Executive 
Order 12988, Civil Justice Reform. This proposed change will direct the 
work of Forest Service employees and is not intended to preempt any 
State and local laws and regulations that might be in conflict or that 
would impede full implementation of this directive. The change would 
not retroactively affect existing permits, contracts, or other 
instruments authorizing the occupancy and use of National Forest System 
lands and would not require the institution of administrative 
proceedings before parties may file suit in court challenging its 
provisions.


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    Dated: June 21, 2006.
 Dale N. Bosworth,
Chief.
[FR Doc. E6-12310 Filed 7-31-06; 8:45 am]
BILLING CODE 3410-11-P