[Federal Register Volume 75, Number 199 (Friday, October 15, 2010)]
[Proposed Rules]
[Pages 63419-63420]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-25999]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 115

RIN 3245-AG14


Surety Bond Guarantee Program; Timber Sales

AGENCY: Small Business Administration.

ACTION: Proposed rule.

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SUMMARY: The Small Business Administration (SBA) proposes to amend its 
Surety Bond Guarantee Program rules to guarantee performance bonds for 
timber sale contracts awarded by the Federal Government or other public 
or private landowners.

DATES: Comments must be received on or before November 15, 2010.

ADDRESSES: You may submit comments, identified by RIN 3245-AG14, by any 
of the following methods:
    Federal eRulemaking Portal: http://www.regulations.gov. Follow the 
instructions for submitting comments.
    Mail: Office of Surety Guarantees, Suite 8600, 409 Third Street, 
SW., Washington, DC 20416.
    Hand Delivery/Courier: Office of Surety Guarantees, 409 Third 
Street, SW., Washington, DC 20416.
    SBA will post all comments on http://www.regulations.gov. If you 
wish to submit confidential business information (CBI) as defined in 
the User Notice at http://www.regulations.gov, please submit 
information to Ms. Barbara Brannan, Special Assistant, Office of Surety 
Guarantees, 409 Third, Street, SW., Washington, DC 20416 or send an e-
mail to [email protected]. Highlight the information that you 
consider to be CBI and explain why you believe SBA should hold this 
information as confidential. SBA will review the information and make 
the final determination whether it will publish the information.

FOR FURTHER INFORMATION CONTACT: Ms. Barbara Brannan, Office of Surety 
Guarantees, 202-205-6545, e-mail: [email protected].

SUPPLEMENTARY INFORMATION:

I. Background Information

    The Forest Service of the U.S. Department of Agriculture (USDA) 
manages the National Forest System, and may permit the harvesting of 
timber on National Forest System lands in exchange for the payment of 
an agreed upon sum of money. More information on that program is 
available at the Web site of the USDA Forest Service at http://www.fs.fed.us. Under regulations issued by the Forest Service, these 
timber sale contracts may require the purchaser to furnish a 
performance bond for satisfactory compliance with the contract terms. 
36 CFR 223.35. Generally, the Performance Bond, as defined in 13 CFR 
115.10, ensures that the Principal, as defined in 13 CFR 115.10, 
complies with all contract terms and conditions associated with forest 
management, such as the protection of natural resources, soil, water, 
erosion control, and road maintenance, as well as to ensure the 
Principal does not cut any trees that are expressly excluded from 
harvesting in the contract. In the process of cutting and transporting 
the logs, for example, forest roads may be damaged and the Principal is 
responsible for repairing the roads. The performance period for most 
timber sale contracts ranges from one to three years, and some can 
exceed five years.
    With respect to a Performance Bond involving the sale of timber on 
land managed by USDA, the Federal Government is the Obligee, as defined 
in 13 CFR 115.10, and the purchaser of the timber is the Principal. 
Unlike the typical contract for supplies or services where the Obligee 
pays the Principal for providing supplies or rendering services, the 
Principal in the timber sale contract is paying the Obligee for the 
right to cut the designated trees. However, under the definition of 
``Contract'' in 13 CFR 115.10, a contract for which SBA may issue a 
Surety Bond Guarantee cannot include a contract requiring any payment 
by the Principal to the Obligee. Thus, SBA cannot presently guarantee a 
bond for a timber sales contract.

[[Page 63420]]

    SBA is proposing to amend this definition to permit SBA to issue a 
bond guarantee for a contract that requires the Principal to pay the 
Obligee for the harvesting of timber. This action is being taken in 
response to concerns expressed by small businesses that have 
experienced difficulty obtaining the required bonds for public and 
private timber sale contracts. Discussions with representatives of the 
United States Forest Service confirm the need for increased bonding 
support for small businesses in this area, and it is estimated that 
approximately 150 small businesses would be eligible for bond guarantee 
assistance as a result of implementing this Proposed Rule. This change 
would apply to contracts involving forests managed by the Federal 
Government or other public or private landowners. SBA invites comments 
from public and private entities and individuals on how this proposed 
rule would affect them.

II. Section-by-Section Analysis

    Section 115.10. SBA is proposing to revise the definition of the 
term ``Contract'' to allow SBA to issue a performance bond guarantee 
for a contract that requires the Principal to pay the Obligee for the 
harvesting of timber on the land of the Obligee. The current definition 
excludes any contract that requires payment by the Obligee to the 
Principal. Because this kind of payment is inherent in timber sale 
contracts, the proposed change makes it clear that timber sale 
contracts are eligible for performance bond guarantees.

Compliance With Executive Orders 12866, 12988, and 13132, the Paperwork 
Reduction Act (44 U.S.C. Ch. 35), and the Regulatory Flexibility Act (5 
U.S.C. 601-612)

Executive Order 12866
    The Office of Management and Budget (OMB) has determined that this 
rule does not constitute a significant regulatory action under 
Executive Order 12866. This rule is also not a major rule under the 
Congressional Review Act.
Executive Order 12988
    This action meets applicable standards set forth in Sections 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. The action does not 
have retroactive or preemptive effect.
Executive Order 13132
    For purposes of Executive Order 13132, SBA has determined that the 
rule will 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. Therefore, for the purpose of Executive Order 13132, 
Federalism, SBA has determined that this Proposed Rule has no 
federalism implications warranting preparation of a federalism 
assessment; however, SBA invites comments from the public on this 
issue.
Paperwork Reduction Act, 44 U.S.C., Ch. 35
    SBA has determined that this Proposed Rule does not impose 
additional reporting or recordkeeping requirements under the Paperwork 
Reduction Act, 44 U.S.C., Chapter 35.
Regulatory Flexibility Act, 5 U.S.C. 601-612
    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601, requires 
administrative agencies to consider the effect of their actions on 
small entities, small non-profit enterprises, and small local 
governments. Pursuant to RFA, when an agency issues a rulemaking, the 
agency must prepare a regulatory flexibility analysis which describes 
the impact of this rule on small entities. However, section 605 of the 
RFA allows an agency to certify a rule, in lieu of preparing an 
analysis, if the rulemaking is not expected to have a significant 
economic impact on a substantial number of small entities. Within the 
meaning of RFA, SBA certifies that this rule will not have a 
significant economic impact on a substantial number of small entities. 
It is estimated that approximately 150 small businesses would now be 
eligible for bond guarantee assistance from SBA as a result of 
implementing this Proposed Rule. Additionally, there are 17 Sureties 
that participate in the SBG Program, and no part of this Proposed Rule 
would impose any significant additional cost or burden on them.

List of Subjects in 13 CFR Part 115

    Claims, Small businesses, Surety bonds.
    For the reasons stated in the preamble, SBA proposes to amend 13 
CFR part 115 as follows:

PART 115--SURETY BOND GUARANTEE

    1. The authority citation for part 115 continues to read as 
follows:

    Authority: 5 U.S.C. app. 3, 15 U.S.C. 687b, 687c, 694b, 694b 
note, Pub. L. 106-554; and Pub. L. 108-447, Div. K, Sec. 203.

    2. Amend Sec.  115.10 by revising the third sentence of the 
definition ``Contract'' to read as follows:


Sec.  115.10  Definitions.

* * * * *
    Contract * * * A Contract does not include a permit, subdivision 
contract, lease, land contract, evidence of debt, financial guarantee 
(e.g., a contract requiring any payment by the Principal to the 
Obligee, except for contracts for the sale of timber that require the 
Principal to pay the Obligee), warranty of performance or efficiency, 
warranty of fidelity, or release of lien (other than for claims under a 
guaranteed bond). * * *
* * * * *

    Dated: October 8, 2010.
Karen G. Mills,
Administrator.
[FR Doc. 2010-25999 Filed 10-14-10; 8:45 am]
BILLING CODE 8025-01-P