[Federal Register Volume 80, Number 57 (Wednesday, March 25, 2015)]
[Proposed Rules]
[Pages 15697-15699]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-06557]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 80, No. 57 / Wednesday, March 25, 2015 / 
Proposed Rules  

[[Page 15697]]



SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

RIN 3245-AG69


Small Business Timber Set Aside Program

AGENCY: U.S. Small Business Administration.

ACTION: Advance notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The U.S. Small Business Administration (SBA or Agency) is 
seeking comments on possible amendments to its Small Business Timber 
Set-Aside Program (the Program) regulations. The Small Business Timber 
Set-Aside Program is rooted in the Small Business Act, which tasked SBA 
with ensuring that small businesses receive a fair proportion of the 
total sales of government property. Several timber industry 
stakeholders have petitioned SBA to make changes to the Program because 
they believe that the current regulations do not provide adequate 
protections to ensure that small businesses maintain a fair share of 
the National Forest timber sale market. In response, SBA, in 
consultation with the United States Forest Service, is seeking comment 
on several issues to assist the agency in formulating potential 
regulatory proposals. SBA will share the comments received in response 
to this advance notice of proposed rulemaking with the United States 
Forest Service for their use in determining whether, and if so how, to 
make any corresponding changes to the United States Forest Service 
Handbook. First, SBA seeks comments on the possibility of including saw 
timber volume sold as part of a stewardship timber or stewardship 
services contract in the calculation of the timber sale share of small 
business. Second, SBA seeks comments on how timber sale appraisals 
should be performed for small business set aside sales and associated 
costs and benefits to stakeholders. The SBA is also seeking input on 
various policy options.

DATES: Comments must be received on or before May 26, 2015.

ADDRESSES: You may submit comments, identified by RIN: 3245-AG69, by 
any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     For mail, paper, disk, or CD/ROM submissions: Brenda J. 
Fernandez, Procurement Analyst, U.S. Small Business Administration, 
Office of Policy, Planning and Liaison, 409 Third Street SW., 8th 
Floor, Washington, DC 20416.
     Hand Delivery/Courier: Brenda J. Fernandez, Procurement 
Analyst, U.S. Small Business Administration, Office of Policy, Planning 
and Liaison, 409 Third Street SW., 8th Floor, Washington, DC 20416.
    SBA will post all comments on www.regulations.gov. If you wish to 
submit confidential business information (CBI) as defined in the User 
Notice at www.regulations.gov, please submit the information to: Brenda 
J. Fernandez, Procurement Analyst, U.S. Small Business Administration, 
Office of Policy, Planning and Liaison, 409 Third Street SW., 8th 
Floor, Washington, DC 20416, or send an email 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 on whether it will publish the information.

FOR FURTHER INFORMATION CONTACT: Brenda J. Fernandez, Procurement 
Analyst, Office of Policy, Planning and Liaison, 409 Third Street SW., 
Washington, DC 20416; (202) 205-7337; [email protected].

SUPPLEMENTARY INFORMATION: The Forest Service, an agency of the federal 
government sells saw logs in accordance with the Small Business Act 
(Pub. L. 85-536 as amended) and the National Forest Management Act 
(Pub. L. 94-588 as amended). Timber is regularly sold from the federal 
forests managed by the U.S. Department of Agriculture's Forest Service 
(USDA/FS) and the U.S. Department of the Interior's Bureau of Land 
Management (DOI/BLM). On occasion, timber is sold from federal forests 
which are under the supervision of the U.S. Department of the 
Interior's U.S. Fish and Wildlife Service, the U.S. Department of 
Defense, the U.S. Department of Energy, and the Tennessee Valley 
Authority. Collectively, these agencies are considered the ``sales 
agencies.'' SBA and the sales agencies jointly set aside timber sales 
for bidding by small concerns when market data demonstrates that small 
businesses would not obtain their fair share under open sales. In 1971, 
USDA and SBA signed a Memorandum of Understanding (MOU) intended to 
accomplish the declared policy of Congress that a fair proportion of 
the total sales of Government property be made to small business 
enterprises defined by SBA (Small Business Act. 15 U.S.C. 631, et 
seq.). In the 1980s and 1990s, efforts to protect species habitat and 
watersheds in compliance with federal law and regulation resulted in 
dramatic changes to the United States timber industry. These changes 
included reduced timber harvests on Federal and private lands which in 
turn caused market failures for timber mills that could not adapt and 
retool. As a result, many small timber mills (western mills in 
particular) have been forced to close. As such, the Small Business 
Timber Set-Aside Program has become increasingly important to ensure 
that a ``fair proportion'' of Federal timber is available for purchase 
by qualified small business concerns.
    SBA is soliciting public comment on the Small Business Timber Set-
Aside Program to help the agency determine what, if any, changes should 
be proposed. Specifically, SBA is soliciting public comments on methods 
to include stewardship sales in the calculation of the timber sale 
share for small business and considerations for how timber sale 
appraisals are performed for small business set-aside sales. These 
possible amendments would not impact the DOI/BLM's Timber Sale and 
Forest Management Programs. DOI/BLM's small business set-asides, which 
are limited to 8 markets in Oregon, are made in accordance with the 
terms of a separate MOU between SBA and DOI/BLM. Rather than setting 
forth computation methods for small business market share 
considerations, SBA's MOU with DOI/BLM affords SBA the opportunity to 
review DOI/BLM annual timber sale plans prior to publication

[[Page 15698]]

and to request set-asides under the authority of the Small Business 
Act. When DOI/BLM agrees to set aside certain timber sales, DOI/BLM 
consults with SBA concerning financial and other performance 
qualifications to be included in the conditions of sale. While DOI/BLM 
utilizes various stewardship contracting vehicles, the regulatory 
amendments contemplated by SBA will not impact DOI/BLM's use of 
stewardship contracting. Further, DOI's current policy regarding small 
business set-aside timber sales is to appraise the hauling costs to the 
closest mill that qualifies as a small business under SBA's definition 
located in.
    Saw logs are sold through conventional timber sales and through 
stewardship contracting. The stewardship contracting program was 
established by Section 347 of the FY1999 Omnibus Appropriations Act 
(Pub. L. 105-277) to help achieve land management goals on the national 
forests, and to help meet the needs of local and rural communities. 
Stewardship contracting is a goods-for-services arrangement that 
requires timber companies who cut trees on National Forest System lands 
to perform other service work in exchange for the timber volume. 
Integrated Resource Timber Contract (IRTC) formats were developed by 
the Forest Service for exclusive use in implementing stewardship 
contracting projects when the value of goods exceeds the cost of 
services. Integrated Resource Service Contract (IRSC) formats were 
developed by the Forest Service for exclusive use in implementing 
stewardship contracting projects when the cost of services exceeds the 
value of the goods. As demonstrated below, stewardship sales accounted 
for 31% of all timber (sawtimber plus non-sawtimber) sold by the FS in 
Fiscal Year 2013. This is the highest percentage of total sales in the 
last ten years. However, some stakeholders believe that certain FS 
Regions could/should do consistently better in making timber sales 
awards to small business.

                                                          Stewardship Timber/Service Sales Sold
                                                                     [FY 2004-2013]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                 Year (FY)                     R-1        R-2        R-3        R-4        R-5        R-6        R-8        R-9        R-10      All FS
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       All sales, sawtimber + non-sawtimber (MMbf)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2004......................................        159        163         49        107        208        434        359        319         85      1,883
2005......................................        243        132         72         49        386        392        414        364         54      2,105
2006......................................        189        165         69         68        228        470        858        381         83      2,511
2007......................................        135        198         57         69        272        489        501        352         29      2,101
2008......................................        186        201         43         70        109        525        539        349          4      2,026
2009......................................        216        199         21         41        236        498        476        319          6      2,011
2010......................................        180        196         46         60        252        424        540        358         45      2,100
2011......................................        149        159         54         46        212        464        556        379         37      2,056
2012......................................        144        196         32         53        219        512        521        419         41      2,137
2013......................................        115        210        129         71        229        527        475        393         13      2,162
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Stewardship timber/service sales (MMbf)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2004......................................          7          9         25         12         23         19          0          0          0         96
2005......................................         12          9         17          7         23         30          4          2          1        105
2006......................................         48         16         18         15         24         64         42          4          0        231
2007......................................         44         16         28          9         62         91         34         23          1        308
2008......................................         64         35         21         12         14        100         28         10          1        284
2009......................................         45         38         15         11         54         96         62         22          0        343
2010......................................         56         70         26         38         75        120         50         50          0        486
2011......................................         43         33         31         21         47        105         62         50         33        427
2012......................................         41         35         19         22        102        175         92         67         40        592
2013......................................         36         39        107         51         75        202         90         61          0        661
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      % Stewardship
--------------------------------------------------------------------------------------------------------------------------------------------------------
2004......................................          4          5         51         12         11          4          0          0          0          5
2005......................................          5          7         23         13          6          8          1          1          1          5
2006......................................         25         10         26         22         11         14          5          1          0          9
2007......................................         33          8         49         14         23         19          7          6          2         15
2008......................................         35         17         49         17         13         19          5          3         27         14
2009......................................         21         19         72         27         23         19         13          7          0         17
2010......................................         31         36         56         64         30         28          9         14          0         23
2011......................................         29         21         59         47         22         23         11         13          9         21
2012......................................         28         18         58         42         47         34         18         16         96         28
2013......................................         32         19         83         72         33         38         19         16          0         31
--------------------------------------------------------------------------------------------------------------------------------------------------------
Data Source: Timber Data Company; November 19, 2013.

    To help ensure a fair proportion of timber sales go to small 
businesses, timber sales must be set aside when small business 
participation falls below a certain amount. In determining this trigger 
amount, the FS calculates the amount of small business market share 
based on small business purchases of saw timber volume over a five-year 
period. This percentage, based upon historical purchases, sets the 
framework for what constitutes small businesses' fair proportion of the 
total sales volume. Currently, the computation of small business market 
share does not include saw logs from stewardship contracts. SBA is 
seeking comment on whether the calculation should also include saw

[[Page 15699]]

timber purchased through stewardship contracts. Specifically, SBA 
invites comments and supporting data in response to the following 
questions.

Stewardship Contracting Questions

    1. How should the FS include the saw timber volume on stewardship 
contracts awarded to small business in the computation of small 
business market share?
    2. How might including stewardship saw timber volume impact future 
market share calculations for small business concerns that participate 
in stewardship contracts and/or conventional timber sales?
    3. What are the potential impacts (costs and benefits) if SBA 
regulations at 13 CFR 121.506 were to include the saw timber volume 
from IRTCs and IRSCs in the calculation of small business market share?
    a. What is the anticipated impact of the inclusion of saw timber 
volume from stewardship contracts on stumpage prices?
    b. If inclusion of saw timber volume from stewardship contracts 
leads to lower stumpage prices, what is the impact to land management 
activities (paid for by stumpage prices) and retained receipts?
    c. What is the anticipated impact on sale values both from an 
agency perspective and a treasury perspective?
    4. What would be the most efficient and effective way to account 
for actual saw timber volume from stewardship contracts awarded to 
small business?
    5. Would an increase in the utilization of stewardship contracts in 
a market area result in a lower representation of small businesses 
successfully bidding for timber sales in that market area? Should this 
lead to lowering the market share for small business set-aside sales in 
that market area when the FS and SBA compute small business 
participation?
    6. Would including stewardship saw timber volume on contracts 
awarded to small business in the calculation result in more accurate 
representation of small business participation in the market area?
    Unrelated to stewardship contracting, SBA is also seeking public 
comments on potential amendments to its current regulations at 13 CFR 
121.507(a)(4)(i), which provides that on a set-aside timber sale, the 
small business may not resell more than 30% of the saw timber volume to 
a large business concern. When the FS offers any timber sale, it 
appraises the sale for its potential market value and sets the minimum 
bid that it will accept based on that appraisal. One factor in the 
appraisal is the haul cost that the purchaser (small or large) will 
absorb to bring the timber to a manufacturing facility. Currently, all 
appraisals are made to the nearest mill. In timber sales set aside for 
small businesses, large mills are ineligible to bid. In the context of 
a set-aside, if the nearest mill is a large mill, the appraisal will 
not accurately capture the haul cost to eligible bidders. As such, SBA 
is seeking public comment on whether the appraisal for a small business 
set-aside sale should be made to the nearest, small mill.

Set-aside Sale Appraisal Point Questions

    1. How can the actual haul costs to eligible small business timber 
set-aside purchasers be better reflected in the appraisal process?
    2. Should there be considerations for keeping the appraisal point 
to the nearest mill on a small business timber set-aside sale in those 
market areas that do not have mills that would qualify as ``small'' 
under the SBA criteria?
    3. How should the prohibition against small businesses reselling 
more than 30% of the saw timber volume to a large business concern be 
taken into account when making appraisals for small business timber 
set-aside sales?
    4. What is the financial impact to the Forest Service if the 30% 
rule is included in the appraisal point haul cost calculation of a 
small business timber set-aside sale?
    5. What is the anticipated impact on trust funds (e.g., Knutson-
Vandenberg), if any, if appraisals are made to a small mill rather than 
the closest processer.
    6. SBA is also requesting data on mill size and location.
    The SBA welcomes comments and any available data to help 
substantiate recommendations made in response to the foregoing general 
questions, or other potential policy options--including status quo--
that should be considered for the Small Business Timber Sales Set-Aside 
Program.

    Dated: March 16, 2015.
Maria Contreras-Sweet,
Administrator.
[FR Doc. 2015-06557 Filed 3-24-15; 8:45 am]
BILLING CODE 8025-01-P