16 U.S.C. § 618 : US Code - Section 618: Timber contract payment modification

Search 16 U.S.C. § 618 : US Code - Section 618: Timber contract payment modification

(a) Statement of purpose, authorization, scope, qualifications,
financial requirements, etc., for buy-out
(1) Notwithstanding any other provisions of law, in order to
retain jobs, to preserve free competition, to utilize the potential
productive capacity of plants, to preserve small communities
dependent on a single economic sector to assure an open and
competitive market for future sales of Government timber, and to
lessen the impact of unemployment, the Secretary of Agriculture for
national forest lands and the Secretary of the Interior for public
lands under their respective jurisdictions are authorized and
directed to permit a requesting purchaser to return to the
Government a volume of the purchaser's timber contracts as
determined under paragraph (2) upon payment of a buy-out charge
from such purchaser in an amount as determined under paragraph (3).
The purchaser shall be released from further obligation to cut,
remove, and pay for timber under such contract upon payment, or
arrangement for payment as provided under paragraph (3)(E), of such
buy-out charge and completion of any obligation required pursuant
to paragraph (4)(B). The Government does not hereby surrender any
other claim against a purchaser which arose under a contract prior
to effectuation of this release and not in connection with this
release from obligation to cut, harvest and pay for timber.
(2)(A) To qualify for buy-out under this section, a timber sales
contract must have been bid prior to January 1, 1982, for an
original contract period of 10 years or less, and be held as of
June 1, 1984: Provided, That any such contract that was defaulted
after January 1, 1981 may qualify for buy-out under this section so
long as (i) settlement for damages has not been reached between the
purchaser and the United States; and (ii) the purchaser's loss on
all of its qualifying timber sales contracts, as determined in
paragraph (3)(A), is in excess of 50 per centum of the net book
worth of the purchaser. A contract is qualified for buy-out
notwithstanding the fact that it was reformed after October 1,
1983, pursuant to Bureau of Land Management Instructional
Memorandum 83-743 or is included in a Forest Service multisale plan
pursuant to the President's program of July 28, 1983.
(B) A purchaser holding more than twenty-seven million three
hundred thousand board feet of net merchantable sawtimber as of
January 1, 1982, in qualifying contracts as provided in
subparagraph (A) shall be entitled to buy out up to 55 per centum
of such timber volume up to a maximum of two hundred million board
feet.
(C) A purchaser holding twenty-seven million three hundred
thousand or less board feet of net merchantable sawtimber as of
January 1, 1982, in qualifying contracts as provided in
subparagraph (A) shall be entitled to buy out up to fifteen million
board feet of such timber volume or one contract, whichever is
greater in volume.
(D) So long as the volume limitation of two hundred million board
feet is not exceeded, the percentage limitation of subparagraph (B)
or the volume limitation of subparagraph (C) may be exceeded by a
volume amount not to exceed the volume of the smallest volume
contract bought out by the purchaser if the purchaser could not
otherwise attain his percentage or volume entitlement.
(E) Timber returned to the Government pursuant to this subsection
shall be available for resale by the Government upon payment, or
arrangement for payment, of the buy-out charge and completion of
obligations, if any, under paragraph (4)(B).
(3)(A) Sums collected by the appropriate Secretary in connection
with the buy-out of contracts pursuant to this subsection shall be
deposited in and paid from the Treasury in the same manner as
moneys received from timber sales from such lands and shall be
determined as follows: The purchaser's loss on any qualifying
timber sales contracts shall be determined by the Forest Service or
the Bureau of Land Management by subtracting the current delivered
log value (as determined by such agency) from the delivered log
cost based on the current contract return (as determined by such
agency) of any such contracts. If such loss is -
(i) in excess of 100 per centum of the net book worth of the
purchaser, the buy-out cost shall be $10 per one thousand board
feet of currently held volume bought out;
(ii) in excess of 50 per centum up to 100 per centum of the net
book worth of the purchaser, the buy-out cost shall be 10 per
centum of the contract overbid but at least $10 per one thousand
board feet of currently held volume bought out; or
(iii) up to 50 per centum or less of the net book worth of the
purchaser, the buy-out cost shall be 15 per centum for the
purchaser's first one hundred twenty-five million board feet, 20
per centum for additional board feet above one hundred twenty-
five million up to one hundred fifty million, 25 per centum for
additional board feet above one hundred fifty million up to one
hundred seventy-five million, and 30 per centum for additional
board feet above one hundred seventy-five million up to two
hundred million, of the contract overbid but at least $10 per one
thousand board feet of currently held volume bought out.
(B) For purposes of this paragraph, the term "net book worth"
does not include the value of any outstanding uncut Federal timber
sales contracts.
(C) Net book worth shall be, subject to agency verification, as
determined by an independent certified public accountant in
accordance with generally accepted accounting standards for the
timber industry.
(D) A purchaser may elect to pay the buy-out cost imposed by
subparagraph (A)(iii) in lieu of utilizing loss and net book worth
determinations.
(E) Where a purchaser is not able to obtain sufficient credit
elsewhere to finance the buy-out charge at reasonable rates and
terms, purchaser may, upon payment of 5 per centum of the buy-out
charge, pay the remainder of the buy-out charge in equal quarterly
payments over a period not to exceed 5 years at an interest rate
adjusted with each payment equal to the average market yield of
outstanding Treasury obligations with remaining years to maturity
of five years payment must be secured by bond, deposited securities
or other forms of security acceptable to the appropriate Secretary
in an amount sufficient to cover the entire buy-out payment.
(F) For purposes of this paragraph, the term "contract overbid"
is the difference between the advertised contract rate and the rate
the purchaser bid.
(4)(A) Contracts returned pursuant to this subsection under which
no harvest has begun shall be returned in full.
(B) Contracts returned to the appropriate Secretary pursuant to
this subsection under which harvest has begun, shall be returned
conditionally and shall not be considered as part of the
outstanding volume of timber under contract for the purposes of
this Act. The return shall become final after the purchaser has
completed stages of contractual obligations for the units on which
the harvest has begun, including work on roads, to logical stopping
points as determined by the Secretary after consultation with the
purchaser. All remaining unharvested units must be returned.
(C) The appropriate Secretary may reject return of a contract on
which harvest has begun if he determines, in his discretion, that
the remaining unharvested portion is substantially unrepresentative
of the original sale as a whole in terms of species, logging
methods, or other appropriate criteria, and that accepting the
return of such contract would seriously disadvantage the
Government.
(5)(A) Timber from returned or defaulted contracts shall be
offered for resale in an orderly fashion as part of, and not in
addition to, the normal congressionally authorized timber sales
program, and in a manner which does not disrupt regional markets or
artificially depress domestic timber prices. Timber from returned
or defaulted contracts shall be given preference for resale in the
Forest Service timber sales programs.
(B) Timber sales in Forest Service region 6 shall not exceed four
billion three hundred million board feet of net merchantable
sawtimber in fiscal year 1984.
(C) Beginning in fiscal year 1985 and continuing through fiscal
year 1991 or the fiscal year in which timber contract extensions in
region 6 granted under the President's program of July 28, 1983 (as
constituted on October 16, 1984), are completed, whichever is
later, the Secretary of Agriculture shall set, and periodically
adjust as necessary, the maximum annual timber sale volume in
region 6. Such maximum sale volume shall be set so as to achieve a
volume of region 6 net merchantable sawtimber under contract at the
end of each fiscal year which does not exceed twelve billion three
hundred million board feet: Provided, however, That such maximum
annual sale volume shall not exceed five billion two hundred
million board feet of net merchantable sawtimber. The sale of
timber within region 6 shall be made in such a manner as not to
result in discriminatory treatment as between different forests in
the region.
(6)(A) The Secretary of the Interior and the Secretary of
Agriculture shall publish final rules for the implementation of
this subsection in the Federal Register within ninety days after
October 16, 1984.
(B) Such final rules shall require purchasers to submit buy-out
requests to the appropriate Secretary within ninety days after the
publication of such rules.
(7)(A) For purposes only of determining a purchaser's buy-out
limitation under paragraph (2) and net worth in connection with buy-
out cost under paragraph (3), concerns which are affiliates as
defined under subparagraph (B) of this paragraph shall be treated
as a single entity.
(B) Definition of affiliates: Concerns are affiliates of each
other when either directly or indirectly, one concern controls or
has the power to control the other, or a third party or parties
controls or has the power to control both. In determining whether
or not affiliation exists, consideration shall be given to all
appropriate factors, including, but not limited to, common
ownership, common management, and contractual relationships.
(C) Definition of purchaser: For the purposes of this Act, a
purchaser is the holder of a contract to purchase timber from the
Secretary of Agriculture or the Secretary of the Interior.
(b) Extension of time for performance of contracts; covered
contracts; damages for default
(1) Timber contracts bid prior to January 1, 1982, not bought out
pursuant to subsection (a) of this section and included in the
President's program of July 28, 1983, shall not be subject to any
further extension of time for performance except as permitted under
the President's program of July 28, 1983, as implemented by the
Secretary of Agriculture and the Secretary of the Interior,
providing for the extension of certain timber sale contracts and
requiring the phased harvesting of such extended contracts, which
program is hereby ratified except as modified by paragraph (2).
(2) Notwithstanding any other provision of law, timber contracts
extended pursuant to the President's program of July 28, 1983, as
implemented by the Secretary of Agriculture shall not be subject to
inclusion of additional provisions for calculating damages for
default.
(c) Monitoring of bidding patterns on timber sale contracts;
discouragement of bids; reporting requirements
The Secretary of Agriculture and the Secretary of the Interior
shall monitor bidding patterns on timber sale contracts and take
action to discourage bidding at such a rate as would indicate that
the bidder, if awarded the contract, would be unable to perform the
obligations as required, or that the bid is otherwise for the
purpose of speculation. Each Secretary shall include in the annual
report to Congress information concerning actions taken under this
subsection.
(d) Cash down-payment and periodic payments for contracts;
effective date
Effective January 1, 1985, in any contract for the sale of timber
from the National Forests, the Secretary of Agriculture shall
require a cash down-payment at the time the contract is executed
and periodic payments to be made over the remaining period of the
contract.