§ 618. — Timber contract payment modification.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 16USC618]
TITLE 16--CONSERVATION
CHAPTER 4--PROTECTION OF TIMBER, AND DEPREDATIONS
Sec. 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.
(Pub. L. 98-478, Sec. 2, Oct. 16, 1984, 98 Stat. 2213.)
References in Text
This Act, referred to in subsec. (a)(4)(B), (7)(C), is Pub. L. 98-
478, Oct. 16, 1984, 98 Stat. 2213, which enacted sections 539f, 618, and
619 of this title and provisions set out as a note under this section.
For complete classification of this Act to the Code, see Short Title
note below and Tables.
Short Title
Section 1 of Pub. L. 98-478 provided: ``That this Act [enacting this
section and sections 539f and 619 of this title] may be cited as
`Federal Timber Contract Payment Modification Act'.''
Administrative Appeals of Timber Sales
Pub. L. 99-500, Sec. 101(h) [title III, Sec. 320], Oct. 18, 1986,
100 Stat. 1783-242, 1783-286, and Pub. L. 99-591, Sec. 101(h) [title
III, Sec. 320], Oct. 30, 1986, 100 Stat. 3341-242, 3341-287, provided
that: ``To assure that National Forest and Bureau of Land Management
timber included in sales defaulted by the purchaser, or returned under
the Federal Timber Contract Payment Modification Act (Public Law 98-478)
[see Short Title note above], is available for resale in a timely
manner, such sales shall be subject only to one level of administrative
appeal. This limitation shall not abridge the right of judicial review.
Actions on such administrative appeals should be completed within 90
days of receipt of the notice of appeal. Sales that are reoffered shall
be modified, including minor additions or deletions, as appropriate, to
reduce adverse environmental impacts, pursuant to current land
management plans and guidelines, and such modifications in themselves
should not be construed to require the preparation of new or
supplemental environmental assessments. This section shall not apply to
any decision on the determination of damages due to the Government for
defaulted or canceled contracts.''
