[Federal Register Volume 67, Number 152 (Wednesday, August 7, 2002)]
[Notices]
[Pages 51165-51167]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-19869]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Forest Service
Extension of Certain Alaska Timber Sale Contracts; Finding of
Substantial Public Interest
AGENCY: Forest Service, USDA.
ACTION: Notice
-----------------------------------------------------------------------
SUMMARY: There is substantial overriding public interest in extending
[[Page 51166]]
National Forest System timber sale contracts in Alaska for 3 years,
subject to a maximum total contract length of 10 years. The extension
applies to timber sale contracts awarded after January 1, 1997, which
purchasers are diligently performing (not in default). To receive the
extension, purchasers must request the extension in writing to the
Contracting Officer and agree to release the Forest Service from
damages for the replacement cost of timber if the contract is canceled
in the future.
Contract extensions in Southeast Alaska will serve the public
interest by advancing the Department's goal of economic stability
through employment in Southeast Alaska in the wake of the closing of
the region's two pulp mills. The intended effect is to minimize
contract defaults, mill closures, and company bankruptcies.
DATES: The determination was made on July 30, 2002.
FOR FURTHER INFORMATION CONTACT: Rex Baumback, Forest and Rangelands
Staff (202) 205-0855.
SUPPLEMENTARY INFORMATION: The Forest Service sells timber from
National Forest System lands to individuals or companies. Each sale is
formalized by execution of a contract between the purchaser and the
Forest Service. The contract sets forth the explicit terms and
provisions of the sale, including such matters as the estimated volume
of timber to be removed, the period for removal, price to be paid to
the Government, road construction and logging requirements, and
environmental protection measures to be taken. The average contract
period is approximately 2 years, although a few contracts have terms of
5 or more years.
The National Forest Management Act of 1976 (16 U.S.C. 472a(c))
provides that the Secretary of Agriculture shall not extend any timber
sale contract period with an original term of 2 years or more, unless
the purchaser has diligently performed in accordance with an approved
plan of operations or the ``substantial overriding public interest''
justifies the extension. The authority to make this determination has
been delegated to the Chief at 7 CFR 2.60.
The closure of the pulp mills operated by the Alaska Pulp
Corporation (APC) and Ketchikan Pulp Company (KPC) in 1993 and 1997,
respectively, has had a significant effect on the overall regional
economy in Southeast Alaska. Wood consumption by these pulp mills and
their associate sawmills accounted for about half of Alaska National
Forest timber harvest since 1980. Employment in the wood products
sector has declined significantly since the peak of 1990, decreasing by
2,500 jobs, or 72 percent, between 1990 and 2000. While this total
includes the entire pulp mill labor force, which accounted for nearly
900 jobs in 1990, a larger absolute loss occurred in the logging sector
with a loss of 1,433 jobs. A total of 993 people were employed in the
wood products sector in 2000. Employment decreases tend to lag behind
decreases in production. consequently, current wood products employment
is projected to fall even lower since harvest has not rebounded. The
unemployment rate in Alaska is 5 percent to 11 percent higher than the
national average of 6 percent. Government indices indicate that the
Western softwood lumber market has declined approximately 25 percent
since mid-1999. Harvest from Tongass National Forest timber sales has
steadily declined from 338 million board feet in 1990 to 147 million
board feet in 2000. Although 2001 harvest level was only 48 million
board feet, the lowest since industrial wood production started in the
early 1950's this level was influenced not only by poor markets but
also by court ordered injunctions that halted harvest for a portion of
the year.
Rules at 36 CFR 223.52 permit contract extensions when Forest
Service officials determine that adverse wood product market conditions
have resulted in a drastic decline in wood product prices. Under
market-related contract addition procedures, the Forest Service refers
to the Western softwood lumber price index (PCU2421#4) to measure
severe market declines in Western softwoods. The index has reflected
the market decrease. Timber sale purchasers in Alaska, who have so
requested, have received up to the maximum of 3 years of additional
contract time authorized by 36 CFR 223.52. However, the market has not
recovered, and companies in Alaska are still facing contract default,
mill closure, and bankruptcy.
It has been determined that additional contract time will assist
these purchasers by giving them more time in which the market may
improve or in which they can mix their high-priced sales with lower
priced sales. If bankruptcies, mill closures, and defaulted contracts
are avoided, the United States and Southeast Alaska will benefit from
more stable employment and market opportunities and increased
competition for National Forest System timber sales. This action is
consistent with Congress' direction to the Secretary in the Tongass
Timber Reform Act of 1990 (16 U.S.C. 539d (note)) to provide for the
multiple use and sustained yield of forest resources and to seek to
provide a supply of timber from the Tongass National Forest which meets
the annual market demand for timber from the Forest. This goal was also
embodied in the February 21, 1997, settlement agreement reached between
the Forest Service and the Ketchikan Pulp Company.
Accordingly, based on a study of alternatives and current rules at
36 CFR 223.115, it has been determined that there is substantial
overriding public interest in extending sales in Alaska for up to 3
years, but not to exceed a total contract length of 10 years. To
receive the extension, purchasers must request the extension in writing
to the Contracting Officer and agree to release the Forest Service from
damages for the replacement cost of timber if the contract is canceled
in the future. The text of the finding is set out at the end of this
notice.
Dated: July 30, 2002.
Sally D. Collins,
Associate Chief.
Determination of Substantial Overriding Public Interest for
Extending Certain Timber Sale Contracts in Alaska
The Tongass Timber Reform Act (16 U.S.C. 539d (note)) directs the
Secretary to provide for the multiple use and sustained yield of forest
resources and to seek to provide a supply of timber from the Tongass
National Forest which meets the annual market demand for timber from
the Forest. Consistent with this direction the Forest Service seeks to
maintain an economically viable timber sale program, which includes
keeping volume under contract for future harvesting.
Periodically, lumber markets may experience severe declines in
prices. Based on Bureau of Labor Statistics producer price indices, the
lumber market for Western softwoods peaked in July 1999. Since then,
price indices have declined approximately 25 to 30 percent. With the
closings in 1993 and 1997 of the pulp mills operated by the Alaska Pulp
Corporation and the Ketchikan Pulp Company, the economy of Southeast
Alaska changed significantly. At the time of the mill closures, the
Department committed itself to aiding the timber-dependent communities
in Southeast Alaska by advancing the goal of economic stability through
employment in the region. Currently, the unemployment rate in Alaska is
5 percent to 11 percent higher than the national average of 6 percent.
While most Forest Service timber sale contracts in Alaska contain
provisions to extend termination dates during severely declining
markets, many contracts have been extended for the
[[Page 51167]]
maximum amount of time permissable under 36 CFR 223.52. Nevertheless,
the market has not improved significantly, and many companies in Alaska
are still facing contract default, mill closure, and bankruptcy. A
contract extension would assist these purchases by giving additional
time in which the market may improve or in which they could mix their
high-priced sales with lower-priced sales.
Having numerous, economically viable timber sale purchasers both
maintains market opportunities and increases competition for National
Forest System timber sales. These factors result in higher prices paid
for such timber. Therefore, the Government benefits if defaulted timber
sale contracts, mill closures, and bankruptcies can be avoided by
granting contract extensions. In addition, the Government would avoid
the difficult and expensive process of collecting default damages.
Therefore, pursuant to 16 U.S.C. 472a, 36 CFR 223.115, and the
authority delegated to the Chief at 7 CFR 2.60 and from the Chief to
the Associate Chief in Forest Service Manual Chapter 1230, I have
determined that there is substantial overriding public interest in
extending for 3 years National Forest System timber sales contracts in
Alaska, subject to a maximum total contract length of 10 years. To
receive the extension purchasers must make written request to the
Contracting Officer and agree to release the Forest Service from
damages for the replacement cost of timber if the contract is canceled
in the future.
Dated: July 30, 2002.
Sally D. Collins,
Associate Chief.
[FR Doc. 02-19869 Filed 8-6-02; 8:45 am]
BILLING CODE 3410-11-M