Timber Sale Contracts; Change in Stumpage Rate Adjustment Procedure

DEPARTMENT OF AGRICULTURE

Forest Service

Timber Sale Contracts; Change in Stumpage Rate Adjustment

Procedure

AGENCY: Forest Service, USDA.

ACTION: Notice; adoption of final procedure.

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SUMMARY: The Forest Service gives notice of adoption of a revised

stumpage rate adjustment procedure, by which rates bid on timber can be

adjusted in response in market changes after the contract is awarded.

The procedure will be applied to most timber sale contracts in the

western States. In an August 7, 1996, Federal Register notice (61 FR

41124), the Forest Service proposed eliminating the stumpage rate

adjustment procedure entirely. After considering the public comment,

the Forest Service has decided to continue to use stumpage rate

adjustment in timber sale contracts, but to modify the procedures so

that 100 percent of the difference between current and base lumber

price indices is added to tentative rates during periods of increasing

lumber prices and 100 percent of the difference is subtracted from

tentative rates during periods of declining prices. The effect of this

change is to equalize the risk of lumber

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price fluctuations between purchasers and the Forest Service on future

timber sale contracts and, thereby, satisfy Office of Inspector General

audit recommendations.

DATES: This policy is effective January 30, 1998.

FOR FURTHER INFORMATION CONTACT: Rex Baumback, Timber Management Staff,

(202) 205-0855.

SUPPLEMENTARY INFORMATION:

Background

The Forest Service sells timber to private purchasers through

competitive bidding. The agency awards the timber sale contract to the

responsible bidder submitting the highest qualified bid.

Title 36, Code of Federal Regulations, Part 223 allows for the

adjustment of contract (stumpage) rates during the term of a timber

sale contract. These regulations state that:

Timber may be appraised and sold at a lump-sum value or at a

rate per unit of measure which rate may be adjusted during the

period of the contract and as therein specified in accordance with

formulas or other equivalent specifications for the following

reasons: (a) Variations in lumber or other product value indices

between the price index base specified in the contract and the price

index actually experienced during the cutting of the timber * * *.

Under contract to the Forest Service, the Western Wood Products

Association provides the lumber price indices that the agency uses for

stumpage rate adjustment.

In the western states, except Alaska, most timber sales with

contract terms exceeding 1 year include a provision which allows

contract rates to be adjusted during the term of the contract by the

use of lumber price indices. The purpose of the stumpage rate

adjustment procedure is to allow a timber sale purchaser's stumpage

payments to follow the price trends of the primary forest product

(lumber) manufactured from National Forest System timber. This

procedure was intended to help reduce the risk of loss to a timber

purchaser holding a timber sale contract during periods of declining

lumber prices and to benefit the Government by increasing stumpage

receipts during periods of rising lumber prices.

The Forest Service first adopted a stumpage rate adjustment

procedure in the 1950's to reduce the risk, both to industry and the

Government, of holding long-term timber sale contracts. In the 1950's

and 1960's, timber sale contract periods often exceeded 10 years, and

the procedure was a means to reduce the risk to both parties due to

price fluctuations in the lumber market. During this era, stumpage

rates would vary, either up or down, by 50 percent of the change in

lumber prices.

In 1971, with the introduction of Forest Service Form 2400-6 Timber

Sale Contract, the initial stumpage rage adjustment procedure was

changed to a formula which provided for stumpage prices to increase by

50 percent of the change in lumber prices when lumber prices are rising

and to decrease by 100 percent of the change in lumber prices when

lumber prices are falling. The purpose of this adjustment was to

account for increased costs to timber sale purchasers during the course

of the contract term. In March, 1983, it was expanded to include

western Washington and Oregon.

In September, 1991, the Department of Agriculture Office of

Inspector General, issued a report (Audit Report No. 08099-122-SF dated

9/91--Stumpage Rage Adjustment on Timber Sales) which found that the 50

percent upwards and 100 percent downwards stumpage rate adjustment

procedure lowers the risk of market fluctuations to the purchaser at

the monetary expense of the Government. The audit recommended either

eliminating the stumpage rate adjustment procedure or modifying it so

that adjustments to stumpage are the same percentage for both periods

of rising and falling lumber prices.

On August 7, 1996, the Forest Service published a notice in the

Federal Register proposing to eliminate the stumpage rate adjustment

procedure entirely. However, after considering the public comments

received, the Forest Service has decided to continue to use stumpage

rate adjustment in timber sale contracts, but to modify the procedure

used to change stumpage rates. Under the revised procedure, 100 percent

of the difference between current and base lumber price indices will be

added to tentative rates during periods of increasing lumber prices and

100 percent of the difference will be subtracted from tentative rates

during periods of declining prices. The effect of this change is to

equalize the risk of lumber price fluctuations between purchasers and

the Forest Service on future timber sale contracts, while making timber

sale purchasers responsible for any increased logging and manufacturing

cost increases due to their delay in harvest.

Summary of Comments

The Forest Service received 22 responses. Comments were received

from 15 timber sale purchasers, four timber industry associations, two

companies related to the timber industry, and one individual. Many of

the responses endorsed the comments of specific timber industry

associations.

The following describes the comments received by general topics and

the agency's response to them.

Reasons for Retaining the Stumpage Rate Adjustment Procedure

Comment. Fifteen respondents commented that the 1991 Office of

Inspector General (OIG) report is outdated and contains conclusions

which are in error, because the sample size was small and non-random,

covered a narrow geographic range, and covered a short timeframe. These

respondents noted that the OIG audit findings conflict with the paper

titled ``Analysis of Stumpage Rate Adjustment Policy on Western

National Forests'' (SRA Policy Study) by Ervin G. Schuster and Michael

J. Niccolucci which was published in the Western Journal of Applied

Forestry (vol. 10, no. 2, pp. 53-58, April 1995).

Response. The OIG report was not intended to be a comprehensive

study. As the respondents state, the OIG analysis had certain

limitations. That is why the Forest Service conducted the SRA Policy

Study. The SRA Policy Study includes a larger and random sample, a

greater geographic range, and a longer time period. However, the

findings of the OIG analysis do not conflict with the findings of the

SRA Policy Study. The SRA Policy Study notes that the ``results from

the two studies are essentially identical * * *.'' While the OIG and

SRA Policy Study were useful, neither was determinative in the

selection of the revised policy.

Comment. Five respondents suggested that all proposed changes in

the contract should be proposed at one time, rather than making

piecemeal changes. Stumpage rate adjustment needs to be evaluated with

other changes.

Response. The agency realizes that it would be desirable to

consider all possible contract changes at one time. For this reason,

the comment period for the proposed changes in stumpage rate adjustment

procedure was extended so that it corresponded to the comment period

for proposed market-related contract term addition changes (published

October 21, 1996, at 61 FR 54589).

There will always be a need for periodic revisions of portions of

the timber sale contract to meet changing situations. The revision of

stumpage rate adjustment procedures will make the price paid for timber

by purchasers more responsive to changing lumber prices, while holding

timber sale purchasers responsible for increased

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inflationary costs due to their delay in harvest. There is no reason to

delay implementing this stumpage rate adjustment change indefinitely

while a more comprehensive contract revision is developed.

Comment. Six respondents stated that it is not fair to withdraw

stumpage rate adjustment procedures, unless other financial security

provisions are also withdrawn.

Response. As explained in response to other comments which follow,

the agency has decided to not abolish stumpage rate adjustment

procedures. However, the procedures are being modified to make them

more responsive to changing lumber prices, while holding timber sale

purchasers responsible for increased inflationary costs due to their

delay in harvest. Financial security contract provisions have been

developed incrementally over time. The current change is part of this

incremental process. There is no valid reason to withdraw other

procedures that have proved themselves to be necessary to protect the

public's financial interests.

Comment. Five respondents felt that prior to eliminating stumpage

rate adjustment, it must be shown that the revised market-related

contract term addition policies work, since market-related contract

term addition and stumpage rate adjustment are complementary policies.

Response. As already noted, the agency is modifying stumpage rate

adjustment procedures, rather than abolishing them. Further, the agency

agrees that market-related contract term addition and stumpage rate

adjustment are complimentary policies. However, the complimentary

nature of the two policies does not provide a valid reason to delay

this change.

Comment. Fifteen respondents noted that the Forest Service proposal

to eliminate stumpage rate adjustment appears to be premised on the

fact that contract terms are now shorter than in the 1960's and 1970's.

However, these respondents noted that while contract length is shorter

now, many timber sales receive extensions of time for harvest, and the

lumber market is more volatile now that in the past. Therefore, they

argued that stumpage rate adjustment is still needed to mitigate market

risk for both the timber sale purchaser and the Forest Service.

These respondents provided information to show that volume weighted

contract lengths for non-salvage timber sales have declined from 1981

to 1996 from approximately 4 years to approximately 3 years. The

respondents also submitted data to show that, for green sales sold from

calendar year 1994 though the second calendar year quarter of 1996, 80

percent of the timber sales and 48 percent of the volume was in

contracts shorter than 3 years. Their point was that, while there are a

large number of short contracts, the majority of the volume remains in

longer contracts. Further, the respondent's analysis asserted that

nearly one-half of all timber sales in Regions 1 and 6 received

contract term extensions, in increasing contract length on these sales

by nearly 1\1/2\ years. The respondents also provided data to show that

lumber markets are more volatile than in the past.

Response. There is a significant volume of timber, over 80 percent,

in contracts that exceed 2 years in length, and many of these sales may

receive contract term extensions. When contracts have a long term,

stumpage rate adjustment provides a valuable tool for ensuring the

viability of contacts by reflecting lumber market changes. Stumpage

rate adjustment reduces the price of timber when lumber price changes

for both the timber sale purchaser and the Government. Stumpage rate

adjustment reduces the price of timber when lumber markets decline,

thus preventing possible purchaser default, and provides increased

revenues to the Government when lumber prices increase. Upon

consideration of comments and its own analysis, the agency agrees that

it is important to continue to provide stumpage rate adjustment on

timber sale contracts that are longer than 1 year in length.

Comment. Six respondents stated that because the Forest Service

timber program is sporadic, the agency should retain all policy tools

to deal with declining markets, including stumpage rate adjustment.

Response. The agency does not agree that the timber program is

sporadic. After reducing the volume sold in the early 1990's, the

volume sold has leveled off at approximately 4 billion board feet. The

agency does agree, however, that policy tools to address volatile

timber markets should be retained, including stumpage rate adjustment.

Comment. Nine respondents felt that if the stumpage rate adjustment

procedures were eliminated small companies, without timberlands, would

be penalized more than large companies. They argued that large

companies can mix expensive Forest Service timber with timber from

their own lands, while small companies would not be able to purchase

enough volume at lower prices to mix with their high-priced timber.

These respondents felt that stumpage rate adjustment provides an

equitable procedure for all sizes of companies to reduce the cost of

high-priced Forest Service timber during market declines.

Response. The agency agrees that the stumpage rate adjustment

procedure provides an equitable mechanism to assist purchasers in

responding to declining markets. Therefore, the stumpage rate

adjustment procedure will be retained.

Comment. Eleven respondents stated that elimination of stumpage

rate adjustment would result in additional risk for all companies. They

argued that the additional risk would make it more difficult for small

companies to obtain loans and bonds and that these companies would need

to use cash to meet financial security requirements, reducing the

number of companies that can purchase timber sales, thereby reducing

competition and timber sale bids.

Response. The agency realizes that purchasers could have a higher

risk from lumber price decreases if stumpage rate adjustment were

eliminated and, in turn, small companies might have more difficulty

obtaining loans and bonds. As previously stated, the agency has

concluded that it will not eliminate the stumpage rate adjustment

procedure, but will modify it to fairly distribute the risks to

purchases and the Government.

Comment. One respondent felt that not allowing for market price

changes to be reflected in stumpage rate adjustment will increase the

number of sales with no bids.

Response. The SRA Policy Study indicated that sales without

stumpage rate adjustment receive lower bids. This finding may support

the respondents conclusion that eliminating stumpage rate adjustment in

timber sale contracts will increase the number of sales with no bids.

Recognition of the effects of stumpage rate adjustment on prices and

sales bid provided an additional reason for concluding that a stumpage

rate adjustment procedure should be retained.

Comment. Ten respondents felt that elimination of stumpage rate

adjustment would result in reduced receipts, reduced opportunity to

collect trust funds, and reduced payments to counties.

Response. This comment is consistent with the SRA Policy Study

results and supports the agency's decision to retain a stumpage rate

adjustment procedure.

Comment. Ten respondents commented that elimination of stumpage

rate adjustment will result in more defaulted sales and increase mill

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closures. One respondent also stated that mill closures would add to a

shortage of wood products for consumer use.

Response. Upon further consideration, the agency agrees that,

without the stumpage rate adjustment procedure, more mills are likely

to experience financial difficulty and default their timber sales

during a lumber market downturn, and there is a risk that, in such an

adverse situation, some of these mills might go out of business. A

decline in the number of mills might reduce competition for Forest

Service timber sales. However, mill closures are unlikely to contribute

to a shortage of wood products. Remaining mills should have ample

capacity to process timber from Forest Service sales.

Comment. In contrast to the vast majority of comments, one

respondent commented that stumpage rate adjustment should be eliminated

if it cannot be continued with the current procedures. This

respondent's reasons were that: (1) Stumpage rate adjustment is almost

impossible for the Government and purchaser to manage with lump sum

sales because there are different rates on different payment units, and

there is uncertainty about the volumes harvested each month; (2) Forest

Service timber is now a smaller part of available volume and with a

small volume the complexity of managing the stumpage rate adjustment

process is not justified; and (3) the indices do not represent the

actual lumber markets for many companies. This respondent felt that the

current procedure of increasing timber prices by 50 percent of lumber

price increases compensates for cost inflation and the burden of

dealing with these complexities.

Response. The agency agrees that, with lump-sum timber sales,

stumpage rate adjustment may complicate the purchaser's financial

planning. However, Forest Service units must do similar planning and

have found that these complications are manageable. The stumpage rate

adjustment process uses 10 indices that are directly related to species

that are sold. It is not feasible to have separate indices for each

product that is marketed. Timber sales purchasers can manage

inflationary cost increases by timing their harvest. No change is being

made based on this comment.

Applicability to Existing Contracts

Comment. One respondent stated that converting existing contracts

to flat rates would not be equitable, because the contracts were bid at

higher prices with the assumption that stumpage rate adjustment would

protect the timber sale purchaser from lumber market declines.

Response. Based on the SRA Policy Study, which found that stumpage

rate adjustment timber sales received higher bids, it is possible

purchasers may have bid higher prices assuming they could be protected

during market declines. In any case, the agency has decided not to

eliminate stumpage rate adjustment.

Comment. Eight respondents stated that elimination of stumpage rate

adjustment would cause expensive contract claims.

Response. While it might be true that elimination of stumpage rate

adjustment could result in claims, the contract does provide for

eliminating stumpage rate adjustment when a suitable index is no longer

available. The Government and purchasers anticipate, upon execution of

the contract, that stumpage rate adjustment may be eliminated in

certain circumstances. In any case, the agency has decided not to

eliminate stumpage rate adjustment.

Stumpage Rate Adjustment Procedures

Comment. Fifteen respondents commented that the current requirement

that increases stumpage 50 percent for any lumber price increase and

decreases stumpage 100 percent for any lumber price decrease is not

unfair to the Government, since inflation needs to be accounted for and

since fixed costs increase when production decreases. These respondents

asserted that operational and equipment costs do not track the lumber

markets. They also stated that the Forest Service should not receive

100 percent of the benefit for a market increase when they have a

monopoly on timber supply in this country and can influence the price

through their policies.

Response. The agency recognizes that inflation may occur and that

fixed costs per unit of output change when production is increased or

decreased. However, purchasers have control of when trees will be

harvested and can minimize the adverse effect of inflation by

harvesting the trees promptly. In addition, when markets are good,

production increases and this reduces the fixed cost per unit of

production, offsetting or partially offsetting inflationary cost

increases.

The current and new policies both decrease stumpage prices for 100

percent of any lumber price decrease. Neither operational cost

increases or increases in the fixed cost of production per unit of

measure are reflected in this reduced price.

Finally, the agency does not have a monopoly on timber supply in

this country. The Forest Service supplies only about 10 percent of the

volume consumed and does not intentionally influence price with its

policies.

Comment. One respondent stated that the current system with

adjustments of 50 percent when lumber prices are up and 100 percent

when lumber prices are down is skewed in favor of the Forest Service.

An equitable system would be one which was revenue neutral over time,

when compared with a flat rate system.

Response. The agency does not agree that the current system is

skewed in favor of the Forest Service. In fact, based on the

respondent's criterion, the current system is skewed in favor of the

timber sale purchaser. No change is being made based on this comment.

Comment. One respondent commented that the 100 percent down

provision of the stumpage rate adjustment procedure protects both the

purchaser and the agency from default. Also, that the 50 percent up

feature allows the Forest Service to benefit from lumber price

increases and that this is the Forest Service compensation for the

protection afforded purchasers during down markets.

Response. The agency agrees that the Forest Service receives a

benefit in down markets by avoiding contract defaults, but this benefit

is not equal to the benefit the purchaser now receives in increasing

markets.

Comment. One respondent stated that if the current system must be

changed, both the Forest Service and the purchaser would receive

compensation for the risks they are taking if a 50 percent up and 50

percent down procedure were used.

Response. The agency agrees, but believes that a 100 percent up and

100 percent down procedure would better protect purchasers during down

markets.

Comment. One respondent stated that, if the procedure must change,

that the 100 percent down and 100 percent up alternative is preferable

to 50 percent down and 50 percent up. In either case, the procedure

would have to be reflected in the appraisal process, since bid prices

will be directly affected. Because purchasers would be assuming more

risk than at present. This respondent felt that bid prices would go

down, and that this market change must be reflected in the appraisal.

Response. The agency agrees that the preferable alternative is the

100 percent down and 100 percent up procedure, because purchasers are

fully protected from falling lumber prices and the Government is fairly

compensated for the reduced revenues it receives in

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down markets by obtaining greater revenues in up markets. In addition,

this procedure would reduce the incentive to delay harvest in the hope

that prices will increase.

The agency also agrees that this change will have to be considered

in timber sale appraisals, until such time as timber sales in the

appraisal base period fully reflect this change.

Which Indices To Use

Comment. Nine respondents stated that alternatives to the currently

used Western Wood Products Association indices might not truly reflect

lumber selling prices, because the indices could be more easily

manipulated by non-manufacturers. In addition, ten respondents stated

that alternatives to the Western Wood Products Association indices do

not include a major portion of western lumber production, are not

weighted by volume sold, are not based on actual sales invoices, and

cannot be audited.

Response. The agency has contracted with the Western Wood Products

Association for indices, so this comment is moot.

Regulatory Procedures

Comment. Fifteen respondents stated that the policy needs to be

reviewed for regulatory impact under Executive Order 12866. The policy

will affect individual purchasers, reduce revenue to the Government,

and affect payments to counties.

Response. The policy has been reviewed for regulatory impact under

Executive Order 12866 and determined not to have a significant economic

effect. The SRA Policy Study indicates that eliminating stumpage rate

adjustment would reduce bids by approximately 4 percent (weighted

average of all Regions) and reduce receipts from stumpage by an

additional 5 percent. Approximately 75 percent of the volume in the

western Regions (except Alaska) is sold with stumpage rate adjustment.

In fiscal year 1996, the volume harvested on stumpage rate adjustment

contracts had a value of approximately $275 million. The possible loss

of 9 percent of this revenue ($25 million) is under the $100 million

economic effect.

The policy being adopted, however, has an even smaller economic

effect than the proposal to eliminate stumpage rate adjustment. The SRA

Policy Study indicates that changing to a policy of 100 percent up and

100 percent down adjustments would increase revenue by approximately 7

percent. The SRA Policy Study was not able to estimate the possible

reduction in bids that will occur when this policy is implemented, but

if bids are reduced by 5 percent there will be a small positive effect

on government receipts, perhaps $5 million.

Comment. Ten respondents stated that the proposal needs a

comprehensive analysis under the Regulatory Flexibility Act, because it

fails to describe the potential impacts on small business, which

includes the possibility that the banking and bonding industries may

withdraw from the federal timber sale program, if stumpage rate

adjustment is eliminated. These respondents concluded if this occurred,

small businesses would have a more difficult time purchasing Forest

Service timber sales.

Response. The proposed policy was reviewed under the Regulatory

Flexibility Act. The respondents did identify a possible effect on

small businesses, if stumpage rate adjustment were eliminated. The

increased risk of default in falling markets might mean that the

banking and bonding industries would be less likely to work with small

businesses. As explained in response to a previous comment, this is one

of the reasons that the Forest Service is choosing to not eliminate the

stumpage rate adjustment procedure. The 100 percent up and 100 percent

down procedure that will be implemented will not have a significant

economic impact on either large or small businesses.

Comment. Ten respondents stated that the potential reduction in 25

percent payments, if flat rates are imposed, is an unfunded mandate on

counties because they will have to find another source of revenue.

Response. As explained in an earlier response, eliminating stumpage

rate adjustment might have a total effect of $25 million, and 25

percent of this is well below the $100 million criteria for the

preparation of an unfunded mandates statement. When the policy is

implemented, the effect on revenue to countries should be a slight

increase.

Conclusion

Based on consideration of the comments received, the agency has

decided to provide a stumpage rate adjustment procedure where 100

percent of any decreases in lumber price are reflected as a reduction

in timber prices, subject to the limitation that prices cannot decrease

below base rates. For falling markets, this is the same as the current

procedure. The procedure for rising markets, however, will be changed

so that 100 percent of any lumber price increase will be reflected as

an increase in timber prices, subject to the limitation that timber

prices cannot increase by more than the difference between base rates

and tentative rates. The current procedure for rising markets is to

reflect only 50 percent of any lumber price increase.

The current procedure is inequitable to the public because the

purchaser is protected from any lumber price decrease, while still

getting the benefit of one-half of any lumber price increase. The

current policy, established when inflation was high, recognized that

the costs of logging and manufacturing also increase with time. To

offset this effect, however, the timber sale purchaser can choose to

harvest the timber early in the contract period, minimizing the risk of

inflationary costs.

This revised stumpage rate adjustment procedure retains full

protection for the timber sale purchaser when lumber prices decline. As

compensation for this reduction in risk due to lumber price decreases,

the public gets the benefit of lumber price increases, while the

purchaser has the ability to time harvest to minimize cost increases

due to inflation.

The revised stumpage rate adjustment procedure will be implemented

through an amendment to chapter 2430 of the Forest Service Manual which

will guide agency employees as follows:

FSM 2431.34--Stumpage Rate Adjustment. Except for situations that

are disadvantageous to the Government, Forest Service timber sale

contracts that exceed 1 year in contract length in the western United

States should provide for stumpage rate adjustment. For example, do not

include a stumpage rate adjustment provision for sales that lack a

significant amount of sawtimber, when an index is not available for the

predominant species in the sale, when there is no reasonably accurate

conversion to board feet, or for other similar situations. When

providing for stumpage rate adjustment, use contract provision C/

CT3.2--Escalation Procedure, which provides that 100 percent of the

difference between current and base lumber price indices will be added

to tentative rates during periods of increasing lumber prices and 100

percent of the difference will be subtracted from tentative rates

during periods of declining prices.

Regulatory Impact

This policy has been reviewed under USDA procedures and Executive

Order 12866 on Regulatory Planning and Review. It has been determined

that this is not a significant policy. This policy will not have an

annual effect of $100 million or more on the economy nor adversely

affect productivity, competition, jobs, the environment,

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public health or safety, nor State or local governments. This policy

will not interfere with an action taken or planned by another agency

nor raise new legal or policy issues. Fianlly, this action will not

alter the budgetary impact of entitlements, grants, user fees, or loan

programs or the rights and obligations of recipients of such programs.

Accordingly, this policy is not subject to OMB review Executive Order

12866.

Moreover, this policy has been considered in light of the

Regulatory Flexibility Act (5 U.S.C. 601, et seq.), and it is hereby

certified that this action will not have a significant economic impact

on a substantial number of small entities as defined by that act. The

decision to retain a stumpage rate adjustment procedure and to equalize

the risks in declining or increasing markets treats small and large

pruchasers equally.

Pursuant to Title II of the Unfunded Mandates Reform Act of 1995,

which the President signed into law on March 22, 1995, the Department

has assessed the effects of this policy on State, local, and tribal

governments and the private sector. This action does not compel the

expenditure of $100 million or more by any State, local, or tribal

governments or anyone in the private sector. Therefore, a statement

under section 202 of the Act is not required.

Environmental Impact

This action falls within a category of actions excluded from

documentation in an Environmental Impact Statement or an Environmental

Assessment. Section 31.1b of Forest Service Handbook 1909.15 (57 FR

43180; September 18, 1992) excludes from documentation in an

environmental assessment or impact statement ``rules, regulations, or

policies to establish Service-wide administrative procedures, program

processes, or instructions.'' The agency's assessment is that this

policy falls within this category of actions and that no extraordinary

circumstances exist which would require preparation of an environmental

assessment or environmental impact statement.

Controlling Paperwork Burdens on the Public

The policy does not require any recordkeeping or reporting

requirements or other information collection requirements as defined in

5 CFR part 1320 not already approved for use and, therefore, imposes no

additional paperwork burden on the public. Accordingly, the review

provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501, et

seq.) and implementing regulations at 5 CFR part 1320 do not apply.

Dated: November 24, 1997.

Ronald E. Stewart,

Acting Associate Chief.

[FR Doc. 97-34051 Filed 12-30-97; 8:45 am]

BILLING CODE 3410-11-M