Small Business Timber Sale Set-Aside Program Share Recomputation

DEPARTMENT OF AGRICULTURE

Forest Service

Small Business Timber Sale Set-Aside Program Share Recomputation

AGENCY: Forest Service, USDA.

ACTION: Notice of proposed policy; request for public comment.

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SUMMARY: The Forest Service proposes to revise the formulas used for

calculating timber sale set-aside market shares. The formula would be

revised to use only purchased timber sale data for the recomputation of

shares to ensure that the most significant factor affecting

recomputations is given the appropriate weight in the formula. This

change is needed to make the recomputation process as fair and accurate

as possible as well as simplifying the process. The agency also

proposes to change structural recomputation procedures to make

structural change implementation more timely and responsive to the

actual market conditions.

DATES: Comments must be received in writing by June 28, 1999.

ADDRESSES: Send written comments to Director, Forest Management, MAIL

STOP 1105, Forest Service, USDA, PO Box 96090, Washington, DC 20090-

6090. All comments, including names and addresses when provided, are

placed in the record and are available for public inspection and

copying. Persons wishing to inspect the comments are encouraged to call

ahead at (202) 205-1766 to facilitate entrance into the building.

FOR FURTHER INFORMATION CONTACT: Rod Sallee, Small Business Timber Sale

Set-aside Program Manager, Forest Management Staff, by telephone at

(202) 205-1766 or by internet at rsallee/[email protected].

SUPPLEMENTARY INFORMATION: Developed in cooperation with the Small

Business Administration, the Forest Service Small Business Timber Sale

Set-aside Program is designed to ensure that qualifying small business

timber purchasers have the opportunity to purchase a fair proportion of

National Forest System timber offered for sale. The current Small

Business Timber Sale Set-aside Program was adopted July 26, 1990 (55 FR

230485). Direction that guides Forest Service employees in

administering the Small Business Timber Sale Set-aside Program is

issued in the Forest Service Manual, Chapter 2430, and Chapter 90 of

the Forest Service Timber Sale Preparation Handbook (FSH 2409.18).

According to the guidelines of this program, the Forest Service

recomputes the shares of timber sales to be set aside for qualifying

small businesses every 5 years. The recomputation percentage is based

on the actual volume of sawtimber that has been purchased and/or

harvested by small businesses. In addition to the 5-year requirement,

shares must be recomputed whenever manufacturing capability changes,

purchaser class size changes, or when certain purchasers discontinue

operations.

In the early 1980's, forest Service Regions, except the Eastern and

Southern Regions, used a formula for the recomputation of small

business market shares based on timber harvest data gathered from

scaling logs. The Eastern and Southern Regions, however, have been

using tree measurement data in the recomputation formula for many years

because the trees marked for sale in the East are much smaller than the

trees included in timber sales in the West and three measurement data

has been found to be a more accurate measurement of the timber volume

for smaller trees. In western regions the log scaling method has been

used previously to allow volume deductions since a greater amount of

defective wood is found in larger, older trees.

In the past 15 years, the volume of timber sold and harvested in

all regions has declined substantially. for example, the timber program

budget has decreased from 12 billion board feet in Fiscal Year 1990 to

less than 4 billion board feet in Fiscal Year 1998. In recent years,

nearly half of the National Forest timber volume sold has been salvaged

from areas damaged by fire and other catastrophic events.

Furthermore, trees currently included in timber sales in western

regions are significantly smaller (as measured by diameter at breast

height) than trees typically marked for sale in the 1980's and early

1990's. This change in size has resulted in an increase in tree

measurement sales in all regions. Now that most timber sales are

comprised of younger, healthier trees, the tree measurement method of

scaling is more efficient and easier to use; therefore, the Forest

Services proposes to revise the formula for calculating the

recomputation of shares to use tree measurement data.

The Forest Service also proposes to revise the procedures for

recalculating the small business share of timber sales to shorten the

time period for responding to a determination that a market structural

change has occured. An increase in administrative appeals and

litigation have resulted in significant delays in harvesting timber

sales. Due to the reduction in the number and volume of timber sales

available, timber purchasers are not able to have under contract the

number of timber sales or the amount of timber volume they have held in

the past. Because of the decreased opportunity to buy Forest Service

timber, competition between timber sale purchasers has increased, and

some timber businesses have closed. The Forest Service proposes to

revise the time period for recomputing shares when a structural change

occurs to respond to the reduction in the number of timber purchasers

and other structural changes in the industry. The time period would be

changed to recompute and implement small business shares within 18

months of a determination by the Forest Service and the Small Business

Administration that a structural change has occurred, rather than the

36 months currently allowed. With the reduced number of purchasers and

mills, this adjustment in responding to a structural change would

provide more time for other operators to respond and fill any void

caused by a structural change. This proposed policy revision would

result in more timely availability of timber sale shares that actually

reflect timber industry conditions for the market area. The Forest

Service is seeking written comment on this proposal or other

suggestions for improving the implementation of structural change

recomputations.

[[Page 28970]]

Summary

The Forest Service proposes to revise the Forest Service Timber

Sale Preparation Handbook (FSH 2409.18) to remove the harvest volume

data from the recomputation formula and require the use of volume of

timber purchased data to determine the small business share. The agency

also proposes to reduce the time period for structural change

implementation.

Regulatory Impact

This proposed policy has been reviewed under USDA procedures and

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

that this is not a significant policy. This proposed policy will not

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

adversely affect productivity, competition, jobs, the environment,

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

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

agency nor raise new legal or policy issues. Finally, this proposed

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 proposed policy is not subject to

OMB review under Executive Order 12866.

Moreover, this proposed policy has been considered in light of the

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

determined that this action will not have a significant economic impact

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

Environmental Impact

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 preliminary assessment is that this

proposed 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. A final

determination will be made upon adoption of the final policy.

Unfunded Mandates Reform

Pursuant to Title II of the Unfunded Mandates Reform Act of 1995 (2

U.S.C. 1531-1538), 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 policy 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.

Controlling Paperwork Burdens on the Public

This policy does not contain any recordkeeping or reporting

requirements or other information collection requirements as defined in

5 CFR part 1320 and, therefore, imposes no paperwork burden on the

public. Accordingly, the review provisions of the Paperwork Reduction

Act of 1995 (44 U.S.C. 3510 et seq.) and implementing regulations at 5

CFR 1320 do not apply.

Dated: April 13, 1999.

Robert Lewis, Jr.,

Acting Associate Chief.

[FR Doc. 99-13634 Filed 5-27-99; 8:45 am]

BILLING CODE 3410-11-M