Small Business Timber Sale Set-Aside Program Share Recomputation

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.

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