[Code of Federal Regulations] [Title 36, Volume 2] [Revised as of July 1, 2008] From the U.S. Government Printing Office via GPO Access [CITE: 36CFR223.52] [Page 91-92] TITLE 36--PARKS, FORESTS, AND PUBLIC PROPERTY CHAPTER II--FOREST SERVICE, DEPARTMENT OF AGRICULTURE PART 223_SALE AND DISPOSAL OF NATIONAL FOREST SYSTEM TIMBER --Table of Contents Subpart B_Timber Sale Contracts Sec. 223.52 Market-related contract term additions. (a) Contract provision. (1) Except as provided in paragraph (a)(3) of this section, each timber sale contract exceeding 1 year in length shall contain a provision for the addition of time to the contract term, under the following conditions: (i) The Chief of the Forest Service has determined that adverse wood products market conditions have resulted in a drastic reduction in wood product prices applicable to the sale; and (ii) The purchaser makes a written request for additional time to perform the contract. (2) The contract term addition provision of the contract must specify the index to be applied to each sale. The Forest Supervisor shall determine, and select from paragraph (b) of this section, the index to be used for each sale based on the species and product characteristics, by volume, being harvested on the sale. The index specified shall represent more than one-half of the advertised volume. (3) A market-related contract term addition provision shall not be included in contracts where the sale has a primary objective of harvesting timber subject to rapid deterioration. (b) Determination of drastic wood product price reductions. (1) The Forest Service shall monitor and use Producer Price Indices, as prepared by the Department of Labor, Bureau of Labor Statistics (BLS), adjusted to a constant dollar base, to determine if market-related contract term additions are warranted. (i) The Forest Service shall monitor and use only the following indices: ------------------------------------------------------------------------ BLS producer price index Index series Index code ------------------------------------------------------------------------ Hardwood Lumber..................... Commodity............ 0812 Softwood Lumber..................... Commodity............ 0811 Wood Chips.......................... Industry............. 3211135 ------------------------------------------------------------------------ (ii) Preliminary index values will be revised when final index values become available, however, determination of a qualifying quarter will not be revised when final index values become available. (2) For PPI index codes 0811 and 0812, the Chief of the Forest Service shall determine that a drastic reduction in wood prices has occurred when, for any 2 or more consecutive qualifying quarters, the applicable adjusted price index is less than 88.5 percent of the average of such index for the 4 highest of the 8 calendar quarters immediately prior to the qualifying quarter. A qualifying quarter is a quarter, following the contract award date, where the applicable adjusted index is more than 11.5 percent below the average of such index for the 4 highest of the previous 8 calendar quarters. For PPI index code 3211135, the Chief of the Forest Service shall determine that a drastic reduction in wood prices has occurred when, for any 2 or more consecutive qualifying quarters, the adjusted price index is less than 85 percent of the average of such index for the 4 highest of the 8 calendar quarters immediately prior to the qualifying quarter. A qualifying quarter is a quarter, following the contract award date, where the adjusted index is more than 15 percent below the average of such index for the 4 highest of the previous eight calendar quarters. Qualifying quarter determinations will be made using the Producer Price Indices for the months of March, June, September, and December. (3) A determination, made pursuant to paragraph (b)(2) of this section, that a drastic reduction in wood product prices has occurred, shall constitute a finding that the substantial overriding public interest justifies the contract term addition. (c) Granting market-related contract term additions. When the Chief of the Forest Service determines, pursuant to this section, that a drastic reduction in wood product prices has occurred, the Forest Service is to notify affected [[Page 92]] timber sale purchasers. For any contract which has been awarded and has not been terminated, the Forest Service, upon a purchaser's written request, will add 1 year to the contract's terms, except as provided in paragraphs (c)(1) through (4) of this section. This 1-year addition includes time outside of the normal operating season. (1) Additional contract time may not be granted for those portions of the contract which have a required completion date or for those portions of the contract where the Forest Service determines that the timber is in need of urgent removal or that timber deterioration or resource damage will result from delay. (2) For each additional consecutive quarter, in which a contract qualifies for a market-related contract term addition, the Forest Service will, upon the purchaser's written request, add an additional 3 months during the normal operating season to the contract. (3) No more than twice the original contract length or 3 years, whichever is less, shall be added to a contract's term by market-related contract term addition. (4) In no event shall a revised contract term exceed 10 years as a result of market-related contract term additions. (d) Recalculation of periodic payments. Where a contract is lengthened as a result of market conditions, any subsequent periodic payment dates shall be delayed 1 month for each month added to the contract's term. [63 FR 24114, May 1, 1998, as amended at 70 FR 37269, June 29, 2005; 71 FR 3411, Jan. 23, 2006]